Auditor Report of Spanco Ltd.

Mar 31, 2013

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

Management''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

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

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

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

Opinion

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

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

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

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

Report on Other Legal and Regulatory Requirements

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

2. As required by section 227(3) of the Act, we report that:

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

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

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

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

e) On the basis of written representations received from the directors as on March 31, 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

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

ANNEXURE TO THE AUDITORS'' REPORT

(Referred to in Paragraph 1 of our report of other Legal and Regulatory Requirement of even date)

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

b) Certain fixed assets were physically verified by the management during the year in accordance with a planned programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

c) During the year, the Company has not disposed off any substantial part of the fixed asset.

(ii) a) The management has conducted physical verification of inventory at reasonable intervals during the year.

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

c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification carried out during the year.

(iii) a) The Company has not granted loan to companies or firms covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly sub clauses (b), (c), (d) of the clause (iii) of paragraph 4 of the order are not applicable.

b) The Company has taken interest free loan from two parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 21.82 Crores and the yearend balance is Rs. 19.88 Crores.

c) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loan are prima facie not prejudicial to the interest of the Company.

d) The loan taken is repayable on demand. As informed, the lender has not demanded repayment of such loan during the year, thus, there has been no default on the part of the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered.

b) According to the information and explanation provided by the management, we are of the opinion that the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 aggregating during the year to 5.00 lacs (Rupees Five Lacs only) or more in respect of a party has been made at price which is reasonable having regard to the prevailing market prices at the relevant time.

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

(vii) The Company has an internal audit system commensurate with the size and nature of its business.

(viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 for the products of the company.

(ix) a) Delays are observed in the deposit of undisputed statutory dues with the appropriate authorities including provident fund, employees'' state insurance, income-tax, TDS, value added tax, service tax and other material statutory dues applicable to it. There is no delay in deposit of investor education and protection fund and wealth tax.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, service tax, wealth-tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable except of TDS amounting to Rs. 4.78 Crores.

c) According to the information and explanation given to us, there are no dues of income tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

(x) The Company has accumulated losses amounting to Rs. 152.99 Crores at the end of the financial year and it has also incurred cash losses in the current financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, the Company has defaulted in repayment of dues to domestic financial institutions, banks and debenture holders during the year as follows:

(Rs. in Crores)

Nature of Borrowing Principal Interest Period of Default

Debentures 46.00 9.31 April-12 to Mar-13

Term Loan 4.22 0.85 July-12 to Mar-13

Vehicle Loan 0.02 - Mar-13

Working Capital Loans 390.54 39.90 April-12 to Mar-13

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantees for loans taken by others from bank or financial institutions, the terms and conditions whereof in our opinion are not prima-facie prejudicial to the interest of the Company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds amounting to Rs. 360 Crores raised on short-term basis have been used for long-term investment.

(xviii) The Company has made preferential allotment of shares to Mrs. Kavita Puri, party covered in the register maintained under section 301 of the Companies Act, 1956.The price at which shares have been issued is not prejudicial to the interest of the Company.

(xix) The Company has not issued any debentures during the year under audit. The Company has created security or charge in respect of debentures issued in previous years.

(xx) During the year the Company has not raised money by way of public issue.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For Khandelwal Jain & Co.

Chartered Accountants

Firm Registration No.l05049W

Shivratan Agarwal

Partner

Membership No. 104180

Place: Mumbai

Date : October 24, 2013

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Mar 31, 2012

1. We have audited the attached Balance Sheet of Spanco Limited ('the Company') as at March 31, 2012 and also the Statement of Profit and Loss and the Cash Flow Statement for the period ended on that date annexed thereto (all together referred to as the 'financial statements'). 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) ('the Order') issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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

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

iii. 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;

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

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

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts 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, 2012;

b) in the case of the Statement of Profit and Loss, of the profit for the period ended on that date; and

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

Annexure referred to in paragraph 3 of our report of even date

Re: Spanco Limited ('the Company')

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

b) Certain fixed assets were physically verified by the management during the period in accordance with a planned programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

c) During the period, the Company has disposed off a substantial part of the assets and liabilities which represented the transfer of its Power Distribution Franchisee Division. Based on the information and explanation given by the management and on the basis of audit procedures performed by us, we are of the opinion that the sale of the said part of the fixed assets has not affected the going concern status of the Company.

(ii) a) The management has conducted physical verification of inventory at reasonable intervals during the period.

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

c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification carried out during the period.

(iii) a) The Company has not granted loan to companies or firms covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly sub clauses (b), (c), (d) of the clause (iii) of paragraph 4 of the order are not applicable.

b) The Company has taken interest free loan from two parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the period was Rs. 4.69 Crores and the period end balance is Rs. 1.54 Crores.

c) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loan are prima facie not prejudicial to the interest of the Company.

d) The loan taken is repayable on demand. As informed, the lender has not demanded repayment of such loan during the period, thus, there has been no default on the part of the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered.

b) According to the information and explanation provided by the management, we are of the opinion that the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 aggregating during the year to Rs. 5.00 lacs (Rupees Five Lacs only) or more in respect of a party has been made at price which is reasonable having regard to the prevailing market prices at the relevant time.

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

(vii) The Company has an internal audit system commensurate with the size and nature of its business.

(viii) The Central Government has prescribed maintenance of the cost records under section 209(1)(d) of the Companies Act, 1956 in respect of the Company's power business. As per the information and explanations provided to us, we are of the opinion that prima facie, the prescribed records have been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) a) Undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, value added tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it have generally been regularly deposited with the appropriate authorities. Delays in few cases are observed in the deposit of above said statutory dues except for investor education and protection fund and wealth tax.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the period end, for a period of more than six months from the date they became payable.

c) According to the information and explanation given to us, there are no dues of income tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

(x) The Company has no accumulated losses at the end of the financial period and it has not incurred cash losses in the current and immediately preceding financial period/year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, the Company has delayed in repayment of dues to domestic financial institutions, banks and debenture holders during the period to the extent of Rs. 175.09 Crores which includes Rs. 161.20 Crores towards working capital facilities (the delay in such repayments for more than 30 days being Rs. 109.60 Crores). Further Rs. 94.37 Crores of such dues were in arrears as on the balance sheet date (the delay for more than 30 days being Rs. 77.80 Crores) which has been subsequently repaid.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantees for loans taken by others from bank or financial institutions, the terms and conditions whereof in our opinion are not prima-facie prejudicial to the interest of the Company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

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

(xix) The Company has not issued any debentures during the period under audit. The Company has created security or charge in respect of debentures issued in previous years.

(xx) During the period the Company has not raised money by way of public issue.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For Khandelwal Jain & Co.

Chartered Accountants

Firm Registration No. 105049W

Shivratan Agarwal

Partner

Membership No. 104180

Place: Mumbai

Date : August 14, 2012.

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Mar 31, 2010

1. We have audited the attached Balance Sheet of Spanco Limited (the Company) 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 (all together referred to as the financial statements). These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with 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 (Auditors Report) Order, 2003 (as amended) (the Order) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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

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

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

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

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

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts 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 the Cash Flow Statement, of the cash flows for the year ended on that date.



Annexure referred to in paragraph 3 of our report of even date Re: Spanco Limited (the Company)

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

b) Certain fixed assets were physically verified by the management during the year in accordance with a planned programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

c) During the year, the Company has disposed off a substantial part of the fixed asset leased to its subsidiary. Based on the information and explanation given by the management and on the basis of audit procedure performed by us, we are of the opinion that the sale of the said part of fixed assets has not affected the going concern status of the Company.

(ii) a) The management has conducted physical verification of inventory at reasonable intervals during the year.

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

c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification carried out during the year.

(iii) a) The Company has granted loan to one company covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 40,237,112 and the year- end balance is Rs. Nil.

b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loan is prima facie not prejudicial to the interest of the Company.

c) The loan granted was re-payable on demand. As informed, the Company has not demanded repayment of any such loan during the year, thus, there has been no default on the part of the party to whom the money has been lent.

d) The outstanding balance of the loan granted to Company covered in the register maintained under section 301 of the Companies Act, 1956 is Nil and therefore the question of overdue does not arise.

e) The Company has taken interest free loan from one company covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 48,18,602 and the year- end balance is Rs. 4,818,602.

f) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loan are prima facie not prejudicial to the interest of the Company.

g) The loan taken is repayable on demand. As informed, the lender has not demanded repayment of such loan during the year, thus, there has been no default on the part of the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered.

b) According to the information and explanation provided by the management, we are of the opinion that the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 aggregating during the year to 5.00 lacs (Rupees Five Lacs only) or more in respect of a party has been made at price which is reasonable having regard to the prevailing market prices at the relevant time.

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

(vii) The Company has an internal audit system, the scope and coverage of which, in our opinion, requires to be enlarged to be commensurate with the size and nature of its business.

(viii)To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for the products of the Company.

(ix) a) Undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it have generally been regularly deposited with the appropriate authorities. Delays in few cases are observed in the deposit of income tax, sales tax and service tax.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

c) According to the information and explanation given to us, there are no dues of income tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

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

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has defaulted in repayment of dues (principal and interest) to financial institutions, banks or debenture holders. The summary of the same is as given below;

Name of the financial Maximum Maximum

institution, bank or amount of period

debenture holder default of default

(Rs.) (in days)

LIC Mutual Fund 52,723,288 59

HDFC Bank 23,617,834 65

Allahabad Bank 100,000,000 56

State Bank of Hyderabad 2,800,000 55

HSBC Bank 15,000,000 88

ICICI Bank 20,500,155 51

Lakshmi Vilas Bank 3,325,847 24

STPBI 30,884,0001 53

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantees for loans taken by others from bank or financial institutions, the terms and conditions whereof in our opinion are not prima-facie prejudicial to the interest of the Company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short- term basis have been used for long-term investment.

(xviii) The Company has made preferential allotment of shares to parties covered in the register maintained under section 301 of the Companies Act, 1956. The price at which shares have been issued is not prejudicial to the interest of the Company.

(xix) The Company has not issued any debentures during the year under audit. The Company has created security or charge in respect of debentures issued in previous years.

(xx) During the year the Company has not raised money by way of public issue. However the Company has issued shares on preferential basis and the proceeds are utilized for the purpose for which the money has been raised.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For KHANDELWAL JAIN & CO.

Chartered Accountants

Firm Registration No. 105049W

(SHIVRATAN AGARWAL)

PARTNER

Membership No. 104180

Place: Mumbai

Date : August 27, 2010.

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Mar 31, 2000

We have audited the attached Balance Sheet of SPANCO TELESYSTEMS AND SOLUTIONS LIMITED as on 31st March, 2000 and the Profit & Loss Account for the year ended on that date annexed thereto.

1. As required by the Manufacturing and Other Companies (Auditors Report) Order, 1988 issued by the Company Law Board in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said order.

2. Further to our comments, in paragraph (1) above, we report that :-

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

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

(c) The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of accounts.

(d) In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report are in compliance with the Accounting Standards (AS) referred to in Section 211(3C) of the Companies Act, 1956.

(e) In our opinion and to the best of our knowledge and according to the explanations given to us, the said accounts subject to the notes to the accounts, give the information required by the Companies Act, 1956, in the manner so required and give true and fair view :-

(i) in case of Balance Sheet, of the affairs of the Company as at 31st March, 2000, and

(ii) in case of Profit & Loss Account, of the Profit for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

Annexure to the Auditors Report to the Members of SPANCO TELESYSTEMS AND SOLUTIONS LIMITED (referred to in paragraph 1 thereof).

1. The Company has maintained proper records to show full particulars including quantitative details and situations of the fixed assets. These fixed assets were physically verified by the management and no serious discrepancies were noticed between the book records and the physical inventory.

2. None of the fixed assets have been revalued during the year.

3. The stock of goods purchased, stores and spares and other materials have been physically verified by the management during the year.

4. In our opinion, the procedures of physical verification of the aforesaid stock followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

5. In our opinion, according to the information given to us, the discrepancies noticed on physical verification of the aforesaid stock, as compared to the book records are not material and have been properly dealt with in the books of accounts.

6. The valuation of the aforesaid stock is fair and proper in accordance with the normally accepted accounting principles and is on the same basis as in the preceding year.

7. The Company has not taken any loans secured or unsecured from the companies, firms or other parties listed in the register maintained under Section 301 and Section 370 (1-B) of the Companies Act, 1956.

8. The Company has not granted any loans to companies, firms or the parties as listed in the register maintained under Section 301 and Section 370 (1-B) of the Companies Act, 1956.

9. In respect of loans and advances in the nature of loans, the parties are regular in the repayment of principal and interest on the same wherever charged.

10. In our opinion and according to the information and explanations given to us, the internal control procedures with regard to the purchases of goods and materials including components, plant and machinery, equipment, stores and other assets, is adequate and commensurate to the size of the Company and the nature of its business.

11. In our opinion and according to the information and explanations given to us, the transactions of the purchase of goods and sale of goods in pursuance of contracts or arrangements referred in the register maintained under Section 301 of the Companies Act, 1956 and aggregating ^during the year to Rs.50,000/- or more in respect of each party have been made at prices which are reasonable having regard to prevailing market prices for such goods as per material available with the Company.

12. The Company has determined the unserviceable or damaged stores and spare parts and adequate provisions have been made in the accounts for the losses arising on the items so determined.

13. As per the information and explanations given to us, no fixed deposits have been accepted during the year by the Company, in terms of Section 58A of the Companies Act, 1956 and rules framed thereunder.

14. We are informed that the Company does not generate any by-product or scrap.

15. In our opinion and according to the information and explanations given to us, the Company is not required to maintain the cost records.

16. According to the records of the Company, Provident Fund and Employees State Insurance dues have been regularly deposited.

17. According to the information and explanations given to us, no undisputed amount payable in respect of Income-Tax, Wealth-Tax, Customs Duty and Excise Duty were outstanding as on 31st March 2000 for a period of more than six months from the date they become payable.

18. According to the information and explanations given to us, no personal expenses of employees or directors have been charged to revenue account, other than those payable under contractual obligations or in accordance with generally accepted business practice.

19. The Company is not a Sick Industrial Company within the meaning of Clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985.

For DHIRAJLAL DESAI & CO.

CHARTERED ACCOUNTANTS

(RAJESH DHIRAJLAL DESAI)

MUMBAI, PROPRIETOR

3rd June, 2000