CMC Ltd

TO THE MEMBERS OF CMC LIMITED

1. We have audited the attached Balance Sheet of CMC Limited (‘theCompany’), as at 31 March, 2010, the Profit and Loss Account and the Cash FlowStatement of the Company for the year ended on that date, both annexed thereto. Thesefinancial statements are the responsibility of the Company’s Management. Ourresponsibility 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 inIndia. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatements. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and the significant estimates made by the Management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by theCentral Government of India in terms of Section 227(4A) of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of thesaid Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we reportas follows:

a) we have obtained all the information and explanations, which to the best of ourknowledge 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 theCompany so far as it appears from our examination of those books;

c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealtwith by this report are in agreement with the books of account;

d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash FlowStatement dealt with by this report comply with the Accounting Standards referred to inSection 211(3C) of the Companies Act, 1956;

e) in our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts give the information required by the Companies Act, 1956 inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31March, 2010;

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

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

5. On the basis of written representations received from the Directors as on 31 March,2010 taken on record by the Board of Directors, none of the Directors is disqualified ason 31 March, 2010 from being appointed as a director in terms of Section 274(1)(g) of theCompanies Act, 1956.

ANNEXURE TO THE AUDITORS’ REPORT

(Referred to in paragraph 3 of our report of even date)

i. Having regard to the nature of the Company’s business, clauses iii(b), iii(c)iii(d), iii(f), iii(g), x, xi, xii, xiii, xiv, xv xvi, xix and xx of Companies(Auditor’s Report) Order, 2003 are not applicable.

ii. In respect of its inventory:

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

b. The Company has a programme of physically verifying its fixed assets in a phasedmanner designed to cover all assets over a period of two years, which in our opinion isreasonable having regard to the size of the Company and the nature of its business. Inaccordance with this programme, the Management had carried out a physical verification offixed assets at some locations during the year. According to the information andexplanation given to us, no material discrepancies were noticed on such verification.

c. The fixed assets disposed off during the year, in our opinion, do not constitute asubstantial part of the fixed assets of the Company and such disposal has, in our opinion,not affected the going concern status of the Company.

iii. In respect of its inventory:

a. As explained to us, inventory in the Company’s possession has been verified bythe Management during the year at reasonable intervals. For materials lying with thirdparties or at customers’ sites aggregating to Rs. 68,350 ‘(000s) in the absenceof confirmations from such parties, we have relied on certification from the respectiveProject Managers.

b. In our opinion and according to the information and explanation given to us, theprocedures of physical verification of inventories followed by the Management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

c. In our opinion and according to the information and explanation given to us, theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification.

iv. The Company has neither granted nor taken any loans, secured or unsecured, to/fromcompanies, firms or other parties listed in the Register maintained under Section 301 ofthe Companies Act, 1956.

v. In our opinion and according to the information and explanations given to us, thereis an adequate internal control system commensurate with the size of the Company and thenature of its business for the purchase of inventory and fixed assets and for the sale ofgoods and services. During the course of our audit, we have not observed any majorweakness in such internal control system.

vi. Based on the examination of the books of account and related records and accordingto the information and explanations provided to us, there are no contracts or arrangementswith companies, firms or other parties which need to be listed in the register maintainedunder Section 301 of the Companies Act, 1956.

vii. The Company has not accepted any deposits from the public, within the meaning ofSections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and theCompanies (Acceptance of Deposits) Rules, 1975.

viii. In our opinion, the Company has an adequate internal audit system commensuratewith the size of the Company and nature of its business.

ix. According to the information and explanations given to us, the Central Governmenthas not prescribed maintenance of cost records under clause (d) of sub-section (1) ofSection 209 of the Companies Act, 1956 for the Company.

x. According to the information and explanations given to us in respect of statutorydues:

a. The Company has generally deposited its statutory dues including Provident Fund,Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, SalesTax, Wealth Tax, Service Tax, Custom Duty, Cess and other material statutory dues withinthe prescribed time with appropriate authorities during the year and that there are noundisputed amounts payable in respect of these dues which have remained outstanding as at31^st March, 2010 for a period of more than six months from the date they becamepayable. The company’s operations do not give rise to any Excise Duty.

b. Details of dues of Income Tax, Sales Tax, Works Contract Tax and Service Taxaggregating to Rs. (000s) 530,935 have not been deposited as on 31^st March,2010 on account of disputes as set out in the attachment. We are informed that there areno dues in respect of Customs Duty, Wealth Tax and Cess which have not been deposited onaccount of any dispute. The Company’s operations do not give rise to any Excise Duty.

xi. In our opinion and according to the information and explanations given to us, andon an overall examination of the Balance Sheet, we report that funds raised on short termbasis have not been used during the year for long term investment.

xii. According to the information and explanations given to us, the Company has notmade any preferential allotment of shares to parties and companies covered in the registermaintained under Section 301 of the Companies Act, 1956.

xiii. To the best of our knowledge and according to the information and explanationsgiven to us, no fraud by the Company and fraud on the Company has been noticed or reportedduring the year.

ATTACHMENT

(Referred to in paragraph x b. of Annexure to the Auditors’ Report)

Information pursuant to clause 4(x)(c) of Companies (Auditor’s Report) Order, 2003in respect of dues disputed, not deposited with various authorities.