Den Networks Ltd

DEN NETWORKS LIMITED

1. We have audited the attached Balance Sheet of DEN Networks 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 misstatement. 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 significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

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

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

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 appears from our examination of those books; c. the Balance Sheet, theProfit and Loss Account and the Cash Flow Statement dealt with by this report are inagreement 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 insub-section 3C of Section 211 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, together with the notes thereon, give the informationrequired by the Companies Act, 1956, in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India:

i. in the case of the Balance Sheet, of the state of affairs of the Company as at March31, 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 March 31, 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 ii, viii, xii,xiii, xiv, xv, xviii and xix of Companies (Auditor’s Report) Order, 2003 are notapplicable.

ii. In respect of its fixed assets:

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

b. According to the information and explanations given to us, the Company has a regularprogramme of physical verification of its fixed assets by which fixed assets are verifiedby the management in a phased manner over a period of three years. In accordance with thisprogramme, certain fixed assets were verified during the year and no materialdiscrepancies were noticed on such verification. In our opinion, this periodicity ofphysical verification is reasonable having regard to the size of the Company and thenature of its assets.

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. a. The Company has not granted any loans, secured or unsecured to parties listedin the register maintained under Section 301 of the Companies Act, 1956.

b. The Company has taken interest free unsecured loan from one party listed in theregister maintained under Section 301 of the Companies Act, 1956. The year end balance ofthe loan aggregates to Rs. 21,952,000 and the maximum amount outstanding during the yearwas Rs. 55,002,000.

c. The rate of interest and other terms and conditions of such loans are, in ouropinion, prima facie not prejudicial to the interest of the Company.

d. The payment of principal amount in respect of such loan is regular/as perstipulations.

iv. In our opinion and according to the information and explanations given to us andhaving regard to the explanations that some capital items for which the procurementdecision was taken based on operational requirements and some the fixed assets purchasedare of specialized nature and, therefore, suitable alternative sources do not exist forobtaining comparable quotations, there are adequate internal control procedurescommensurate with the size of the Company and the nature of its business for the purchaseof fixed assets and sale of goods and services.

The operations of the Company do not give rise to purchase of inventory.

v. To the best of our knowledge and belief and according to the information andexplanations given to us, we are of the opinion that:

a. The particulars of contracts or arrangements referred to in section 301 of theCompanies Act, 1956 have been entered in the register required to be maintained under thatsection; and

b. According to information and explanations given to us, having regard to theexplanation that some of the services purchased and sold are of a specialised nature forwhich there are no alternate sources of supply to enable comparison of prices,transactions made in pursuance of contracts or arrangements entered in the registermaintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5lakhs in respect of any party during the year have been made at prices which arereasonable to prevailing market prices at the relevant time.

vi. According to the information and explanations given to us, the Company has notaccepted any deposits from the public during the year, within the meaning of Sections 58Aand 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies(Acceptance of Deposits) Rules, 1975.

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

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

a. The Company has been generally regular in depositing its undisputed statutory duesincluding Provident Fund, Employees’ State Insurance, Income Tax, Sales Tax, Valueadded Tax, Wealth Tax, Service tax, Customs Duty, Work Contract Tax, Cess and othermaterial statutory dues within the prescribed time with the appropriate authorities duringthe year. There are no undisputed amounts payable in respect of these dues which haveremained outstanding as at 31 March, 2010 for a period of more than six months from thedate they became payable.

We are informed that the Company’s operations did not give rise to any Excise Dutyand Investor Education and Protection Fund.

b. According to the information and explanations given to us, there are no amount ofIncome Tax, Sales Tax, Value added Tax, Wealth Tax, Service tax, Customs Duty, WorkContract Tax and Cess which have not been deposited on account of any disputes. ix. Clause4(x) of the Companies (Auditor’s Report) Order, 2003 regarding accumulated losses ofthe Company at the end of the financial year exceeding fifty percent of its net worth isnot applicable to the Company since the Company has been registered for a period of lessthan five years.

x. In our opinion and according to the information and explanations given to us, theCompany has not defaulted in the repayment of dues to banks and financial institutions.The Company has not issued any debentures.

xi. In our opinion and according to the information and explanations given to us, theterm loans have been applied for the purpose for which they were obtained.

xii. 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.

xiii. The Company has raised money by way of initial public offering of equity shareduring the year. The Management has disclosed the end use of money raised by public issuein note 20 of schedule 15 and we have verified the same.

xiv. 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.