IVRCL Ltd

To the Members of

IVRCL Infrastructures & Projects Limited

1. We have audited the attached Balance Sheet of IVRCL Infrastructures & ProjectsLimited ("the Company") as at March 31, 2010, the Profit and Loss Account andthe Cash Flow Statement of the Company for the year ended on that date, both annexedthereto, in which are incorporated the unaudited Returns from Dubai Branch. 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 the auditing standards generally acceptedin India. 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 thedisclosures in the financial statements. An audit also includes assessing the accountingprinciples used and the significant estimates made by the Management, as well asevaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued bythe Central Government in terms of Section 227(4A) of the Companies Act, 1956, we give inthe Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Attention is invited to Note B-27 of Schedule 19 forming part of the financialstatements. The Company’s branch accounts have not been audited by virtue of anexemption provided under rule 3 of Companies (Branch Audit Exemption) Rules, 1961.Accordingly, the branch returns incorporated in the financial statements of the Companyare as certified by the Management.

5. Attention is invited to Note B-9 of Schedule 19 forming part of the financialstatements regarding the Company’s claim for the benefit of Rs. 1,409.03 million andin respect of which no provision had been made in the previous year as the matter wasunder appeal. During the year, necessary provision has been made by transfer from theSpecial Reserve account, as the tax relief available to the Company was withdrawn withretrospective effect.

6. 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 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 and the unaudited BranchReturns;

d. in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash FlowStatement dealt with by this report are in compliance with the Accounting Standardsreferred to in Section 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 atMarch 31, 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.

7. On the basis of the written representations received from the Directors as on March31, 2010 taken on record by the Board of Directors, we report that none of the Directorsis disqualified as on March 31, 2010 from being appointed as a director in terms ofSection 274(1)(g) of the Companies Act, 1956.

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

(i) Having regard to the nature of the Company’s business/activities, clauses(viii), (x), (xii), (xiii), (xiv) and (xviii) of CARO are not applicable.

(ii) In respect of its fixed assets:

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

(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which, in our opinion, provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanation given to us, no material discrepancies were noticed on suchverification.

(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, the inventories were physically verified during the year by theManagement at reasonable intervals.

(b) In our opinion and according to the information and explanation given to us, theprocedures of physical verification of inventories followed by the Management werereasonable 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 explanations given to us, theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification.

(iv) In respect of loans, secured or unsecured, granted by the Company to companies,firms or other parties covered in the Register under Section 301 of the Companies Act,1956, according to the information and explanations given to us:

(a) The Company has granted loans aggregating Rs. 337.24 million to two parties duringthe year. At the year-end, the outstanding balances of such loans aggregated Rs. 828.19million and the maximum amount involved during the year was Rs. 828.19 million.

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

(c) In accordance with the terms of the loan, the principal, along with interestthereon is receivable in five annual instalments after a moratorium of five years.Accordingly no receipt of principal or interest was due during the year.

(d) The company has not taken any loans, secured or unsecured, from companies, firms orother parties listed in the Register maintained under Section 301 of the Companies Act,1956.

Consequently, paragraphs (iii) (e), (f) and (g) of CARO are not applicable.

(v) In our opinion and according to the information and explanations given to us,having regard to the explanations that some of the items purchased are of special natureand suitable alternative sources are not readily available for obtaining comparablequotations, there is generally an adequate internal control system commensurate with thesize of the Company and the nature of its business with regard to purchases of inventoryand fixed assets and the sale of goods and services. During the course of our audit, wehave not observed any major weakness in such internal control system.

(vi) In respect of contracts or arrangements entered in the Register maintained inpursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge andbelief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to Section 301 that needed tobe entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction is in excess of Rs.5 lakhs in respect of any party,the transactions (other than the loans reported under paragraph (iv) above) have been madeat prices which are prima facie reasonable having regard to the prevailing marketprices at the relevant time except for certain purchases for which comparable quotationsare not available and in respect of which we are unable to comment.

(vii) According to the information and explanations given to us, the Company has notaccepted any deposit from the public during the year. In respect of unclaimed deposits,the Company has complied with the provision of Sections 58A & 58AA or any otherrelevant provisions of the Companies Act, 1956 except for a delay in filing the annualreturn for the year ending March 31, 2009, required under Rule 10 of the Companies(Acceptance of Deposits) Rules, 1975.

(viii) In our opinion, the internal audit functions carried out during the year byfirms of Chartered Accountants appointed by the Management have been commensurate with thesize of the Company and the nature of its business.

(ix) According to the information and explanations given to us in respect of statutorydues:

(a) The Company has generally been regular in depositing undisputed dues, includingProvident Fund, Investor Education and Protection Fund, Employees’ State Insurance,Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and othermaterial statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Income-tax, Sales Tax,Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory duesin arrears as at March 31, 2010 for a period of more than six months from the date theybecame payable.

(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty,Excise Duty and Cess which have not been deposited as on March 31, 2010 on account ofdisputes are given below:

(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.

(xi) In our opinion and according to the information and explanations given to us, theterms and conditions of the guarantees given by the Company for loans taken by others frombanks and financial institutions are not prima facie prejudicial to the interestsof the Company.

(xii) In our opinion and according to the information and explanations given to us, theterm loans have been applied for the purposes for which they were obtained, other thantemporary deployment pending application.

(xiii) 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.

(xiv) According to the information and explanations given to us, during the periodcovered by our audit report, the Company had issued 1,200 non convertible debentures ofRs. 1,000,000 each and has created security in respect of 1,050 debentures.

(xv) The Management has disclosed in note B-22 of schedule 19 to the financialstatements the end use of money raised by public issues in the previous years and we haveverified the same.

(xvi) To the best of our knowledge and according to the information and explanationsgiven to us, no fraud by the Company and no material fraud on the Company has been noticedor reported during the year.