Kavveri Telecom Products Ltd

To

The Members of Kavveri Telecom Products Limited

1. We have audited the attached Balance Sheet of Kavveri Telecom Products Limitedas at 31 st March, 2010, the Profit and Loss Account and also the Cash Flow Statement forthe year ended on that date annexed thereto. These financial statements are theresponsibility of the company's management. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We conducted the 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 presentation. We believe that our audit provides a reasonable basis for ouropinion.

3. As required by the Companies (Auditors Report) Order, 2003 (as amended) issued byCentral 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 comments in the Annexure referred to above, we report that:

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 accounts as required by law have been kept by theCompany, so far as appears from our examination of those books;

c. The Balance Sheet, Profit and Loss Account and Cash Flow dealt with by this reportare in agreement with the books of account;

d. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report 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 31,2010 and taken on record by the Board of Directors, we report that none of the Directorsis disqualified as on 31 st March, 2010 from being appointed as a director in terms ofclause (g) of sub-section (I) of Section 274 of the Companies Act, 1956;

f. 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,in the 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 at 31 stMarch,2010;

ii) in the case of the Profit and Loss Account, of the Profit for the year ended onthat date; and

iii) in the case of the Cash Flow Statement, of the cash flows for the year ended onthat date.

ANNEXURE TO AUDITOR'S REPORT OF KAVVERI TELECOM PRODUCTS LIMITED

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

b. The Company has a regular program of physical verification of fixed assets which, inour opinion, is reasonable having regard to the size of the Company and the nature of itsassets. In accordance with this program, certain fixed assets were physically verified bythe management during the year and we are informed that no material discrepancies werenoticed on such verification.

c. In our opinion, there was no substantial disposal of fixed assets by the Companyduring the year.

2. a. The management has conducted physical verification of inventory at reasonableintervals during the year. In respect of stocks lying with the third parties, confirmationfor most of the stocks has been received.

b. In our opinion, the procedures of physical verification of inventory followed by themanagement are reasonable and adequate in relation to the size of the Company and thenature of its business.

c. The Company has maintained proper records of inventory and as explained to us, nomaterial discrepancies were noticed on physical verification of inventory as compared tothe book records.

3. a. As informed, the Company has granted unsecured loan to one company covered in theregister maintained under Section 301 of the Companies Act, 1956 during earlier year. Themaximum amount involved during the year was Rs. 122.25 Million (Previous Year Rs. 211.38Million) and the year end balance was Rs. 111.41 Million (Previous Year Rs. 159.13Million). However, the Company has not granted any loan, secured or unsecured, to firms orother parties covered in the register maintained under Section 301 of the Companies Act,1956.

b. In our opinion and according to the information and explanations given to us, therate of interest and other terms and conditions on which such loan has been granted arenot prima facie prejudicial to the interest of the Company.

c. The Company has not taken any loan, secured or unsecured from Companies, firmscovered in the register maintained under section 301 of the Companies Act, 1956. Howeverthe company had taken interest free loan of Rs.332.93 Million during the year from twoparties covered in the register maintained under Section 301 of the Companies Act, 1956

d. In our opinion and according to the information and explanations given to us, therate of interest and other terms and conditions on which such loan has been taken fromsuch other parties covered in the register maintained under section 301 of the CompaniesAct, 1956, are not, prima-facie prejudicial to the interest of the company.

e. Due to the fact that these loans are interest free loans, there is no applicabilityof the clause relating to the repayment of interest and with regard to the repayment ofprincipal, it is in accordance with the terms and conditions on which such loans have beentaken.

4 In our opinion and according to the information and explanations given to us, thereare adequate internal control systems commensurate with the size of the Company and thenature of its business with regard to the purchase of inventory, and fixed assets and withregard to the sale of goods and services. During the course of our audit, no majorweakness has been noticed in the internal control system in respect of these areas.

5 a. In our opinion and according the information and explanations given to us, thetransactions made in pursuance of contracts or arrangements referred to in Section 301 ofthe Companies Act, 1956, have been entered in the register required to be maintained undersection 301 of the Companies Act, 1956.

b. In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of contracts or arrangements entered in the registermaintained under section 301 of the Companies Act, 1956 and exceeding value of rupees fivelakhs in respect of any party during the year have been made at prices which arereasonable having regard to prevailing market prices at the relevant time except thatreasonableness could not be ascertained where comparable quotations are not availablehaving regard to the specialized nature of some of the transactions of the Company.

6. The Company has not accepted any deposits from the public and hence provisions ofpara (vi) of the said order (as amended) are not applicable.

7 In our opinion, the company has an internal audit system commensurate with the sizeand nature of its business.

8. As explained to us, the Central Government has not prescribed the maintenance ofCost Records under Section 209( I )(d) of the Companies Act, 1956.

9. a. According to the information and explanations given to us and books and recordsproduced by the company and examined by us, in our opinion, the undisputed statutory duesincluding Provident Fund, Investor Education and Protection Fund, Employees' StateInsurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cesswherever applicable and other material statutory dues have been generally regularlydeposited with the appropriate authorities.

b. According to the information and explanations given to us, no undisputed amountspayable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, ExciseDuty and cess were in arrears as at 31 st March 2010 for a period more than six monthsfrom the date they became applicable.

c. According to the information and explanations given to us, there are no dues ofIncome tax, Sales tax Wealth tax, Service tax, Customs Duty, Excise duty, and cess whichhave not been deposited with appropriate authorities on account of any dispute except forthe following:

10. The company has no accumulated losses and has not incurred any cash losses duringthe financial year covered by our audit and in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, theCompany has not defaulted in repayment of dues to financial institutions or banks. Thecompany has no debenture holders.

12. In our opinion and according to the information and explanations given to us, theCompany has not granted any loan or advance, on the basis of security by way of pledge ofshares, debentures and other securities.

13. In our opinion, the Company is not a chit fund or a nidhi/mutual benefitfund/society. Therefore the provisions of clause 4(xiii) of the Companies (Auditor'sReport) Order 2003 (as amended) are not applicable to the Company.

14. In our opinion, the Company is not dealing in or trading in shares, securities,debentures and other investments except those investments, which are held as investments.Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order,2003 (as amended) are not applicable to the company.

15. According to the information and explanations given to us, the Company has givenguarantees for loans taken from banks by a subsidiary company and prima facie, the termsand conditions on which such guarantees have been extended are not prejudicial to theinterest of the Company.

16. According to the information and explanations given to us, term loans availed bythe Company during the year were, prima facie, utilized by the company for the purposesfor which the loans were obtained.

17. According to the information and explanations given to us and on an overallexamination of the Balance Sheet of the company, we report that no funds raised onshort-term basis have been used for long-term investments.

18. During the year, the company has not made any preferential allotment of shares toparties and companies covered in the register maintained under section 301 of theCompanies Act, 1956.

19. During the year, the Company has not issued debentures and hence the provisions ofclause (xix) of para 4of this order (as amended) are not applicable.

20. The company has not raised any money by way of public issue during the year andhence the provisions of clause (xix) of Para 4 of this order (as amended) are notapplicable.

21. During the course of our examination of the books of account carried out inaccordance with the generally accepted auditing practice in India and according to theinformation and explanations given to us, we have neither come across any instance offraud on or by the company noticed or reported during the year nor we have been informedof such case by the management.