Marg Ltd

TO

THE SHAREHOLDERS OF

MARG Limited

1. We have audited the attached Balance Sheet of M/s MARG LIMITED as on 31st March 2011and the annexed Profit & Loss Account and Cash Flow Statement for the year ended 31stMarch 2011. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financial statementsbased on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted inIndia. These standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatements. Ouraudit 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 subsection (4A) of Section 227 of the CompaniesAct, 1956, we enclose in the annexure hereto a statement on the matters specified inparagraphs 4 and 5 of the said order to the extent they are applicable to this Company.

4. Further to the 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 were necessary for the purpose of our Audit.

b. In our opinion, proper books of accounts as required by law have been kept by theCompany so far as it appears from our examination of the books.

c. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the Books of Accounts of the Company.

d. According to the best of our information and explanations given to us, the BalanceSheet and Profit and Loss Account dealt with by this report are in compliance with theaccounting standards referred to in Section 211(3C) of The Companies Act 1956, in so faras they are applicable to the Company.

e. On the basis of written representations received from the Directors of the companyand taken on record by the Board of Directors, we report that none of the directors aredisqualified as on 31st March 2011 from being appointed as a director U/s 274(1)(g) of theCompanies Act, 1956.

f. In our opinion and to the best of our information and according to the explanationsgiven to us, the accounts read with the notes give the information required by theCompanies Act, 1956 in the manner required and give a true and fair view,

i. in the case of the Balance Sheet, of the State of Affairs of the Company as at 31stMarch 2011;

ii. in the case of Profit and Loss Account of the Profit for the year ended 31st March2011; and

iii. in the case of the Cash Flow Statement, of the Cash Flows for the year ended 31stMarch 2011.

For K RAMKUMAR & CO.,

Reg no:02830S

Chartered Accountants

R M V BALAJI

Partner

Membership no: 27476

Place: Chennai

Date : 29th August 2011

ANNEXURE TO AUDITORS’ REPORT REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATETO THE SHAREHOLDERS OF MARG LIMITED

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

b) The Company has a programme of Physical verification of Fixed assets over a periodof three years which is, in our opinion, reasonable having regard to the size of thecompany and the nature of its assets. In accordance with this programme, certain fixedassets have been physically verified by the management during the year and no seriousdiscrepancies have been noticed on such verification

c) During the year, the company has not disposed off a substantial part of fixedassets.

2. a) As explained to us, physical verification of inventory has been conducted by themanagement, at the end of the year.

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

c) The company is maintaining proper records of inventory and the discrepancies noticedon verification between physical stocks and book stocks were not material.

3. a) The Company has not taken any loan from parties covered in the registermaintained under section 301 of the Companies Act.

b) The Company has granted unsecured loans to 79 Subsidiary companies covered in theregister maintained under section 301 of the Companies Act. The maximum amount involvedduring the year was Rs. 677.39 Crores and the year end balance of loans granted to suchcompanies was Rs. 504.82 Crores.

c) According to the information and explanations given to us, the rate of interest andother terms and conditions of the loans given are not prima facie, prejudicial to theinterest of the company.

d) According to the information and explanations given to us, the principal amount ofthe loan along with interest in respect of loan granted to the Subsidiary Companies,except three subsidiaries, is repayable on call.

The Subsidiaries have made repayments during the year as and when calls were made bythe Company. In respect of three subsidiaries, the loan given by the company issub-ordinated to the secured loans from Banks and Financial Institutions availed by suchsubsidiaries and accordingly the obligation to repay does not arise during the pendency ofsaid secured loans.

4. In our opinion and according to the explanation given to us there is an adequateinternal control procedure commensurate with the size of the company and the nature of itsbusiness, for the purchase of inventory and fixed assets and for the sale of goods &services. During the course of our audit, we have not observed any continuing failure tocorrect major weaknesses in internal control system.

5. a) According to the information and explanations given to us, we are of the opinionthat the transactions that need to be entered into the register maintained under section301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanations given to us thetransaction in pursuance of contracts or arrangements entered in the register maintainedU/s 301 of The Companies Act, 1956 and exceeding the value of rupees five lakhs in respectof any party during the year have been made at rates or value which are reasonable havingregard to the prevailing market rates or values at the relevant time.

6. The Company has not accepted any deposits from the public in terms of provisions ofsections 58A and 58AA and other relevant provisions of the Companies Act, 1956 and theRules framed there under.

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

8. We have been informed that the Central Government has not prescribed the maintenanceof Cost Records under the provisions of Section 209(1)(d) of the Companies Act, 1956.

9. a) According to the records of the Company, apart from certain instances of delays,the company is regular in depositing with appropriate authorities undisputed statutorydues including Provident Fund, Employee’s State Insurance, Income Tax, Wealth Tax,Custom Duty, Cess, Sales Tax, Service Tax, and other material statutory dues applicable toit.

b) According to the information and explanations given to us, no undisputed amountspayable in respect of Income Tax, Wealth Tax, Service Tax, Sales Tax, Customs Duty andcess were in arrears as at 31st March 2011, for a period of more than six months from thedate they became payable.

c) According to the records of the Company and the information and explanation given tous, the dues of Income Tax/Sales Tax/Customs Duty/Cess, which have not been deposited onaccount of any dispute, are as follows:-

Income Tax

Tax Deducted at Source

10. The Company has no accumulated losses and has no cash losses during the financialyear covered by our audit and 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 any financial institutions and banks.

12. The Company has not granted any loans or advances on the basis of security by wayof pledge of shares, debentures and other securities.

13. The Company is not a Chit Fund or a Nidhi / Mutual Benefit Fund / Society.

14. The Company is not dealing in or trading in shares, securities, debentures andother investments.

15. According to the information and explanations given to us, the Company has givenguarantees aggregating to Rs. 2277.16 Crores for loans raised by others from Banks. In ouropinion, the terms and conditions of the guarantees are prima facie not prejudicial to theinterests of the company.

16. In our opinion and according to information and explanations given to us, the termloans have been applied for the purpose for which they were raised.

17. According to the information and explanations and on an overall examination of theBalance Sheet of the Company we report that no funds raised on short-term basis have beenused for Long Term investment.

18. The Company has made preferential allotment of shares to parties and companiescovered in the register maintained U/s 301 of the Act during the year. The price at whichthe shares have been issued is not prejudicial to the interest of the company.

19. During the year, the company has not issued any debentures and therefore thequestion of creating security or charge in respect thereof does not arise.

20. The Company has not made any public issue during the year covered under audit.

21. Based on the audit procedures performed and according to the information andexplanations given to us, we report that no fraud on or by the Company was noticed orreported during the year.

For K RAMKUMAR & CO.,

Reg no:02830S

Chartered Accountants

R M V BALAJI

Partner

Membership no: 27476

Place: Chennai

Date : 29th August 2011