Tulip Telecom Ltd

NEW DELHI.

We have audited the attached Balance Sheet of M/S TULIP TELECOM LIMITED as at31st March 2010 the Profit & Loss Account and also the Cash Flow statement on the dateannexed thereto. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financial statementsbased on our audit.

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.

1. As required by the Companies (Auditors Report ) Order 2003 as amended by TheCompanies (Auditors Report) (Amendment) Order, 2004 issued by Central Government of theIndia in terms of section 227(4A) of the Companies Act 1956, and on the basis of suchchecks as we considered appropriate and according to information and explanation given tous and books and records examined by us in the normal course of audit, we annex hereto astatement on the matters specified in paragraph 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we reportthat:

a) We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose 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 books of account of the Company.

c) The Balance Sheet, Profit & Loss Account and Cash Flow statement dealt with thereport are in agreement with the books of account of the company.

d) In our opinion the Balance Sheet, Profit & Loss account and Cash Flow statementcomplies with the Mandatory Accounting Standards referred to in Section 211(3C) of theCompanies Act, 1956.

e) On the basis of written representation received from the directors, as on 31^stMarch, 2010 and taken on record by the Board of Directors, we report that no director isdisqualified from being appointed as a director of the company, as on 31^stMarch, 2010, under clause (g) of sub-section (1) 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 read with the notes thereon, give the information requiredby the Companies Act 1956 in the manner so required and give a true and fair view inconformity 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 31stmarch, 2010

ii) In the case of the Profit & Loss Account, of the Profit of the company for theyear ended on that date and

iii) In the case of Cash Flow Statement, for the cash flow of the company for yearended as on that date.

Annexure referred to in paragraph 1 of our report of even date to the member of M/sTulip Telecom limited on the accounts for the year ended March 31, 2010.

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

b) The Fixed Assets have been physically verified by the management during the year,which in our opinion is reasonable having regard to the size of the company and the natureof its assets. No material discrepancies were noticed on physical verification.

c) There was no substantial disposal of fixed assets during the year.

2. a) As informed to us by management, physical verification of inventory has beenconducted at reasonable intervals during the year.

b) The procedures followed by the management for physical verification of inventory arereasonable and adequate in relation to the size of the company and the nature of itsbusiness.

c) On the basis of our examination of records of inventory, the company is maintainingproper records of inventory.

We are informed that there were no material discrepancies on physical verification.

3. i) The company has not granted but has taken loans, secured or unsecured fromcompanies, firms or other parties covered in the register maintained under section 301 ofAct.

ii) Clause 3 (b), 3 (c) & 3 (d) of the order are not applicable.

4. In our opinion and according to the information and explanations given to us, thereis an adequate internal control procedure commensurate with the size of the company andthe nature of its business, for the purchase of inventory and fixed assets and for thesales of goods.

5. a) In our opinion and according to the information and explanations given to us thetransactions that need to be entered in to the register maintained under section 301 ofthe companies Act, 1956, have been so entered.

b) In our opinion and according to the information and explanation given to us, thetransactions made in pursuance of contracts or arrangement entered into the registermaintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs.Five Lakhs in respect of any party during the year have been made at prices , which arereasonable having regard to prevailing market price at relevant time.

6. The company has not accepted deposits from the public, hence the directives issuedby the Reserve Bank of India and the provisions of section 58A & 58AA of the Act arenot applicable.

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

8. The company has maintained the accounts and records as prescribed by the CentralGovernment under section 209(1) (d) of the Companies Act, 1956. We have not, however madea detailed examination of the records with a view to determine whether they are accurateor complete.

9. a) The company is generally regular in depositing undisputed statutory dues whichare applicable to the company including Provident Fund, Employee’s State Insurance,Income Tax, FBT, Sales Tax, Custom Duty , Excise Duty, Cess, Service Tax, TDS and anyother statutory dues with the appropriate authorities.

b) According to the information and explanation given to us, the following are thedisputed amount of Statutory dues outstanding as on 31st March, 2010 for a periodexceeding six months:-

10. This clause of accumulated losses is not applicable.

11. In our opinion and according to the information and explanation given to us, theCompany has not defaulted in repayment of dues to financial institutions, banks ordebenture holders as at the balance sheet date.

12. The company has not granted loan & advance on the basis of security by way ofpledge of shares, debentures & other securities; hence this point of order is notapplicable.

13. The provision of any special statute applicable to chit fund are not applicable tothis company.

14. The company is not dealing in or trading in shares, securities, debenture &other investments.

15. The company has given corporate guarantee to M/s Axis Trustee Services Ltd. actingas Debenture Trustee for Non Convertible Debentures issued by M/s Beeta Infocom Pvt. Ltd.,New Delhi. The responsibily of Tulip arises, only when, cash position of Beeta is notsufficient to meet its obligation with respect to this loan. The company has givencorporate guarantee to M/s Cisco Systems Capital India Pvt. Ltd. for loan taken by itswholly owned subsidiary, M/s Tulip SWAN IT Services Ltd. The terms and conditions of suchguarantee are not prejudicial to the interest of the company.

16. In our opinion and according to the information and explanation given to us, theterm loans were applied for the purpose for which obtained.

17. Based on the information and explanations given to us on an overall examination ofthe balance sheet of the company, in our opinion , there are no funds raised on short termbasis which have been used for long term investment and vice versa.

18. According to the information and explanation given to us the company has not madepreferential allotment of shares to parties and Companies covered in the registermaintained under section 301 of the Act.

19. During the year company has issued Secured Non-convertible Debentures. The companyis taking necessary steps to create the security

20. The company has not raised any money by way of public issues during the year.

21. According to the information and explanation given to us and to the best of ourknowledge and belief, no fraud on or by the company has been noticed or reported duringthe course of our audit.