Vindhya Telelinks Ltd

VINDHYA TELELINKS LIMITED

1. We have audited the attached Balance Sheet of Vindhya Telelinks Limited ('theCompany') as at March 31, 2012 and also the Statement of Profit and Loss and the cashflow statement for the year ended on that date annexed thereto. These financial statementsare the responsibility of the Company's management. Our responsibility is to express anopinion 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 (as amended) issued bythe Central Government of India in terms of sub-section (4A) of Section 227 of theCompanies Act, 1956, we enclose in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

(i) We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purposes of our audit;

(ii) 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;

(iii) The balance sheet, statement of profit and loss and cash flow statement dealtwith by this report are in agreement with the books of account;

(iv) In our opinion, the balance sheet, statement of profit and loss and 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.

(v) On the basis of the written representations received from the directors, as onMarch 31, 2012, and taken on record by the Board of Directors, we report that none of thedirectors is disqualified as on March 31, 2012 from being appointed as a director in termsof clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(vi) Without qualifying our report, we draw attention to Note No. 33 of the attachedfinancial statements regarding non-provision for the shortfall in the market value of thequoted investments for the stated reason.

(vii) In our opinion and to the best of our information and according to theexplanations given to us, the said accounts give the information required by the CompaniesAct, 1956, in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India;

(a) in the case of the balance sheet, of the state of affairs of the Company as atMarch 31, 2012;

(b) in the case of the statement of profit and loss, of the Loss for the year ended onthat date; and

(c) in the case of cash flow statement, of the cash flows for the year ended on thatdate.

Annexure referred to in paragraph 3 of the Auditors’ report to the shareholders ofVindhya Telelinks Limited for the year ended 31^st March 2012

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

(b) The management has physically verified the fixed assets at the year end, thefrequency of which, in our opinion is adequate.

No material discrepancies were noticed on such verification.

(c) Since there is no substantial disposal of fixed assets during the year, thepreparation of financial statements on a going concern basis is not affected on thisaccount. ii. (a) As explained to us, the inventories comprising of raw material, store& spares, traded goods, work in progress, finished goods and scrap except stock intransit, have been physically verified by the management at reasonable intervals.

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

(c) In our opinion, the Company is maintaining proper records of inventory and nomaterial discrepancies were noticed on physical verification.

iii. (a) The Company has not granted any loans, secured or unsecured to companies,firms or other parties covered in the register required to be maintained under Section 301of the Companies Act,1956.Therefore,the provisions of clause 4 (iii) (b), (c) and (d) ofthe Order are not applicable to Company.

(b) The Company has not taken any loans, secured or unsecured from companies, firms orother parties covered in the register required to be maintained under Section 301 of theCompanies Act, 1956. Therefore, the provisions of clause 4 (iii) (f) and (g) of the Orderare not applicable to Company.

iv. In our opinion and according to the information and explanations given to us, thereare adequate internal control procedures commensurate with the size of the Company and thenature of its business, for the purchase of inventory and fixed assets and for the sale ofgoods and services. During the course of our audit, we have not observed any continuingfailure to correct major weaknesses in internal control system of the company.

v. According to the information given to us, there are no contracts or arrangementsduring the year that need to be entered into a register in pursuance of section 301 of theCompanies Act, 1956. Therefore, the provisions of clause 4 (v) of the Order are notapplicable to the Company.

vi. The Company has not accepted any deposits from the public in terms of sections 58Aand 58AA or any other relevant provisions of the Act and the rules made there under.

vii. A firm of Chartered Accountants has carried out internal audit during the year. Inour opinion, the internal audit system of the Company is commensurate with its size andnature of its business.

viii. We have broadly reviewed the books of accounts maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records underclause (d) of sub-section (1) of section 209 of the Companies Act, 1956 and are of opinionthat prima facie, the prescribed accounts and records have been maintained. We have not,however, made a detailed examination of the records with a view to determine whether theyare accurate and complete.

ix. (a) The Company is regular in depositing the undisputed statutory dues includingemployees’ state insurance, provident fund, investor education and protection fund,income-tax, sales-tax, wealth-tax, service-tax, customs duty, excise duty, cess and othermaterial statutory dues as applicable with the appropriate authorities, though there hasbeen slight delay in a few cases. No undisputed amounts payable in respect thereof wereoutstanding at the year end for a period of more than six months from the date they becamepayable.

(b) There are no amounts in respect of sales-tax, income-tax, customs duty, wealth-tax,service-tax, excise duty and cess that have not been deposited with the appropriateauthorities on account of any dispute.

x. The Company has no accumulated losses at the end of the financial year. Further, theCompany has incurred cash losses during the financial year covered under audit. However,the Company had not incurred cash losses in the year immediately preceding the currentfinancial year.

xi. On the basis of the verification of records and information and explanations givento us, the Company has not defaulted in repayment of dues to banks. The Company did nothave any outstanding debentures and loans from financial institutions during the year.xii. The Company has not granted loans and advances on the basis of security by way ofpledge of shares, debentures and other securities. Accordingly, the provisions of clause4(xii) of the Order are not applicable to the Company.

xiii. The Company does not carry on the business of a chit fund/Nidhi/Mutual BenefitFund. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable to theCompany.

xiv. The Company is not dealing or trading in shares, securities, debentures and otherinvestments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicableto the Company.

xv. According to the information and explanations given to us, the Company has givenCross corporate guarantee to a bank for credit facilities sanctioned to Birla EricssonOptical Limited (a joint venture) amounting to Rs.5,400 lakhs as stated in Note No. 30 (a)(v). In our opinion, the terms and conditions of the guarantee given by the Company, forcredit facilities sanctioned to the joint venture by the bank during the year, are notprejudicial to the interest of the Company.

xvi. The Company did not have any term loan outstanding during the year.

xvii. According to the information and explanations given to us and on an overallexamination of the balance sheet of the Company, we report that funds raised on short-termbasis have not been used for long term investment.

xviii. During the year, the Company has not made any preferential allotment of sharesto parties and companies covered in the Register maintained under section 301 of the Act.

xix. The Company has neither issued nor had any outstanding debenture during the year.xx. Since there were no public issue of securities during the year, verification of theend use of money does not arise.

xxi. Based on the audit procedure performed and the representation obtained from themanagement, we report that no case of fraud on or by the Company has been noticed orreported during the year under audit.