To

The Members of 3i Infotech Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of 3i Infotech Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity 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 31st March, 2015;

(ii) in the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date, and

(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Emphasis of Matter:

Without qualifying, we draw attention to the following:

a) Going Concern and Impairment analysis:

(i) During the financial year 2011-12, the Company undertook restructuring of its debts through CDR cell and also renegotiated with the Foreign Currency Convertible Bond (FCCB) holders with respect to its obligations. Post the debts restructuring, there have been substantial delays in repayment of Principal and payment of Interest in respect of CDR lenders as well as for the interest on the FCCB , which may be construed as Default as per the Master Restructuring Agreement (MRA) and the terms of FCCB. The Company is negotiating with the aforesaid lenders as also with the lease financiers to restructure the debt and is reasonably certain to renegotiate and meet its financial obligations.

(ii) The Company, as per itsAccounting Policy and in accordance with the requirements oftheAccounting Standard (AS) 28 - 'Impairment of Assets' and Accounting Standard (AS) - 13 Accounting for Investments, specified under Section 133 of the Act, has carried out an impairment analysis of its Cash Generating Units / Long term Investments on a going concern basis, with the assistance of an independent expert valuer and accordingly provision for diminution in value of long term investments (subsidiaries) of '350 crores (Previous year Rs Nil) has been made. Besides, the Companyhasprovided for'305.79crores onaccountofdivestmentofstakeinstep down subsidiaries during theyear. Pending negotiations with lenders and restructuring of business, the Company has prepared the financial statements on a going concern basis which is dependent, inter alia, upon the positive outcome of negotiations with lenders, restructuring of business and infusion of funds.

(Refer note no.2.26.1 and 2.26.2 of the standalone financial statements)

b) In respect of justification of carrying deferred tax assets recognized in earlier years of '121.33 crores (Previous year '121.33 crores), the management based on the confirmed order book on hand and relying on the restructuring scheme as mentioned in para (a) (i) above, is confident of having sufficient taxable income in the foreseeable future enabling reversal of the said deferred tax assets.

(Refer note no.2.11 of the standalone financial statements)

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge 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 the Company so far as it appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the

Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements.(Refer note no 2.25.1 of the standalone financial statements).

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses on long-term contracts including derivative contract.

iii. There were no delays in amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

For Lodha & Company
Chartered Accountants
Firm Registration No. 301051E
R.P. Baradiya
Place: Mumbai Partner
Date : 28th May, 2015 Membership No. 44101

ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF 3i INFOTECH LIMITED ON THE STANDALONE FINANCIAL STATEMENTS

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we state that:

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

b) During the year, the Company in accordance to a phased programme has physically verified Furniture & Fixtures, Office equipment, Plant and equipment and Computers at five locations which in our opinion, is reasonable considering the size of the Company and nature of its fixed assets. The discrepancies noticed on such verification have been dealt with in the books of accounts.

2. (a) As explained to us, the inventories (hardware held for rendering services) were physically verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

3. As informed, the Company has not granted/taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 189 of the Act.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items of purchase and sale are of special nature and suitable alternative sources do not exist for obtaining comparable quotations, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of inventories and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control systems.

5. In our opinion and according to the information and explanations given to us, the Company has not accepted any public deposits within the meaning of Section 73 to 76 or any other relevant provisions of the Act and rules framed thereunder.

6. To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under Section 148 (1) of the Act for the services rendered by the Company. Accordingly, paragraph 3(vi) of the Order is not applicable.

7. a) During the year, the Company has been facing liquidity stress due to which there were substantial delays in payment of various statutory dues such as income tax, sales tax, profession tax and service tax. However, as at the close of the year, there were no arrears outstanding for a period of more than six months from the date they become payable except in respect of Tax Deducted at Source of Rs 1.52 lacs.

b) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Service Tax, Custom Duty, Wealth tax, Excise Duty and Cess which have not been deposited on account of any dispute except the following :

Name of Statute Nature of Demand Period to which amount Relates Rs in crores Forum where dispute is pending
MVAT Act, 2002 Sales Tax Financial Year 2005-06, 2006-07, 2009-10 32.77 Sales Tax Officer
UP VAT Act, 2008 Sales Tax Financial Year 2009-10 and 2010-11 0.10 The Assistant Commissioner, Commercial Taxes
AP VAT Act, 2005 Sales Tax Financial Year 2009-10 and 2010-11 0.68 Appellate Deputy Commissioner
Income Tax Act, 1961 Income Tax Assessment Year 2004-05 1.00 Commissioner of Income Tax (Appeals)
Name of Statute Nature of Demand Period to which amount Relates Rs in crores Forum where dispute is pending
Income Tax Act, 1961 Assessment Year 2008-09 5.19 Income Tax Appellate Tribunal
Assessment Year 2007-08 2.83
Assessment Year 2006-07 0.18
Finance Act,1994 Service Tax Financial year 2004-05 to 2009-10, 2011-12, 2012-13 158.99 Commissioner of Service Tax
Financial year 2010-11 19.47 Assistant Commissioner of Service Tax

b) There were no delays in amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

8. The Company's accumulated losses at the end of the financial year have exceeded 50% of its net-worth. It has incurred cash losses in the current year under review and in the immediately preceding financial year.

9. During the year, there have been defaults in repayment of dues to the banks, , financial institutions and debenture holders as per details hereunder:

Particulars

Principal

Interest

Amount (Rs in crores) Delay in months Amount (Rs in crores) Delay in months
Banks 100.59 1-17 123.46 1-12
Finance Lease (Banks) 29.99 1-44 6.72 1-44
Debenture holders- FCCB Nil Nil 14.59 4-8

10. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by others from banks and financial institutions, are not, prima facie prejudicial to the interest of the Company.

11. In our opinion and according to the information and explanations given to us, the term loans were applied for the purposes for which they were obtained.

12. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing standards in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For Lodha & Company
Chartered Accountants
Firm Registration No. 301051E
R.P. Baradiya
Place: Mumbai Partner
Date : 28th May, 2015 Membership No. 44101