Glodyne Technoserve Ltd Auditor Reports

TO THE MEMBERS OF GLODYNE TECHNOSERVE LIMITED

1. We have audited the attached Balance Sheet of GLODYNE TECHNOSERVE LIMITED ("the Company") as at 31st March, 2012 and related Statement of Profit and Loss and Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 as amended by Companies (Auditors Report) (Amendment) Order, 2004 (together the Order) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 (the Act), and on the basis the information and explanations given to us and books and records examined by us in the normal course of audit and to the best of our knowledge and belief we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Without qualifying our opinion, we draw attention to Note 4(e) to the Financial Statements relating to the revision in the amount of Dividend for the F.Y. 2011-12 as originally proposed by the Board of Directors ("the Board") in its meeting held on 25th May 2012 and its subsequent revision in the Board meeting held on 6th December 2012. As a result of such revision in the proposed dividend and consequent impact on provision for tax on proposed dividend, the amount of Short Term Provisions has decreased by Rs. 23,30,00,879/- with a corresponding increase in the amount of Reserves and Surplus. As the said revision has taken place subsequentto the issue of our audit report dated 25th May 2012, based on Standard on Auditing (SA)-560 (Revised) on "Subsequent Events" issued by the Institute of Chartered Accountants of India (ICAI), we have carried out audit procedures necessary in these circumstances and restricted them only to the amendment in the financial statements arising as a result of such revision.

5. Further to our comments in the annexure referred to above, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of the audit;

b) In our opinion, proper books of accounts as required by law have been kept by the company, so far as appears from our examination of the books;

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

d) In our opinion the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act, to the extent applicable;

e) On the basis of written representations received from the directors, as on 31st March 2012, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act; and

f) In our opinion and to the best of our information and according to the explanations given to us read with our comments in paragraph 4 above, the said accounts, read together with the notes thereon, 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, 2012;

ii) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

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

For N M Kapadia & Co

Chartered Accountants

FRN: 107072W

Sd/-

Nilesh M. Kapadia

Partner

Membership No. 033697

Mumbai: 25th May2012

(except as to Note 4(e) referred to in para 4 of our report, which is as of 6th December 2012)

Annexure to the Auditors Report

[Referred to in paragraph (3) of our report of even date to the members of Glodyne Technoserve Limited]

(i) (a) The Company has maintained proper records showing full

particulars, including quantitative details and situation of fixed assets for additions to Fixed Assets, with records in respect of certain acquisitions being under updation.

(b) The Company has a phased programme for verification of all fixed assets over a period of three/four years. In accordance with the programme, fixed assets are verified and any material differences will be adjusted upon reconciliation with the records and documents. However the management does not expect any major discrepancies between the book records and physical inventory.

(c) The fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern assumption.

(ii) (a) As informed to us, the inventories have been physically verified by the Management. In our opinion, the frequency of such verification is reasonable.

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

(c) On the basis of our examination of records of inventory, in our opinion and according to the information and explanations given to us, the Company has maintained proper records of inventory and no material discrepancies were noticed on physical verification of the stocks as compared to the book records.

(iii) (a) The Company has granted unsecured loans to Six parties

covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year was Rs. 26,070.48 Lakhs and the yearend balance of these loans was Rs. 27,242.31 Lakhs.

(b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for the loans mentioned in para (iii) (a) above, are prima facie not prejudicial to the interest of the Company.

(c) Since the loans mentioned in para (iii) (a) above are without any fixed repayment schedule, the question of examining the regularity of repayment of the Principal amount and interest thereon, does not arise.

(d) For the same reasons given in para (iii) (c) above, the question of examining the overdue amount and commenting on the reasonableness of the steps taken by the Company for the recovery of such loans does not arise.

(e) In our opinion and according to the information and explanations given to us, the Company has not taken any loan, secured or unsecured, from Companies, firms or other parties covered in the Register maintained under Section 301 of the Act. As such paragraph 4(iii) (f) and (g) of the Order are not applicable

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for sale of goods and services. Further, on the basis of our examination of books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weakness in the aforesaid internal control system.

(v) (a) In our opinion and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lakhs during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public during the year.

(vii) The Company has appointed a firm of Chartered Accountants to carry out its internal audit function. In our opinion, internal audit system is commensurate with its size and nature of its business.

(viii) According to the information and explanations given to us and to the best of our knowledge, the Central Government has not prescribed maintenance of cost records under clause (d) of subsection (1) of Section 209 of the Act for the products / services of the Company.

(ix) (a) According to the information and explanations given to us and according to the books and records examined by us, in our opinion, the company has been generally regular in depositing with the appropriate authorities undisputed statutory dues relating to Provident fund and Employee State Insurance. However, TDS (Rs. 260.25Lakhs), Dividend Distribution Tax (Rs. 299.44 Lakhs), Service Tax (Rs. 102.82 Lakhs - as estimated by the Management), and Value added Tax (Rs. 46.00 Lakhs) have remained outstanding as at 31st March 2012 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues which have not been deposited on account of any dispute with the Statutory authorities, except Rs. 25.28 Lakhs, Rs. 15.43 Lakhs and Rs. 20.57 Lakhs being disputed Income Tax demands for Assessment Year 200506, 2006-07 and 2007-08 respectively. All these demands being contested by the Company in appeals pending before the Commissioner (Appeals).

(x) The Company neither has accumulated losses as at 31st March 2012 nor has it incurred any cash losses during the current financial year or in the immediately preceding financial year.

(xi) Based on our audit procedures and on the basis of information and explanations given by management, we are of the opinion that the Company has not defaulted in repayment of its dues to any financial institution, bank or debenture holders.

(xii) In our opinion and according to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of share, debentures and other securities.

(xiii) In our opinion and according to the information and explanation given to us, the Company is not a chit fund or a nidhi / mutual benefit fund /society.

(xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other Investments.

(xv) According to the information and explanations given to us, the Company has given Guarantees to banks in respect of loans taken by two of its subsidiaries, as detailed in Note 42 to the financial statements. These guarantees have not been covered by any security. However, as the one of the business activities of companies is to promote the business of these subsidiaries and considering long term involvement of these companies, in our opinion, these guarantees are prima facie not prejudicial to the interest of the Company.

(xvi) In our opinion and according to the information and explanations given to us, the Company has applied the term loans for the purpose for which such loans were obtained.

(xvii) Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, in our opinion, there are no funds raised on a short term basis which have been used for long term investment.

(xviii) During the year under Audit, the Company has issued Equity Shares amounting to Rs. 60 Lakhs on conversion of warrants to one of the Companies covered in the register maintained under section 301 of the Act. Besides, the company has also issued warrants amounting to Rs. 60 Crores to the said party during the year. In our opinion and according to the information and explanations given to us, the price at which the said shares / warrants have been issued is not prejudicial to the interest of the Company.

(xix) As the Company has not issued any debentures, question of commenting on the securities created in respect thereof does not arise.

(xx) The company has not raised any money by public issue during the year. Accordingly clause 4(xx) of the Order is not applicable.

(xxi) During the course of our examination of the books of account and records of the Company carried out in accordance with the generally accepted auditing practices in India, we have not 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 N M Kapadia & Co

Chartered Accountants

FRN: 107072W

Sd/-

Nilesh M. Kapadia

Partner

Membership No. 033697

Mumbai: 25th May2012

(except as to Note 4(e) referred to in para 4 of our report, which is as of 6th December 2012)