Aftek

1.  We have audited the attached Balance Sheet of Aftek Limited, (the
 Company) as at March 31, 2008, and also the Profit and Loss Account
 and the Cash Flow Statement for the year ended on that date annexed
 thereto (collectively referred as the financial statements). 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 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 (the
 Order) (as amended), issued by the Central Government of India in
 terms of sub-section (4A) of section 227 of the Companies Act, 1956
 (the Act), we enclose in the Annexure a statement on the matters
 specified in paragraphs 4 and 5 of the Order.
 
 4.  We report that:
 
 a.. Management has not considered any provision in respect of old
 outstanding loans and advances aggregating (Rs.000) 138,139 for the
 reasons explained by them in Note B.14 of Schedule P, Notes to the
 financial statements, which in our opinion, are doubtful of recovery.
 Consequently, loans and advances and profit before tax are overstated
 by (Rs.000) 138,139;
 
 b.  Management has not considered any provision in respect of
 investments of (Rs.000) 1,002,092 and loans of (Rs.000) 292,853 given
 to Arexara Information Technologies Gmbh (Arexara Gmbh), a wholly owned
 subsidiary whose accumulated losses substantially exceed its paid up
 capital for the reasons explained by them in Note B.15 of Schedule P,
 Notes to the financial statements. The impact of non provision of
 diminution other than temporary in investments and doubtful loans and
 advances is presently not ascertainable;
 
 c.  As stated in the Note B.16 of Schedule P, Notes to the financial
 statements, during the year, the Company has entered into transactions
 for sale of rights and services with, and loan to private company in
 which some of the directors of the Company are interested. In respect
 of the transactions for sale and loan given, the company has not
 complied with the provisions of section 297 and 295 of the Act,
 respectively.
 
 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 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 appears from our examination of those
 books;
 
 c) The financial statements dealt with by this report are in agreement
 with the books of account;
 
 d) On the basis of written representations received from the directors,
 as on March 31, 2008 and taken on record by the Board of Directors, we
 report that none of the directors is disqualified as on March 31, 2008
 from being appointed as a director in terms of clause (g) of
 sub-section (1) of section 274 of the Act;
 
 e) In our opinion and to the best of our information and according to
 the explanations given to us, subject to our comments in paragraph 4
 above, the financial statements dealt with by this report comply with
 the accounting standards referred to in sub-section (3C) of section 211
 of the Act and the Rules framed there under and 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, in the case of:
 
 (i) the Balance Sheet, of the state of affairs of the Company as at
 March 31, 2008;
 
 (ii) the Profit and Loss Account, of the profit for the year ended on
 that date; and
 
 (iii) the Cash Flow Statement, of the cash flows for the year ended on
 that date.
 
 ANNEXURE TO THE AUDITORS REPORT OF EVEN DATE TO THE MEMBERS OF AFTEK
 LIMITED, ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31,2008
 
 Based on the audit procedures performed for the purpose of reporting a
 true and fair view on the financial statements of the Company and
 taking into consideration the information and explanations given to us
 and the books of account and other records examined by us in the normal
 course of audit, we report that:
 
 (i) (a) The Company maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets except for
 one location, where the records are maintained for a group of similar
 assets and not for each individual asset.
 
 (b) The Company has a regular programme of physical verification of its
 fixed assets by which fixed assets are verified in a phased manner over
 a period of three years. In our opinion, this periodicity of physical
 verification is reasonable having regard to the size of the Company and
 the nature of its assets. No material discrepancies were noticed on
 such verification.
 
 (c) In our opinion, a substantial part of fixed assets has not been
 disposed off during the year.
 
 (ii) (a) The inventory has been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 (b) The procedures of physical verification of inventory followed by
 the management are reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 (c) The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) (a) The Company has granted an unsecured loan to a party covered
 under section 301 of the Act. The maximum amount outstanding during the
 year was (Rs.000) 8,750 and the year end balance was (Rs.000) 8,700.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 of such loans are not, prima facie, prejudicial to the interest of the
 Company.
 
 (c) The loans granted are repayable on demand. As informed, the Company
 has not demanded repayment of any such loan during the year, thus there
 has been no default on the part of the parties to whom the money has
 been lent. The payment of interest has not been regular.
 
 (d) There is no amount overdue in respect of loans granted to
 companies, firms or other parties listed in the register maintained
 under section 301 of the Act.
 
 (e) The Company has not taken any loans, secured or unsecured from
 companies, firms or other parties covered in the register maintained
 under section 301 of the Act. Accordingly, the provisions of clauses
 4(iii)(f) and 4(iii)(g) of the Order are not applicable.
 
 (iv) In our opinion, there is an adequate internal control system
 commensurate with the size of the Company and the nature of its
 business for the purchase of inventory and fixed assets and for sale of
 goods. However, the internal control system for sales of services needs
 to be strengthened with respect to process of authorization.  Further,
 we have not come across any continuing failure to correct major
 weaknesses in the aforesaid internal control system.
 
 (v) (a) According to the information and explanation given to us, we
 are of the opinion that the company has entered all the transactions
 required to be entered in the register maintained under section 301 of
 the Companies Act, 1956 except for transaction as explained in note
 B.16 of schedule P to the financial statement.  (b) Owing to the unique
 and specialized nature of the items involved and in the absence of any
 comparable prices, we are unable to comment as to whether the
 transactions made in pursuance of such contracts or arrangements have
 been made at prevailing market prices at the relevant time.
 
 (vi) In our opinion, the Company has not accepted any deposits from the
 public within the meaning of sections 58A and 58AA of the Act and the
 Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the
 provisions of clause 4(vi) of the Order are not applicable.
 
 (vii) In our opinion, the Company does not have an internal audit
 system commensurate with its size and the nature of its business.
 
 (viii) To the best of our knowledge and belief, the Central Government
 has not prescribed maintenance of cost records under clause (d) of
 sub-section (1) of section 209 of the Act, in respect of the services
 rendered by the Company or in respect of Companys products.
 Accordingly, the provisions of clause 4(viii) of the Order are not
 applicable.
 
 (ix) (a) Undisputed statutory dues including investor education and
 protection fund, employees state insurance, sales-tax, wealth-tax,
 service-tax, custom duty, excise duty, cess and other material
 statutory dues, as applicable, have been regularly deposited with the
 appropriate authorities. In respect of provident fund and income-tax
 there have been significant delays in one location. Undisputed amounts
 payable in respect of above mentioned taxes which were outstanding, at
 the year end for a period of more than six months from the date they
 became payable are as follows:
 
 Name of           Nature of                 Amount
 the statute       the dues                (Rs.000)
 
 Income-tax        Tax deducted
 Act, 1961         at Source-Salary
 Salary                                       1,066
                                                679
 
 Provident         Employers and
 Fund              Employees
                   Contribution to              667
                   Provident                    399
                   Fund
 
 Period to                Due Date            Date of
 which the                                    Payment
 amount relates
 
 July 2007          August 7, 2007       July 24,2008
 August 2007     September 7, 2007
 
 July 2007         August 15, 2007       May 22, 2008
 August 2007    September 15, 2007
 
 
 (b) The dues outstanding in respect of sales-tax, income-tax, custom
 duty, wealth-tax, excise duty, cess on account of any dispute, are as
 follows:
 
 Name of the statute              Nature of dues     Amount (Rs.000)
 
 The Service Tax Act, 1994           Service tax               4,667
 
 Period to which the          Forum where dispute is
 amount relates                              pending
 
 2007-08                             Commissioner of
                                         Service Tax
 
 (x) In our opinion, the Company has no accumulated losses at the end of
 the financial year and it has not incurred cash losses in the current
 and the immediately preceding financial year.
 
 (xi) In our opinion, the Company has not defaulted in repayment of dues
 to a financial institution or a bank or debenture holders during the
 year.
 
 (xii) In our opinion, the Company has not granted any loans and
 advances on the basis of security by way of pledge of shares,
 debentures and other securities. Accordingly, the provisions of clause
 4(xii) of the Order are not applicable.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi/
 mutual benefit fund/ society. Accordingly, the
 provisions of clause 4(xiii) of the Order are not applicable.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Order are not applicable.
 
 (xv) During the year, the Company has provided a corporate guarantee of
 (Rs.000) 30,000 to a bank for loan availed by its subsidiary which are
 not considered, prima facie, prejudicial to the interest of the
 company.
 
 (xvi) In our opinion, the term loans were applied for the purpose for
 which the loans were obtained, though idle/ surplus funds which were
 not required for immediate utilization have been gainfully invested in
 liquid investments, payable on demand.
 
 (xvii) In our opinion, no funds raised on short-term basis have been
 used for long-term investment.  (xviii) The Company has not made any
 preferential allotment of shares to parties or companies covered in the
 register maintained under section 301 of the Act. Accordingly, the
 provisions of clause 4(xviii) of the Order are not applicable.
 
 (xix) The Company has neither issued nor had any outstanding debentures
 during the year. Accordingly, the provisions of clause 4(xix) of the
 Order are not applicable.
 
 (xx) The Company has not raised any money by public issues during the
 year. Accordingly, the provisions of clause 4(xx) of the Order are not
 applicable.
 
 (xxi) No fraud on or by the Company has been noticed or reported during
 the year covered by our audit.
 
                                             For Walker, Chandiok & Co
                                                 Chartered Accountants
 
                                              per Khushroo B. Panthaky
                                                               Partner
                                                Membership No. F-42423
 
 Place: Mumbai
 Date : September 30, 2008