Ansal Properties & Infrastructure

1.  We have audited the attached Balance Sheet of Ansal Properties &
 Infrastructure Limited as at 31st March, 2009, the annexed Profit and
 Loss Account and Cash Flow Statement of the Company for the year ended
 on that date. These financial statements are the responsibility of the
 Companys management. Our responsibility is to express an opinion on
 these financial statements based on ouraudit.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted in India. These standards require that we plan and
 perform the audit to obtain reasonable assurance whether the financial
 statements are free of material mis-statement. 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 issued
 by the Central Government of India in terms of sub-section (4A) of
 section 227 of the Companies Act, 1956, we enclose in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the said
 order to the extent applicable.
 
 4.  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 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 the
 books.
 
 c) The Balance Sheet and Profit & Loss Account dealt with by this
 report are in agreement with the books of account.
 
 d) In our opinion, the Balance Sheet and Profit & Loss account dealt
 with by this report comply with Accounting Standards referred to in
 Section 211 (3C) of the Companies Act, 1956.
 
 e) On the basis of the written representations received from the
 directors, we report that none of the directors is disqualified as on
 31st March, 2009, from being appointed as a director in terms of clause
 (g) of sub-section (1) of Section 274 of the Companies Act, 1956
 
 f) The accounts read with Accounting Policies and other notes in our
 opinion and to the best of our information and according to the
 explanations given to us, give the information required by the
 Companies Act, 1956 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, 2009 and;
 
 ii)
 inthecaseoftheProfitandLossAccount,oftheprofitfortheyearendedonthatdate.
 
 iii) in the case of Cash-Flow Statement, of Cash Flows for the
 yearended on that date.
 
 5.  Without qualifying our report we draw attention to the following:
 
 5.1 Underlying agreements defining terms and conditions of advances
 given and received are not available in the following cases.
 
 a) Note 2(b) relating to advances given to Subsidiary Companies
 amounting to Rs. 10015 lacs.
 
 b) Note 3(b) relating to advances given to Collaborators amounting to
 4281 lacs.
 
 c) Note 4 relating to advances received from Group Companies amounting
 to Rs. 4666.60 lacs.
 
 5.2 Attention is also drawn to Note no. 3(a) regarding net investments
 in two projects under collaboration arrangements amounting to Rs. 4631
 lacs where discussions with the collaborators are in progress in
 connection with the restructuring of ownerships of the two projects and
 Note No.  3(b) relating to advances to collaborators of Rs. 9955 lacs
 (including Rs. 5187 lacs which are more than three years old) and are
 under review for appropriate timing of launch of the concerned
 projects.
 
 
 
 ANNEXURE TO THE AUDITORS REPORT (REFERRED TO IN PARAGRAPH 3 THEREOF)
 
 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:
 
 1.  In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 (b) All fixed assets have not been physically verified by the
 management during the year but there is a regular programme of
 verification in a phased manner which in our opinion is reasonable
 having regard to the size of the Company and the nature of its assets.
 No material discrepancies were noticed on fixed assets verified during
 2007-2008.
 
 (c) In our opinion, the Company has not disposed of a substantial part
 of its fixed assets during the year.
 
 2.  In respect of its inventories
 
 (a) The inventories of building materials, stores and spare parts have
 been verified by the management.
 
 (b) The procedures of physical verification of inventories 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 has maintained proper records of inventories. The
 inventory consisting of flats / shops / houses etc. were physically
 verified during the previous year and inventory of unsold land at two
 projects was verified during the year. Discrepancies noticed on
 physical verification of such inventory as compared to the book records
 were material in a few cases resulting in increase in stock of
 Rs.748.44 lacs.. (Refer Note 10(c)).
 
 3.  (a) The Company has not granted unsecured loans to companies
 covered in the register maintained undersection 301 of the Companies
 Act, 1956.
 
 (b) The Company has taken deposits from one of the parties covered in
 the register maintained under section 301 of the Companies Act, 1956.
 In our opinion the rate of interest and other terms and conditions of
 such deposits are not prima facie, prejudicial to the interest of the
 Company. The maximum amount of deposit during the year was Rs.610 lacs
 and the year end balance was Rs 2 lacs.
 
 (c) In respect of deposits taken, repayment of principal and interest
 has been regular.
 
 4.  There are adequate internal control systems commensurate with the
 size of the Company and the nature of its business, for the purchase of
 inventory, fixed assets and for the sale of services. During the course
 of our audit, no major weakness has been noticed in the internal
 controls in respect of these areas. Owing to the nature of the business
 of the Company it does not sell any goods. Accordingly, clause 4(iv) of
 the Order with respect to sale of goods is not applicable to the
 Company
 
 5.  (a) The particulars of all contracts or arrangements that need to
 be entered in the register maintained under Section 301 of the Act have
 been so entered.
 
 (b) The transactions made in pursuance of contracts or arrangements
 entered into the register maintained under Section 301 of the Companies
 Act, 1956 and exceeding the value of Rs.5,00,000/- in respect of any
 party during the year have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 However, in the case of lease of a plot of land to one of the
 charitable trusts on a lease rental of Rs.5000/- per month for running
 a school in the colony developed by the Company, because of the special
 nature of the transaction it was not feasible to ascertain whetherthe
 transaction has taken place at the prevailing market price.
 
 6.  The Company has complied with the provisions of section 58A, 58AAor
 any other relevant provisions of the Companies Act, 1956 and the
 Companies (Acceptance of Deposits) Rules, 1975 with regard to the
 deposits accepted from the public. In this regard, no order under
 aforesaid sections has been passed by the Company Law Board or National
 Company Law Tribunal or Reserve Bank of India or any Court or any
 otherTribunal on the Company.
 
 7.  In our opinion the Company has an internal audit system which is
 commensurate with its size and nature of its business and steps are
 being taken to further strengthen the system.
 
 8.  The Central Government has not prescribed the maintenance of cost
 records U/s209 (1)(d) of the CompaniesAct,1956foranyoftheproductsofthe
 Company.
 
 9 (a) The Company is generally regular in depositing with appropriate
 authorities undisputed statutory dues relating to Provident Fund,
 Investor Education and Protection Fund, Employees State Insurance,
 Income-Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise
 Duty, Cess and other statutory dues. However, in the case of service
 tax, Tax deducted at source in some of the cases there was delay in
 deposit of these taxes . No undisputed amounts payable in respect of
 these dues were outstanding at the year end for a period of more than
 six months from the date they became payable.
 
 (b) According to the records of the Company examined by us, the
 disputed amounts in respect of income- tax, sales tax, wealth tax,
 service tax/custom duty and excise duty / cess not deposited with the
 appropriate authorities are as follows.
 
 S.No. Name of Statute        Nature of Dues            Amount
                                                       (Rs.in lacs)
 
 (i)   Income Tax             Disallowance of           57.68
                              expenses claimed &
                              miscellaneous
                              matters
 
 (ii)  Income Tax             Disallowance of           65.37
                              expenses claimed &
                              miscellaneous
                              matters
 
 (iii) F.B.T                  Re-computation of          0.49
                              interest
 
 (iv)  Wealth Tax             Re-computation of          0.45
                              deductions as per
                              appeal order
 
 (v)   Wealth Tax             Re-computation of          0.50
                              deductions as per
                              appeal order
 
 (vi)  Wealth Tax             Re-computation of          0.96
                              deductions as per
                              appeal order
 
 (vii) Local Area             Local Area                 8.72
 Development Tax              Development Tax
 (HR)
 
 (viii) Sales Tax (Delhi)     Sales Tax                  4.47
 
 (ix)   Sales Tax (Delhi)     Sales Tax                 39.17
 
 (x)    Sales Tax             Sales Tax                 13.16
 (Haryana)
 
                                      Assessment        Forum where
 S.No. Name of Statute                      Year            pending
 
 
 (i)   Income Tax                        2005-06    Commissioner of
                                               Income Tax (Appeals)
 
 (ii)  Income Tax                        2006-07    Commissioner of
                                               Income Tax (Appeals)
 
 (iii) F.B.T.                           2006-07 Asstt. Commissioner
                                                      of Income Tax
 
 (iv)  Wealth Tax                       1992-93 Asstt. Commissioner
                                                      of Wealth Tax
 
 (v)   Wealth Tax                       1997-98 Deputy Commissioner
                                                      of Wealth Tax
 
 (vi)  Wealth Tax                       2000-01 Deputy Commissioner
                                                      of Wealth Tax
 
 (vii) Local Area                       2003-04 Joint Excise & 
       Development Tax                          Taxation
       (HR)                                     Commissioner
                                               (Appeal) Gurgaon
 
 (viii) Sales Tax (Delhi)             1999-2000  Joint Commissioner
                                               (Appeal) Delhi sales
                                                                tax
 
 (ix)  Sales Tax (Delhi)                2004-05  Addl. Commissioner
                                               (Appeal) Delhi sales
                                                                tax
 
 (x)   Sales Tax                        2005-06  Joint Commissioner
       (Haryana)                                  (Appeal) Gurgaon.
 
 
 10.  The Company does not have any accumulated losses. The Company has
 not incurred cash losses during the financial year covered by our audit
 and in the immediately preceding financial year.
 
 11.  In a few cases the Company had delayed beyond the stipulated
 dates, repayment of dues to banks and financial institutions for which
 necessary approvals for rescheduling of repayments were obtained from
 the lenders before the year end. However, payment of Rs.1 crore due in
 March, 2009 to one of the Banks has been paid subsequent to the close
 of the year. Interest due upto 31st March, 2009 amounting to Rs.1373
 lacs has also been paid subsequent to the close of the year.
 
 12.  The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  The provisions of any special statutes applicable to chit fund/
 nidhi /mutual benefit fund/societies are not applicable to the company.
 
 14.  In our opinion, the company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 15.  The Company has given guarantees for loans taken by others from
 Banks or Financial Institutions. In our opinion the terms and
 conditions of the guarantees in other cases are prima facie not
 prejudicial to the interest of the Company.
 
 16.  In our opinion on an overall basis, the Company has applied term
 loans for the purpose for which the loans are obtained.
 
 17.  On the basis of an overall examination of the Balance Sheet and
 cash flow statement of the Company, in our opinion, there are no funds
 raised on short term basis which have been used for long term
 investments.
 
 18.  The Company has not made any preferential allotment of shares
 during the year to parties and companies covered in the Register
 maintained under section 301 of the Companies Act, 1956.
 
 19.  The Company has created security in respect of debentures issued
 during the year in accordance with the terms of issue of debentures.
 
 20.  The Company has not raised any money by public issue during the
 year. Accordingly provisions of
 clause4(xx)oftheOrderarenotapplicabletotheCompany.
 
 21.  No fraud on or by the Company has been noticed or reported during
 the year.
 
                                                For KHANNA & ANNADHANAM
                                                  Chartered Accountants
 
 Place : New Delhi                                        ( B.J.Singh )
 Dated : 24th June, 2009                                        Partner
                                                 Membership No.: 007884