1.  We have audited the attached Balance Sheet of ARSS Infrastructure
 Projects Limited, as at 31st March, 2011 the Profit and Loss Account
 and also the Cash flow statement for the year ended on that date
 annexed thereto. These financial statements are the responsibility of
 the Company''s Management. Our responsibility is to express an opinion
 on these financial statements based on our audit.
 
 2.  We conducted our audit in accordance with 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 (Auditor''s Report) Order, 2003 as
 amended by the Companies (Auditors'' Report) (Amendment) Order,
 2004(hereinafter referred to as the order) 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.
 
 4.  Further to our comments in the Annexure I referred to in paragraph
 3 above, we report that:
 
 4.1 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.
 
 4.2 Profit from HCIL-Adhikaria- ARSSPL JV has been considered on the
 basis of Provisional Accounts as on 31.03.2011 and also for earlier
 years instead of audited accounts, which is not in accordance with
 Accounting Standard – 27, Financial Reporting of Interest in Joint
 Ventures issued by The Institute of Chartered Accountants of India.
 
 4.3 In our opinion, the Company has kept proper books of accounts as
 required by law so far as appears from our examination of those books.
 
 4.4 The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report, are in agreement with the books of account.
 
 4.5 In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement have been drawn up in accordance with Accounting
 Standards (AS) referred to in Sub- section (3C) of Section 211 of the
 Companies Act, 1956 except as stated in Para – 4.2 above.
 
 4.6 According to the information and explanations provided to us and on
 the basis of written representations received from the company, we
 report that none of the Directors are disqualified as on 31.03.2011
 from being appointed as a director in terms of clause (g), sub section
 (i) of section 274 of the Companies Act, 1956.
 
 4.7 In our opinion and to the best of our information and according to
 the explanations provided to us, the said accounts, subject to the
 observations in para 4.2 above regarding consideration of provisional
 profit and investment in one of the Joint Venture, 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 Balance Sheet of the state of affairs of company as
 at 31st March, 2011.
 
 ii. In the case of Profit and Loss Account of the Profit of the Company
 for the year ended on that date and.
 
 iii. In the case of Cash Flow Statement of the Cash Flows for the year
 ended on that date.
 
 ANNEXURE TO AUDITOR''S REPORT (Referred to in Para 1 of the said report
 of even date)
 
 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) According to the information and explanations provided to us, all
 the fixed assets have been physically verified by the management in a
 phased periodical 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 such physical verification.
 
 c) In our opinion the Company has not disposed off a substantial part
 of its fixed assets during the year and hence the status of the Company
 as a going concern is not affected.
 
 2.  In respect of its Inventories
 
 a) As explained to us, inventories have been physically verified by the
 management during the year. In our opinion, the frequency of
 verification is reasonable having regard to the size of the company and
 nature of its business.
 
 b) According to the information and explanation provided to us the
 procedure of physical verification of inventories followed by the
 management in our opinion 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 , we are of the opinion that the
 company is maintaining proper records of inventory.  The discrepancies
 noticed on verification between the physical stocks and the book
 records were not material and have been properly dealt with in the
 books of account.
 
 3.  a) According to the information and explanations provided to us,
 the company has granted loan to two parties covered in the register
 maintained under section 301 of the Act. The maximum amount involved
 during the year was Rs. 84.20 lacs and the balance at the end of the
 year is Rs. 9.20 lacs.
 
 b) In our opinion and according to the information and explanations
 provided to us, the aforesaid loan is interest free and other terms and
 conditions of the loan taken by the parties, were not prima facie
 prejudicial to the interest of the company.
 
 c) The said interest free loan is repayable on demand and there is no
 repayment schedule.
 
 d) The company had taken loan from one party covered in the register
 maintained U/s 301 of the Act. The maximum amount involved during the
 year is Rs. 120.00 lacs and the balance at the end of the year was NIL.
 
 e) In our opinion and according to the information and explanations
 provided to us, the aforesaid loan is interest free and other terms and
 conditions of the loan taken by the company , were not prima facie
 prejudicial to the interest of the company.
 
 f) The company has repaid the loan during the year as stipulated in the
 terms and conditions of the loan.
 
 4.  In our opinion and according to the information and explanations
 provided to us, 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 also for
 sale of goods and services. During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses in internal
 control system.
 
 5.  According to the information & explanation provided to us, we are
 of the opinion that the particulars of the contracts or arrangements
 that need to be entered in the register maintained U/s. 301 of the
 Companies Act, 1956 have been so entered.
 
 6.  In our opinion and according to the information and explanations
 provided to us, each such transaction have been made at prices which
 are reasonable having regard to the prevailing market price at the
 relevant time.
 
 7.  In our opinion and according to the information and explanations
 provided to us, the Company has not accepted any deposit from public
 within the meaning of section 58A and 58AA or any other provisions of
 the Act and rules framed there under.
 
 8.  In our opinion and according to the information and explanations
 provided to us, the company has an internal audit system commensurate
 with the size of company and the nature of its business.
 
 9.  According to the information and explanations provided to us , the
 Central Government has not prescribed the maintenance of cost records
 under section 209(1) (d) of the Companies Act, 1956 for any of the
 products of the Company.
 
 10.  According to the information and explanations provided to us the
 company is generally regular in deposit of undisputed statutory dues
 including Provident Fund, Employees State Insurance, Income Tax, VAT
 and Service Tax.
 
 11.  According to the information and explanation provided to us, in
 our opinion , no undisputed amount payable in respect of the aforesaid
 dues were outstanding as at 31st March,2011 for a period of more than
 six months from the date they became payable.
 
 12.  According to the information & explanation provided to us and on
 basis of the records of the company examined by us, the particulars of
 sales tax, income tax and entry tax as at 31st March, 2011 which have
 not been deposited on account of pending disputes are as under.
 
                                                     (Rs. in lacs)
 
 Forum where disputes are Pending Period to which the 
                                  dispute relates.          Amount of 
                                                               demand
 
 1.  Orissa Sales Tax Act.
 
 Appellate Tribunal                2000-01 & 2004-05           52.11
 
 Commissioner of Commercial Taxes  2000-01 to 2002-03          31.86
 
 2.  Orissa VAT Act
 
 Commissioner of Commercial Taxes  2004-05 to 2006-07          14.51
 
 Joint Commissioner of Commercial 
 Taxes                             2004-05 to 2006-07           7.79
 
 3.  Orissa Entry Tax Act
 
 Joint Commissioner of Commercial 
 Taxes                             2004-05 to 2006-07          24.59
 
 Commissioner of Commercial Taxes  2004-05 to 2006-07           9.83
 
 4.  Central sales Tax Act
 
 Commissioner of Commercial Taxes  2008-09                    791.10
 
 5.  Income Tax Act, 1961
 
 CIT(Appeal)                       A.Y. 2006-07 to 
                                   A.Y. 2007-08               151.07
 
 13 The company does not have accumulated losses at the end of the
 financial year and has not incurred cash losses during the financial
 year covered by our audit and in the immediately preceding financial
 year.
 
 14.  In our opinion and based on the information and explanations
 provided to us the company has not defaulted in repayment of dues to
 financial institutions or banks.
 
 15.  According to the information and explanations provided to us, the
 company has not granted any loans or advances on the basis of security
 by way of pledge of shares, debentures or other securities.
 
 16.  In our opinion, the company is not a chit fund or nidhi/mutual
 benefit fund/society. Therefore, the provisions of clause (xiii) of
 paragraph 4 of the Order are not applicable to the Company.
 
 17.  As explained to us and on the basis of information provided to us,
 the company is not dealing in shares, securities, debentures and other
 investments. Accordingly, the provisions of clause (xiv) of paragraph 4
 of the order are not applicable to the Company.
 
 18.  In our opinion and according to the information and explanations
 provided to us , the terms and conditions of guarantees given by the
 company for loans taken by others from banks are not prima facie
 prejudicial to the interest of the company.
 
 19.  In our opinion and according to the information and explanations
 provided to us, the term loans have been applied for the purpose for
 which they were obtained.
 
 20.  According to the information and explanations provided to us and
 on an overall examination of the books of accounts of the company, we
 are of the opinion that no funds raised on short-term basis have been
 utilised for long term investment.
 
 21.  According to the information and explanations provided to us,
 during the year, the company has not made any preferential allotments
 of shares to parties covered in the register maintained under section
 301 of the Act.
 
 22.  During the period covered by our audit report, the Company has not
 issued any debentures.
 
 23.  The Company has not raised any monies by way of public issues
 during the year.
 
 24.  To the best of our knowledge and belief and according to the
 information and explanation provided to us, no material fraud on or by
 the company has been noticed or reported during the course of our
 audit.
 
 
                                               For P. A. & Associates
 
                                                Chartered Accountants
 
                                               Firm Regn. No. 313085E
 
                                                     (CA P. S. Panda)
 
 Bhubaneswar                                                 Partner
 
 The 11th day of May, 2011                              M. No. 51092