1.  We have audited the attached Balance Sheet of AGC Networks Limited
 (the Company) as at March 31, 2011 and also the Profit and Loss
 account and the cash flow statement for the six months period 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 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 (as
 amended) (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 referred to above, we
 report that:
 
 i. 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;
 
 ii. 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;
 
 iii. The balance sheet, profit and loss account and cash flow statement
 dealt with by this report are in agreement with the books of account;
 
 iv. In our opinion, the balance sheet, profit and loss account 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
 Companies Act, 1956.
 
 v. On the basis of the written representations received from the
 directors, as on March 31, 2011, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2011 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956.
 
 vi. In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts 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;
 
 a) in the case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 b) in the case of the profit and loss account, of the profit for the
 six months period ended on that date; and
 
 c) in the case of cash flow statement, of the cash flows for the six
 months period ended on that date.
 
 Annexure referred to in paragraph 3 of our report of even date Re: AGC
 Networks Limited (the Company)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) Fixed assets have been physically verified by the management during
 the period and no material discrepancies were identified on such
 verification.
 
 (c) There was no disposal of a substantial part of fixed assets during
 the period.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the period.
 
 (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) According to the information and explanations given to us,
 the Company has not granted any loans, secured or unsecured to
 companies, firms or other parties covered in the register maintained
 under section 301 of the Companies Act, 1956. Accordingly, the
 provisions of clauses 4 (iii) (a) to (d) of the Order are not
 applicable to the Company and hence not commented upon.
 
 (b) According to the information and explanations given to us, 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 Companies Act, 1956. Accordingly, the provisions of the
 clauses 4 (iii) (e) to (g) of the Order are not applicable to the
 Company and hence not commented upon.
 
 (iv) In our opinion and according to the information and explanations
 given 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 for the sale of goods and
 services. During the course of our audit, we have not observed any
 major weakness or continuing failure to correct any major weakness in
 internal control system of the company in respect of these areas.
 
 (v) According to the information and explanations provided by the
 management, in our opinion, there are no contracts or arrangements that
 need to be entered in the register maintained under section 301 of the
 Companies Act, 1956.
 
 (vi) The Company has not accepted any deposits from the public.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) To the best of our knowledge and as explained, the Central
 Government has not prescribed the maintenance of cost records under
 clause (d) of sub-section (1) of section 209 of the Companies Act, 1956
 for the products of the Company.
 
 (ix) (a) The Company is regular in depositing with appropriate
 authorities undisputed statutory dues including provident fund,
 investor education and protection fund, employees state insurance,
 income-tax, sales- tax, wealth-tax, service tax, customs duty, excise
 duty, cess and other material statutory dues applicable to it.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under section 441A of the Companies Act,1956, we
 are not in a position to comment upon the regularity or otherwise of
 the company in depositing the same.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees state insurance, income-tax,
 wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and
 other material statutory dues which were outstanding, at the period
 end, for a period of more than six months from the date they became
 payable.
 
 (c) According to the records of the Company, the dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, custom duty, excise
 duty and cess on account of any dispute, are as follows:
 
 Name of the         Nature of dues             Amount
 statute                                        (Rs. in 000)
 
 The Central Excise  Demands on account          4,310
 Act, 1944           of incorrect duty credit /
                     short payment
 
 Finance Act, 1994   Service tax on RTU          3,518
                     activation and
                     penalty thereon
 
 Finance Act, 1994   Service tax on RTU          7,413
                     activation and
                     penalty thereon
 
 West Bengal Sales   Interest on works             291
 Tax Act, 1994       Contract tax/Sales tax
 
 Kerala Value Added  Differential VAT              727
 Tax Act, 2003       rate demand
 
 
 
 Name of the Statue      Period to which         Forum where the
                         the amount relates     dispute is pending
 
 The Central Excise
 Act, 1944               1991-92 to 1996-97     Customs, Excise &
                                                Service Tax
                                                Appellate Tribunal
 
 
 Finance Act, 1994       2006-07 and 2007-08    Customs, Excise &
                                                Service Tax
                                                Commissioner Appeals
 
 Finance Act, 1994       2004-05 to 2006-07     Commissioner of
                                                Service Tax, Appeals
 
 West Bengal Sales
 Tax Act, 1994           2005-06 and 2006-07    Assistant Commissioner
                                                (Commercial Taxes)
 
 Kerala Value Added
 Tax Act, 2003           2008-09                Deputy Commissioner
                                                of Appeals
 
 (x) The Company has no accumulated losses at the end of the financial
 period and it has not incurred cash losses in the current and
 immediately preceding financial year.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a financial
 institution, bank or debenture holders.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 4(xiii) of the Order are not applicable to the Company.
 
 (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 to the
 Company.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 (xvi) The Company did not have any term loans outstanding during the
 period.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that 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 Companies Act, 1956.
 
 (xix) The Company did not have any outstanding debentures during the
 period.
 
 (xx) The Company has not raised any money by public issues during the
 period.
 
 (xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations given by the management, we report
 that no fraud on or by the Company has been noticed or reported during
 the period.
 
 For S.R. BATLIBOI & ASSOCIATES
 
 Firm registration number: 101049W
 Chartered Accountants
 
 per Shyamsundar Pachisia
 
 Partner
 
 Membership No.: 49237
 
 Place : Mumbai
 Date  :  23 May 2011