Cambridge Solutions

1.  We have audited the attached Balance Sheet of Cambridge Solutions
 Limited (the Company) as at December 31, 2008 and also the Profit and
 Loss account and the cash flow statement for the nine 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.  Without qualifying our opinion, we draw attention to Note 29 to the
 financial statements. As at December 31, 2008, the Company has net
 receivables (after eliminating payables) from Scandent USA (formerly
 Albion Inc.) and Cambridge Network Europe Limited (formerly Scandent
 Network Europe Limited), its wholly owned subsidiaries, of Rs 973
 million (net of payable of Rs 392 million) and Rs 72 million (net of
 payable of Rs 289 million), respectively. The Company based on the
 future funding plans believes that these dues will be recovered in due
 course.
 
 4.  As required by the Companies (Auditors Report) Order, 2003 (as
 amended) 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.
 
 5.  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 ash
 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 December 31, 2008, and taken on
 record by the Board of Directors, we report that none of the directors
 is disqualified as on December 31, 2008 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 December 31, 2008;
 
 b.  in the case of the profit and loss account, of the profit for the
 nine months period ended on that date; and
 
 c.  in the case of cash flow statement, of the cash flows for the
 period ended on that date.
 
 ANNEXURE REFERRED TO IN PARAGRAPH 4 OF OUR REPORT OF EVEN DATE
 
 Re: Cambridge Solutions Limited (the Company)
 
 i) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 The Company has a regular program of physical verification of fixed
 assets in a phased manner such that all categories of fixed assets are
 physically verified over a period of two years which, in our opinion,
 is reasonable having regard to the size of the Company and the nature
 of its assets. Accordingly, during the period, fixed assets have been
 physically verified by the management and as informed, no material
 discrepancies were identified on such verification.
 
 There was no substantial disposal of fixed assets during the period.
 
 ii) Considering the nature of business of the Company, Clause 4 (ii) of
 the Companies (Auditors Report) Order, 2003 (as amended) pertaining to
 physical verification of inventory and records maintained for inventory
 are not applicable to the Company.
 
 iii) As informed, 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.
 
 As informed, 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, Clause 4 (iii) (b), (c), (d), (f) and (g) of the Companies
 (Auditors Report) Order, 2003 (as amended) are not applicable to the
 Company.
 
 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 fixed assets and sale of services. During the period, the
 Company has made improvements in its internal control system with
 respect to tracking time for billing purposes in its BPO division for
 it to be commensurate with the size of the Company and the nature of
 its business at the period end. During the course of our audit,
 weakness noticed in the internal control system, have been rectified as
 at the Balance Sheet date.
 
 Considering the nature of business of the Company, the Clause 4 (iv) of
 the Companies (Auditors Report) Order, 2003 (as amended) to the extent
 pertaining to internal control system for purchase of inventory and
 sale of goods is not applicable to the Company.
 
 v) According to the information and explanations provided by the
 management, there are no transactions that need to be entered into 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 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) 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, have generally been
 regularly deposited with the appropriate authorities.
 
 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 undisputed statutory dues were outstanding, at the period end,
 for a period of more than six months from the date they became payable.
 
 According to the records of the Company, the dues outstanding of
 income-tax on account of any dispute are as follows:
 
                                                      Amount
 Name of the statute    Nature of dues                (Rs in
                                                      millions)
 
 Income Tax Act, 1961   Transfer pricing adjustment     126.33
                        - Reduction in carry forward
                        of losses
 
 Income Tax Act, 1961   Income tax payable on             3.01
                        Transfer pricing adjustment
 
 Income Tax Act, 1961   Income tax payable on           119.32
                        Transfer pricing adjustment
 
 Period to which the      Forum where dispute is
 amount relates           pending
 
 AY 2003-04               Commissioner of Income-tax
                          (Appeals)
 AY 2004-05               Commissioner of Income-tax
                          (Appeals)
 AY 2005-06               Commissioner of Income-tax
                          (Appeals)
 
 - Net of Rs 2.81 million paid to the Income-tax authorities.
 
 According to the information and explanation give to us, there are no
 dues of sales-tax, wealth tax, service tax, customs duty, excise duty
 and cess which have not been deposited on account of any dispute.
 
 x) The Companys accumulated losses at the end of the financial period
 are less than fifty percent of its net worth. The Company has not
 incurred cash losses during the period. In the immediately preceding
 financial year the Company had incurred cash losses.
 
 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 financial
 institutions and banks. The Company does not have any borrowings by way
 of debentures.
 
 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 Companies (Auditors Report) Order, 2003 (as amended)
 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 Companies (Auditors Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 xv) According to the information and explanations given to us, the
 Company has given guarantee for loans taken by its subsidiary companies
 from banks, the terms and conditions whereof in our opinion are not
 prima-facie prejudicial to the interest of the Company.
 
 xvi) Based on information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained other than for a term loan of Rs 230 million, which has
 been funded to a subsidiary company and as represented by the
 management, utilized for recouping previous capital expenditure
 deployed out of internal accruals at such subsidiary. We are unable to
 verify the end use of the funds at the subsidiary.
 
 xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet and cash flow statement of
 the Company, we report that the Company has used funds raised on short-
 term basis for long- term investment.  The Company has a loan balance
 of Rs 860 million receivable from its subsidiary which was sourced out
 of short-term funds of the Company.
 
 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 money by public issues.
 
 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 course of our audit
 
                                   For S.R. BATLIBOI a ASSOCIATES 
                                            Chartered Accountants
 
                                            per Prashant Singhal
                                                         Partner
 
                                           Membership No.: 93283
 
 Place : Gurgaon, India
 Date  : March 27, 2009