1.  We have audited the attached Balance Sheet of Cambridge Solutions
 Limited (the Company) as at December 31, 2010 and the related Profit
 and Loss Account and Cash Flow Statement for the year ended on that
 date annexed thereto, which we have signed under reference to this
 report. 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.  Without qualifying our opinion, we draw attention to Note 3.12 on
 Schedule 18 regarding year end investments of Rs.676,789,412 and loans,
 advances and receivables (net of payables) of Rs.1,989,850,651 due from
 Scadent Group, Inc., USA, a wholly owned subsidiary of the Company,
 whose net worth has been completely eroded. Based on an evaluation in
 the earlier years, the Company is carrying a provision of
 Rs.766,420,288 against the loans, advances and receivables.  However,
 no further provisions have been made in these financial statements for
 reasons stated therein, which, however, are susceptible to inherent
 uncertainties around the performance of the subsidiary in the
 environment in which it operates.  If the subsidiary does not achieve
 its projected financial results or if the Company is unable to
 implement the proposed strategic restructuring plan, the carrying value
 of investments, loans, advances and receivables at the year-end could
 be significantly impacted.
 
 4.  As required by the Companies (Auditors Report) Order, 2003, as
 amended by the Companies (Auditors Report)(Amendment) Order, 2004
 (together the ‘Order), issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 of The Companies Act, 1956 of
 India (the ‘Act) and on the basis of such checks of the books and
 records of the Company as we considered appropriate and according to
 the information and explanations given to us, we give 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 in paragraph 4
 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 Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 (d) 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 Act;
 
 (e) On the basis of written representations received from the
 directors, as on December 31, 2010, and taken on record by the Board of
 Directors, none of the directors is disqualified as on December 31,
 2010 from being appointed as a director in terms of clause (g) of
 sub-section (1) of Section 274 of the Act;
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements, together
 with the notes thereon and attached thereto, give, in the prescribed
 manner, the information required by the Act and also give a true and
 fair view in conformity with the accounting principles generally
 accepted in India:
 
 i.  in case of the Balance Sheet, of the state of affairs of the
 Company as at December 31, 2010; ii.  in case of the Profit and Loss
 Account, of the loss for the year ended on that date; and iii.  in case
 of the Cash Flow Statement, of the cash flows for the year ended on
 that date
 
 [Referred to in paragraph 4 of the Auditors Report of even date to the
 members of Cambridge Solutions Limited on the financial statements for
 the year ended December 31, 2010]
 
 1) a) The Company is maintaining proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b) The fixed assets are physically verified by the Management according
 to a phased programme designed to cover all the items 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. Pursuant to the
 programme, a portion of the fixed assets has been physically verified
 by the management during the year and no material discrepancies between
 the book records and the physical inventory have been noticed.
 
 c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 of by the Company during the year.
 
 2) The Company does not have any inventory and hence sub-clauses (a) to
 (c) of clause (ii) of the Order are not applicable to the Company.
 
 3) a) The Company has not granted any loans, secured or unsecured, to
 companies, firms or other parties listed in the register maintained
 under Section 301 of the Act and accordingly sub- clauses (b), (c) and
 (d) of clause (iii) of the Order are not applicable to the Company.  b)
 The Company has not taken any loans, secured or unsecured, from
 companies, firms or other parties listed in the register maintained
 under Section 301 of the Act and accordingly sub- clauses (f) and (g)
 of clause (iii) of the Order are not applicable to the Company.
 
 4) 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 for the sale of services. Further, on the
 basis of our examination of the books and records of the Company, and
 according to the information and explanations given to us, we have
 neither come across nor have been informed of any continuing failure to
 correct major weaknesses in the aforesaid internal control system.
 
 5) According to the information and explanations given to us, there
 have been no contracts or arrangements referred to in Section 301 of
 the Act during the year to be entered in the register required to be
 maintained under that Section.  Accordingly, the question of commenting
 on transactions made in pursuance of such contracts or arrangements
 does not arise.
 
 6) The Company has not accepted any deposits from the public within the
 meaning of Sections 58A and 58AA of the Act and the rules framed there
 under.
 
 7) In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 8) The Central Government of India has not prescribed the maintenance
 of cost records under clause (d) of sub-section (1) of Section 209 of
 the Act for any of the products of the Company.
 
 9) a) According to the information and explanations given to us and the
 records of the Company examined by us, in our opinion, the Company is
 generally regular in depositing 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, as
 applicable, with the appropriate authorities.  b) According to the
 information and explanations given to us and the records of the Company
 examined by us, the particulars of dues of income-tax, sales-tax,
 wealth tax, service tax, customs duty, excise duty and cess as at
 December 31, 2010, which have not been deposited on account of a
 dispute, are as follows:
 
                               Amount        Period to which the 
 Name of the 
 statute       Nature of dues   (Rs.)            amount relates
 
 Income-tax 
 Act, 1961     Income tax    5,820,828   (*)          2003-04
 
                           119,316,051 (**)           2004-05
 
                            13,741,157 (***)          2005-06
 
                             7,210,807                2006-07
 
 Name of the             Forum where the dispute is
 statue                        pending
 
 Income-tax Act,1961     Commissioner of Income Tax
                        (Appeals), Bangalore
 
                         Income Tax Appellate
                         Tribunal, Bangalore
 
                         Income Tax Dispute Resolution
                         Panel, Bangalore (****)
 
 (*)     Rs.2,801,977 has been deposited under protest by the Company.
 (**)    Rs.30,504,790 has been deposited under protest by the Company.
 (***)   Rs.3,800,000 has been deposited under protest by the Company.
 (****) Filed subsequent to the year end.
 
 10) The Company has no accumulated losses as at December 31, 2010 and
 it has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 11) According to the records of the Company examined by us and the
 information and explanation given to us, the Company has not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holders, as may be applicable, as at the balance sheet date.
 
 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 statute 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) In our opinion and according to the information and explanations
 given to us, the terms and conditions of guarantees given by the
 Company for loans taken by others from banks or financial institutions
 during the year are not prejudicial to the interest of the Company.
 
 16) In our opinion, and according to the information and explanations
 given to us, on an overall basis, the term loans have been applied for
 the purposes for which they were obtained.
 
 17) On the basis of an overall examination of the balance sheet of the
 Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short-term
 basis, which have been used for long-term investment.
 
 18) The Company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Act during the year.
 
 19) The Company has not issued any debentures during the year.
 
 20) The Company has not raised any money by public issues during the
 year. The management has disclosed the end use of monies during the
 year, out of public issue raised in the earlier year [refer Note 3.14
 on Schedule 18] and the same has been verified by us.
 
 21) During the course of our examination of the books and records of
 the Company carried out in accordance with the generally accepted
 auditing practices in India and according to the information and
 explanations given to us, we have neither come across any instance of
 fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by the Management.
 
 For Price Waterhouse & Co.
 
 Firm Registration Number: 007567S
 Chartered Accountants
 
 Shivakumar Hegde
 
 Partner
 
 Membership No.: 204627
 Bangalore
 February 28, 2011