1.  We have audited the attached Balance Sheet of Cranes Software
 International Limited as at 31st March 2010, the Profit and Loss
 Account and the Cash Flow Statement for the year 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 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.  The attached Balance Sheet as at 31st March, 2010 is drawn on the
 basis of the Principle of Going Concern. We opine as follows in this
 connection :
 
 i) A Principal supplier of the company The Mathworks Inc. has filed a
 petition for Winding up of the company u/s.434 of the Companies Act,
 1956 before the High Court of Karnataka for non-payment of dues.
 
 ii) The Trustees of Foreign Currency Convertible Bond holders due for
 redemption in March, 2011 have served a legal notice on the Company for
 non-payment of interest due on the Bonds from September, 2009 and
 stated that a Petition u/s.434 for winding up of the company would be
 filed in the event of non-payment of interest.
 
 iii) The company has also received several legal notices from creditors
 and employees for non- payment of dues to them.
 
 iv) The security provided to Banks and other lending institutions is
 not adequate to cover the amounts outstanding as appearing in the
 Balance Sheet.
 
 v) The Company has incurred a cash loss of Rs. 220.08 Crore for the
 year under review
 
 vi) There has been a considerable erosion of staff strength for the
 year under review
 
 vii The ability of the company to recover the book debts/trade advances
 representing substantial part of these assets shown in the Balance
 Sheet particularly in the absence of confirmation of balances and any
 tangible evidence for follow up of collection
 
 viii) The company has not carried out the exercise of assessing the
 value of intangible assets appearing in the books with a view to
 provide for any impairment
 
 vix) There are several cases filed u/s.138 of the Negotiable
 Instruments Act against the company
 
 x) Some Banks and lending institutions have applied the DRT for review
 of dues and provisions of SARFAESI have also been invoked against the
 company
 
 In the light of the above, we are unable to give an opinion on the
 reasonableness and applicability of the principle of Going Concern.
 Nevertheless, in the absence of any conclusive evidence to indicate the
 contrary, the statements are prepared based on the principles of Going
 Concern and our opinion is based on the same as well.
 
 4.  Further to the above, we additionally opine as follows :
 
 i) The company has defaulted in discharge of undisputed statutory dues
 like Provident Fund, ESI, VAT, Income Tax, including Tax deducted at
 source and Dividend Tax and Service Tax.
 
 ii) Non provision for the book debts to the extent of Rs.319.84 Crore
 and Rs. 234.44 Crore on account of the advances, which in the auditors
 opinion is doubtful.
 
 iii) Recognition of Deferred Tax asset in respect of the carried
 forward losses to the extent of Rs.102 Crore, in the absence of any
 reasonable certainty of future taxable income
 
 iv) Non payment of dividend declared in the Annual General meeting held
 on 29th September 2009 for the FY ending 31st March 2009.
 
 v) As required by the Companies (Auditors Report) Order, 2003, as
 amended by the Companies (Auditors Report) (Amendment) order, 2004
 issued by 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.
 
 6.  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, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 iv) in our opinion, the Balance Sheet, the Profit and Loss Account and
 the 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 written representations, as on 31st March 2010 and
 taken on record by the Board of Directors, we report that none of the
 Directors is disqualified as on 31st March 2010 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, subject to Para nos ( 3 ) and ( 4 ) above
 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 31st March 2010;
 
 (b) in the case of the Profit and Loss Account, of the loss of the
 Company for the year ended on that date; and
 
 (c) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 ANNEXURE
 
 (Referred to in paragraph 3 of our report of even date)
 
 (i) (a) The Company has generally maintained records showing
 particulars including quantitative details and situation of fixed
 assets. During the year, there have been a large number of movements of
 such Fixed Assets amongst locations; these movements and the
 consequential impact are yet to be comprehensively reflected in the
 above records.
 
 (b) The Fixed Assets have generally been physically verified by the
 management during the year.
 
 (c) The Company has not disposed off substantial part of fixed assets
 during the year and therefore do not affect the going concern
 assumption on this account.
 
 (ii) (a) The inventory has been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, 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 is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 (iii) The Company has not granted/taken any loans, secured or
 unsecured, to/from companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956. In
 view of the above, clause 4 (iii) (b), (c), (d), (f) and (g) of the
 said order are not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business with regard to purchases of inventory, fixed assets and with
 regard to the sale of goods and services. During the course of our
 audit, we have not observed any continuing failure to correct major
 weaknesses in the internal control system.
 
 (v) (a) According to the information and explanations given to us, we
 are of the opinion that the particulars of all contracts and
 arrangements referred to in section 301 of the Companies Act 1956 have
 been entered in the register required to be maintained under that
 section.
 
 (b) In our opinion and according to the information and explanations
 given to us, the contracts and arrangements entered in the register
 maintained under section 301 of the Companies Act, 1956 have been made
 at prices which are reasonable having regard to the prevailing market
 prices at the relevant time.
 
 (vi) The company has not accepted any deposit from the public and as
 such the provisions of clause 4(vi) of the said Order are not
 applicable.
 
 (vii) In our opinion, the company has an in house internal audit system
 which needs to be further streamlined to render it commensurate with
 the size and nature of its business.
 
 (viii) The Central Government has not prescribed the maintenance of
 cost records as required under clause
 
 (d) of sub-section (1) of section 209 of the Companies Act, 1956.
 
 (ix) (a) According to the information and explanations given to us, the
 Company was yet to deposit undisputed statutory dues including,
 Provident Fund, Employees state Insurance, Income Tax, Sales Tax,
 Service Tax, Wealth Tax, Customs duty, and Cess with the appropriate
 authorities.  As of 31st March, 2010, the following amounts were still
 to be deposited out of the total liabilities:
 
                                                      (Rs. in Lakhs)
 
 Name of the Statute           Nature of dues           Amount to be
                                                        Deposited
 
 Employee`s Provident Fund     Provident Fund             265.30
 & Miscellaneous Provisions
 Act
 
 Commercial Taxes Act          Professional Tax             5.70
 
 Employee State Insurance Act       ESI                     0.20
 
 Income Tax Act                     TDS                   453.00
 
 Service Tax Act               Service Tax                 274.2
 
 Sales Tax                     Value Added Tax             16.50
 
 Income Tax Act                Self Assessment Tax        607.90
 
 Wealth Tax Act                   Wealth Tax                0.80
 
 (b)According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident fund, Employees
 State Insurance, Income Tax, Wealth Tax, Service Tax, Customs Duty,
 Sales Tax and Cess were in arrears as at 31st March 2010 for a period
 of more than six months from the date they became payable except in the
 below case which is still due for payment:
 
                                                      (Rs. in Lakhs)
 
 Name of the Statute     Nature of dues     Amount Due  For the Period
 
 Income Tax Act      Corporate Dividend Tax  233.85     F Year 2007-08
                                              40.03     F Year 2008-09
 
 (c) According to the information and explanations given to us, there
 are no dues of Sales tax, Service tax, Income tax, Customs duty, Wealth
 Tax, and Cess, which have not been deposited on account of any dispute
 except in the below said cases:
 
                                                       (Rs. in Lakhs)
 
 Name of the   Nature of  Disputed   Assessment  Forum where dispute is
 Statute       dues       Amount       Year            pending
 
 Income Tax 
 Act,          Income     3849.18    2003-2004   Commissioner of Income 
                                                 Tax,
 1961           Tax                 to 2007-08   Appeals -VI
 
 Sales Tax 
 Act,          Sales       104.1     2005-06 to  Commissioner of 
                                                 Commercial
 1956          Tax                    2007-08    Taxes, Appeals
 
 Service Tax 
 Act,          Service     523.34    2004-05 to  Customs, Exicise and 
                                                 Service
 1994          Tax                   2007-08     Tax Appelate Tribunal
 
 (x) The Company does not have any accumulated losses, as at March 31,
 2010. The Company has incurred cash losses of Rs.220crores in the
 financial year ended on that date and there are no cash losses in the
 immediate preceding financial year.
 
 (xi) There are defaults in repayment of dues to some financial
 institution and banks although there are no dues to debenture holders
 as at the balance sheet date.
 
 (xii) According to information and explanations given 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 and according to the information and explanation
 given to us, the Company is not a chit fund or a Nidhi /mutual benefit
 fund/ society.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the Company is not dealing in or trading in shares,
 securities, debentures and other investments.
 
 (xv) In our opinion and according to information and explanations given
 to us, and as per our examination of relevant records, the terms and
 conditions on which guarantees are given are not prejudicial to the
 interest of the Company.
 
 (xvi) In our opinion and according to the information and explanations
 given to us, a categorical examination of the application of financing
 received by the Company compared to the purposes as stipulated in the
 terms of the sanction has not been possible.
 
 (xvii) According to the information and explanations given to us during
 this audit, we have not come across situations of funds raised on
 short-term basis being used for long-term investment.
 
 (xviii) During the year the Company has not made any preferential
 allotment of shares to parties and companies covered in the register
 maintained under section 301 of the Companies Act, 1956.
 
 (xix) During the period, the Company has not raised any funds by issue
 of debentures.
 
 (xx) The end use of money raised by preferential issue and Foreign
 Currency Convertible bonds is disclosed in the Notes on Accounts to the
 financial statement. We have verified the same, based on the
 information and explanation given to us.
 
 (xxi) During the course of our examination of the books of accounts
 carried out in accordance with the generally accepted auditing
 practices in India and according to the information and explanations
 given to us, no fraud on or by the Company, has been noticed or
 reported during the course of our audit.
 
                                         for S.JANARDHAN & ASSOCIATES
 
                                         Chartered Accountants
 
                                         FRN : 005310S
 
                                         Balakrishna S. Bhat
 Bangalore                               Partner
 
 September 30, 2010                      Membership No.202976