1.  We have audited the attached Balance Sheet of Gammon Infrastructure
 Projects Limited (the Company) as at March 31,.2011 and the related
 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 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) 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 purpose of our
 audit;
 
 li) In our opinion, proper books of accounts as required by law have
 been kept by the Company so far as it appears from our examination of
 the books;
 
 lii) The Balance Sheet, Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 accounts;
 
 iv) In our opinion, the Balance Sheet, Profit and Loss Account and the
 Cash Flow statement dealt with by this report comply with the
 accounting standards referred to in sub-section (30 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 require and give a
 true and fairview in conformity with the accounting principles
 generally accepted in India:
 
 (a) in the case of Balance Sheet of the state of affairs of the Company
 as at March 31, 2011;
 
 (b) in the case of Profit and Loss Account of the profit for the year
 ended on that date; and
 
 (c) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Annexure to the Auditors'' Report
 (Referred to in our report of even date)
 Re: Gammon Infrastructure Projects Limited
 
 (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 year and no material discrepancies were identified on such
 verification.
 
 (c) There was no disposal of a substantial part of fixed assets during
 the year.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 lb) 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 as per
 the report of the site auditors provided to us, no material
 discrepancies were noticed on such verification.
 
 (iii) 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 clause
 4(iii)(a] to (d) of the Companies (Auditor''s Report] Order, 2003 (as
 amended) are not applicable to the Company and hence not commented
 upon.
 
 (e) The Company had taken loan from three companies covered in the
 register maintained under section 301 of the Companies Act, 1956. The
 maximum amount involved during the year was Rs. 1/36,200,000 and the
 year-end balance of loans taken from such parties was Rs. 736,200,000.
 
 (f) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions for
 such loans are not prima facie prejudicial to the interest of the
 Company.
 
 (g) The loans taken are re-payable on demand.
 
 (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 rendering of
 services. The activities of the Company do not involve sale of goods.
 During the course of our audit, we have not observed any major weakness
 or continuing failure to correct any major weakness in the internal
 control system of the Company in respect of these areas.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in section 301 of the Companies Act, 1956 that
 need to be entered into the register maintained under section 301 have
 been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five Lakhs have been entered
 into during the financial year at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 Ivi] The Company has not accepted any deposits from the public during
 the year under review, and consequently the directives issued by the
 Reserve Bank of India and the provisions of sections 58A and 58AA of
 the Act and the rules framed there under are not applicable.
 
 (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 Id) of sub-section (1) of section 209 of the Companies Act,
 1956.
 
 (ix) (a) The Company is generally regular in depositing with
 appropriate authorities undisputed statutory dues including provident
 fund, employees'' state insurance, income-tax, sales-tax, wealth-tax,
 service tax and other material statutory dues applicable to it though
 there has been slight de-lay in a few cases.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under section 441 A 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 were outstanding, at the year end, for a
 period of more than six months from the date they became payable.
 
 [c] According to the information and explanations given to us, there
 are no dues of income tax, sales- tax, wealth tax, service tax, customs
 duty, excise duty and cess which have not been deposited on accountof
 any dispute.
 
 (xj The Company has no accumulated losses at the end of the financial
 year 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. The Company did not have any outstanding dues towards any
 bank or debenture holders during the year.
 
 Ixii] 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.
 
 Ixiii) 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 (Auditor''s 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 (Auditor''s Report] Order,
 2003 las 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 the information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained.
 
 (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 funds amounting to f.574,648,385 raised on short term basis in the
 form of unsecured loans have been used for long-term investments.
 
 IxviiilThe 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 Therefore, the provisions of clause
 4-fxviii] of the Companies (Auditor''s Report) Order. 2003 (as amended]
 are not applicable to the Company.
 
 (xix] The Company did not have any outstanding debentures during the
 year. Therefore, the provisions of clause iixix) of the Companies
 (Auditors Report! Order, 2003 las amended) are not applicable to the
 Company.
 
 (xx) We have verified the end use of money raised by public issues as
 disclosed in the note C 3 (b) of schedule 19 to the financial
 statements.
 
 [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 Natvarlal Vepari & Co.                     For S. R. Batliboi & Co.
 
 Firm Registration Number: 106971W    Firm Registration Number : 301003E
 
 Chartered Accountants                             Chartered Accountants
 
 N Jayendran                                              per Hemal Shah
 
 Partner                                                         Partner
 
 M. No. 40441                                               M. No. 42650
 
 Mumbai, Dated : May 19, 2011               Mumbai, Dated : May 19, 2011