1.  We have audited the attached Balance Sheet of Hindustan
 Construction Company Limited, as at 31st March, 2011 and also the
 Profit and Loss Account for the year ended on that date annexed thereto
 and the cash flow statement for the year ended on that date.  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.  We did not audit the financial statements of certain Integrated
 Joint Ventures reflecting Companys share in Loss of Rs. 0.76 crores in
 these financial statements.  These financial statements have been
 audited by other auditors whose reports have been furnished to us, and
 our opinion, in so far as it relates to the amounts included in respect
 of the said audited Joint Ventures, is based solely on the Reports of
 the other auditors. The financial statements of an integrated joint
 ventures reflecting total assets of Rs. 19.61 crores, share in revenue
 of Rs. 19.12 crores and share in loss of Rs. 15.30 crores included in
 these financial statements are unaudited.
 
 4.  Without qualifying our opinion, we draw attention to Note 27 (i)
 and (ii) of Schedule Q regarding the value of investments and loans and
 advances to certain subsidiaries.
 
 5.  As required by the Companies (Auditors Report) Order, 2003 as
 amended by Companies (Auditors Report) (Amendment) Order, 2004 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.
 
 6.  Further to our comments in the Annexure referred to 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
 Companies Act, 1956 to the extent applicable;
 
 (e) On the basis of written representations received from the directors
 / companies, as on 31st March, 2011, and taken on record by the Board
 of Directors we report that none of the directors are disqualified as
 on 31st March 2011 from being appointed as a director in terms of
 clause (g) of sub-section (1) of section 274 of the Companies Act,
 1956.
 
 (f) 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:
 
 (i) In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011;
 
 (ii) In the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 (iii) In the case of Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Annexure to the Auditors Report ANNEXURE TO THE AUDITORS REPORT
 (Referred to in paragraph 4 of our Report of even date on the Accounts
 for the year ended on 31st March, 2011 of Hindustan Construction
 Company Limited)
 
 (i) The Company is maintaining proper records showing full particulars
 including quantitative details and situation of Fixed Assets.
 
 (ii) A substantial portion of the fixed assets have been physically
 verified by the management during the year and in our opinion the
 frequency of such verification is reasonable having regard to the size
 of the Company and the nature of its assets. No material discrepancies
 were noticed on such physical verification.
 
 (iii) Fixed assets disposed off during the year were not substantial.
 According to the information and explanations given to us, we are of
 the opinion that the disposal of fixed assets has not affected the
 going concern status of the Company.
 
 (iv) The inventories have been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 (v) The procedure of physical verification of inventories followed by
 the management is reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 (vi) In our opinion and according to the information and explanation
 given to us, the Company is maintaining proper records of inventory.
 The discrepancies noticed on verification between physical stocks and
 the book records were not material and have been properly dealt with in
 the books of account.
 
 (vii) The Company has not granted unsecured loans and Inter-Corporate
 Deposits to companies covered in the Register maintained under Section
 301 of the Act. Hence the provisions of clause (iii)(b),(c),(d) of
 paragraph 4 are not applicable to the Company.
 
 (viii) The Company has taken unsecured loans in the form of
 inter-corporate deposit from three companies covered in the Register
 maintained under Section 301 of the Companies Act, 1956.  The maximum
 amount involved was Rs. 23.51 crores and the balance at the year end
 was Rs. 2 crores.
 
 (ix) Based on the information and explanations given to us, we are of
 the opinion that the rate of interest and other terms and conditions of
 loans taken from such parties covered in the Register maintained under
 Section 301 are not prima facie prejudicial to the interests of the
 Company.
 
 (x) According to the information and explanations given to us,
 repayments of the principal and interest have been regularly made as
 stipulated.
 
 (xi) 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
 purchase of inventory and fixed assets and for the Work Done. During
 the course of our audit, we have not observed any major weakness in
 internal control system.
 
 (xii) Based on the audit procedures applied by us and 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 Act have been entered in the register required to
 be maintained under that section. The transactions made in pursuance of
 such contracts or arrangements have been made at prices which are
 reasonable having regard to prevailing market prices at the relevant
 time.
 
 (xiii) 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. Therefore, the provisions of Section 58A, 58AA and any
 other relevant provisions of the Companies Act, 1956 and the rules
 framed thereunder with regard to deposits accepted from the public are
 not applicable to the Company.
 
 (xiv) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (xv) The Central Government has not prescribed the maintenance of cost
 records under section 209(1) (d) of the Companies Act, 1956.
 
 (xvi) According to the records of the Company, 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 been generally
 regularly deposited during the year with the appropriate authorities.
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of above were in arrears, as at
 March 31, 2011 for a period of more than six months from the date on
 which they became payable.
 
 (xvii) According to the records of the Company, sales tax, income tax,
 customs duty, wealth tax, service tax, excise duty or cess which have
 not been deposited on account of dispute are given below :
 
 Nature of      Year        Amount      Forum where dispute is
 dues                       (Rs. in     pending
                             Crs)
 
 Income Tax    2008-09      92.65       Commissioner of Income
                                        Tax (Appeals)
 
 Sales Tax/ 
 VAT           1996-97 
               &             1.27       High Courts
               1998-99
 
              1997-98 to      0.53      Taxation Tribunal – Cuttak
              2000-01
 
              2002-03 to     12.20      AC/DC/Add. Commissioners
              2008-09                   & ACTO
 
 Service Tax  2005-06         0.23      Central Excise Appeal/
                                        Service Tax Commissioner
 
              Jan 04 to       2.87      Central Excise and Service
              Mar 06                    Tax Appellate Tribunal
 
 (xviii) The Company does not have any accumulated losses at the end of
 the financial year and has not incurred cash losses during the
 financial year covered by our audit and the immediately preceding
 financial year.
 
 (xix) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to a
 financial institution, bank or debenture holders.
 
 (xx) Based on our examination of the records and the information and
 explanations given to us, the Company has not granted any loans and
 advances on the basis of security by way of pledge of shares,
 debentures and other securities.
 
 (xxi) 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) (Amendment) Order, 2004 are not
 applicable to the Company.
 
 (xxii) 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)
 (Amendment) Order, 2004 are not applicable to the Company.
 
 (xxiii) In our opinion, the terms and conditions on which the Company
 has given guarantees for loans taken by others from banks or financial
 institutions are not prejudicial to the interest of the Company.
 
 (xxiv) In our opinion, the term loans have been applied for the purpose
 for which they were raised.
 
 (xxv) 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.
 
 (xxvi) According to the information and explanations given to us, 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.
 
 (xxvii) The Company has created a security / charge in- respect of
 secured debentures issued and outstanding at the year end.
 
 (xxviii)The Company has not raised any money by way of public issue
 during the year. The monies raised on account of Bonds / GDS issue in
 the previous year have been utilised for the purpose for which it was
 raised.
 
 (xxix) 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 K.S. Aiyar & Co
                                             Chartered Accountants
                                                      FRN: 100186W
 
                                                 Raghuvir M. Aiyar
                                                           Partner
                                               Membership No.38128
 Place: Mumbai
 Date : 29th April, 2011