India Infoline

We have audited the attached Balance Sheet of India Infoline Limited as
 at 31st March 2009, and Profit and Loss account and also 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.
 
 We have 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.
 
 In accordance with the provisions of Section 227 of the Companies Act,
 1956, we report that:
 
 1.  As required by the Companies (Auditor’s Report) Order, 2003, issued
 by the Central Government of India under sub-section (4A) of section
 227 of the companies Act, 1956, 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 explanation given to us, we enclose in
 the Annexure a statement on the matters specified in paragraphs 4 and 5
 of the said Order.
 
 2.  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;
 
 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 the
 books;
 
 iii) The balance sheet, profit and loss account and also 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 also
 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; and
 
 v) On the basis of written representations received by the company from
 its Directors as on 31st March, 2009 and taken on record by the Board
 of Directors, we report that none of the director is disqualified as on
 31st March, 2009 from being appointed as a Director in terms of the
 clause (g) of sub section (1) of section 274 of the Companies Act,
 1956;
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the said accounts, read together with the
 significant accounting policies and notes appearing thereon, 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 case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2009;
 
 b.  in case of the profit and loss account, of the profit for the year
 ended on that date; and
 
 c.  in case of the cash flow statement, of the cash flows for the year
 ended on that date.
 
 Annexure to the Auditors’ Report
 
 1.  a) The Company has been generally maintaining proper records to
 show full particulars including quantitative details and situation of
 the fixed assets.
 
 b) We are informed that the company has formulated a programme of
 physical verification of all the fixed assets in a phased manner. We
 are also informed that a physical verification of the fixed assets have
 been carried out by management during the year and there are no
 material discrepancies observed between assets physically verified and
 book balances.
 
 c) The company has not disposed of any substantial part of its fixed
 assets so as to affect its going concern status.
 
 2.  The Company is not carrying on any manufacturing or trading
 activity. Therefore, the provisions of sub clause (a), (b), and (c), of
 clause (ii) of paragraph 4 of the Order are not applicable to the
 Company.
 
 3.  a) The Company has granted loan to one Company and loan to one
 Party covered in the register maintained under Section 301 of the
 Companies Act, 1956. The maximum amount involved during the year were
 Rs.1,134,170,198 and the year-end balance of loans granted to such
 Company/ Party was Rs.1,400,000.
 
 b) In our opinion, the rate of interest and other terms and conditions
 of such loan given is not, prima facie, prejudicial to the interest of
 the Company.
 
 c) There are no stipulations as to repayment of principal and interest
 amounts.
 
 d) There is no overdue amount in excess of one Rs.1 lakh in respect of
 loan granted to Companies listed in the register maintained under
 Section 301 of the Companies Act, 1956 since repayment schedule is not
 stipulated.
 
 e) The Company has not taken any loans from the companies, firms or
 other parties covered in the register maintained under Section 301 of
 the Companies Act, 1956. As the Company has not taken any loans, the
 provisions of sub clause (e), (f) and (g) of clause (iii) of paragraph
 4 of the Order are not applicable to the Company.
 
 4.  In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the company and nature of its business, for the
 purchase of fixed assets and 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 we been informed of any continuing failure to correct
 major weaknesses in the aforesaid internal control systems.
 
 5.  a) In our opinion and according to the information and explanations
 given to us, the particulars of contracts or arrangements that need to
 be entered into a Register in pursuance of Section 301 of the Companies
 Act, 1956 and those brought to our notice, have been so entered.
 
 b) In our opinion and according to the information and explanations
 given to us, the transactions in pursuance of such contracts or
 arrangements entered in the register maintained under section 301 of
 the companies Act, 1956 and exceeding the value of rupees five lakhs in
 respect of any party during the year, have been made at prices which
 are not comparable since the prevailing market prices of such services,
 in view of the management, are not readily available.
 
 6.  The Company has not accepted any deposits from the public of the
 nature, which attracts the provisions of Section 58A, 58AA or any other
 relevant provision of the Companies Act, 1956 and the rules made there
 under. Therefore, the provision of clause (vi) of paragraph 4 of the
 Order is not applicable to the Company.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 8.  As per the information and explanations given to us, in respect of
 the class of industry the Company falls under, the maintenance of cost
 records has not been prescribed by the Central Government under section
 209 (1) (d) of the Companies act, 1956. Therefore, the provision of
 clause (viii) of paragraph 4 of the Order is not applicable to 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. Based on the information
 furnished to us, there are no undisputed statutory dues as on 31st
 March 2009, which are outstanding for a period exceeding six months
 from the date they became payable.
 
 b) According to the information and explanations given to us and
 records of the Company examined by us, the particulars of sales
 tax/excise duty/service tax/income tax/custom duty/wealth tax/cess as
 at 31st March, 2009 which have not been deposited on account of a
 dispute pending, and amount involved and the forum where dispute is
 pending is as under:
 
 Name of the               Nature of the              Amount (Rs.)
     Statute               disputed dues                  of Tax
 
 Income Tax       Bad Debts Disallowed and              3,413,731
  Act, 1961            Depreciation on BSE
                           Membership Card
 
      Period to                    Forum where
      which the             Dispute is pending
 amount relates
 
 AY 2005-2006                      Income Tax
                           Appellate Tribunal
 
 10.  At the end of the financial year, the Company has neither
 accumulated losses exceeding fifty percent of its net worth nor
 incurred any cash loss during the financial year and in the immediately
 preceding financial year.
 
 11.  According to the information and explanations given to us, the
 Company has not defaulted in repayment of its dues to its financial
 institution or bank.
 
 12.  According to the information and explanations given to us, since
 the company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities,
 the company in our opinion, need not maintain relevant documents and
 record.
 
 13.  The Company is not a chit fund or a nidhi / mutual benefit fund /
 society. Therefore, the provisions of sub clause (a), (b), (c) and (d)
 of clause (xiii) of paragraph 4 of the Order are not applicable to the
 Company.
 
 14.  Based on our examination of the records and evaluation of the
 related internal controls, the Company has maintained proper records of
 transactions and contracts in respect of its dealing or trading in
 shares, securities, debentures and other investments, as applicable,
 and timely entries have been made therein. The aforesaid securities
 have been held by the Company in its own name, except to the extent of
 the exemption granted under Section 49 of the Companies Act, 1956.
 
 15.  The Company has granted a Corporate Guarantee to a bank in respect
 of a loan availed by its subsidiary company. Based on the information
 and explanations given to us, we are of the opinion that the terms and
 conditions on which the guarantee is given are prima facie, not
 prejudicial to the interest of the Company.
 
 16.  According to the information and explanation given to us and on
 overall examination of books of accounts of the Company, we report that
 the term loan has been applied for the purpose for which it was raised.
 
 17.  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
 investments.
 
 18.  According to the information and explanations given to us, the
 Company has not made preferential allotment of shares to parties and
 companies covered in the Register maintained under section 301 of the
 Companies Act, 1956.
 
 19.  The Company has issued unsecured debentures during the year.
 Since, these debentures are unsecured the Company is not required to
 and has not created a charge in respect of these debentures.
 
 20.  The Company has not raised any money through a public issue during
 the year. Therefore, the provision of clause (xx) of paragraph 4 of the
 Order is not applicable to the Company.
 
 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
 explanation given to us, we have neither come across any instances of
 material fraud on or by the company, noticed or reported during the
 year nor have we been informed of such case by management.
 
                                           Sharp & Tannan Associates
                                               Chartered Accountants
                                                      By the hand of
 Place: Mumbai                                        Tirtharaj Khot
 Date: April 28, 2009.                                       Partner
                                               Membership No.: 37457