1.  We have audited the attached balance sheet of India Tourism
 Development Corporation Limited, New Delhi as at 31st March, 2010, the
 profit and loss account and also the cash flow statement for the year
 ended on that date annexed thereto, in which are incorporated the
 accounts of the Head Office and 4 units/branches audited by us and 34
 units/ branches audited by respective branch auditors appointed by the
 Comptroller and Auditor General of India. These financial statements
 are the responsibility of the Corporations 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 from material misstatement. An audit
 includes examining, on 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 the 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 (Auditors Report) Order, 2003 as
 amended by Companies (Auditors Report) (Amendment) Order, 2004, issued
 by the Central Government of India in terms of Section 227 (4A) of the
 Companies Act, 1956, and on the basis of such examination of the books
 and records of the Corporation as we considered appropriate and the
 information and explanations given during the course of audit arid
 after considering the reports of unit/branch auditors, 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 in paragraph 3
 above, we report that:
 
 i) There are demands ofRs 465.81 Lakhs (Previous Year Rs 436.60 Lakhs)
 from ESI authorities in respect of ESI dues, which are being disputed
 by the Corporation and not provided for (Refer Note Nos. 2(b)).
 
 ii) The corporation is due Rs 1,755.17 Lakhs as at 31.03.2010 (Rs
 2,100.99 Lakhs upto 31.03.2009) from certain subsidiary Companies
 (which have significant accumulated losses) on account of services
 rendered and funds advanced to them (intluding interest thereon).
 Besides the corporation holds investments in the said subsidiaries
 having a book value as at 31.03.2010 of Rs.729.10 Lakhs (Previous Year
 Rs 729.10 Lakhs). The management has represented to us that these
 investments are of long term nature and the shortfall/diminution in
 their value is not permanent and that the intrinsic value of assets
 owned by these companies is considerable to recover the dues and cost
 of investments, though some of the companies are non-operational and
 the present net worth of most of these companies is in the negative
 (Refer Note Nos. 6 (a)(i) & (ii)).
 
 iii) (a) Compensation payable to a party , whose premises were under
 occupation by the Corporations ATT Division , Delhi upto 28.02.2007
 has not been provided as determination / quantification by the
 Commissioner appointed for the purpose is pending. [Refer Note No.
 2(c)].
 
 (b) Lease Rent / registration fee/ ground rent / depreciation due to
 non- finalization of terms of purchase/lease/title deeds of land and
 buildings have not been provided for. [Refer Note No. 4]
 
 iv) Amount of Rs 1326.12 Lakhs (Previous Year Rs 1326.12 Lakhs) shown
 as recoverable from demerged units for the period from l April 2001
 till the date of physical transfer on account of funds transferred and
 expenses incurred on behalf of the said units, but not received till
 date, has been considered good of recovery by the management. . [Refer
 Note No. 8(b)]
 
 v) Impairment in the value of assets /partly completed assets
 aggregating to Rs. 209.69 Lakhs (Previous Year Rs 206.56 lakhs)
 included under capital work in progress has not been provided. [Refer
 Note No. 3(b)]
 
 vi) Pending reconciliation / receipt of detailed statement of accounts
 from NBCC, provision has not been made for interest payable
 to/recoverable from and amount due from NBCC pertaining to Iraq
 Project. Effect on the accounts on due receipt /adjustment / accounting
 thereof cannot be indicated at this stage. [Refer Note Nos. 6(c) &
 7(b)]
 
 vii) Capitlisation effected/charged to expenditure on
 provisional/payment basis/pending/receipt of final bills / finalisation
 and certification by architects. Effect on the accounts on due
 adjustment there of, cannot be indicated at this stage. [Refer Note
 Nos. 4(g)/4(h)J
 
 viii) Balance in Sundry Debtors, Loans and Advances, Deposits and
 Sundry Creditors accounts are subject to independent confirmation and
 reconciliation in some cases. [Refer Note No. 6(b)]
 
 ix) In respect of lease agreements with some of the licensees the
 corporation has, despite prescribed conditions, not charged
 interest/levied damages on overdue amounts. These have also not been
 quantified. Consequently effect on the accounts on due
 quantification/accounting thereof cannot be indicated at this stage.
 (Refer Accounting Policy No. 13(v))
 
 x) The Corporation has provided for Rs. 3,3 3 5.24 Lakhs in respect of
 unionized workers on IDA pattern w.e.f 01.01.2007. However, while
 working out the liability towards pay revision as above, the
 Corporation had not considered the liability on account of Gratuity and
 Leave Encashment. (Refer Note No. 11(b)).
 
 5.  We further 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 except to the extent referred to in Note No. 6(c) of Schedule 12
 regarding status of dues payable / recoverable from a party and Note
 No. 8(b) of Schedule 12 regarding confirmation of amount recoverable
 from demerged units;
 
 b) In our opinion proper books of account, as required by law, have
 been kept so far as appears from our examination of those books and
 proper returns adequate for the purpose of our audit have been received
 from the branch auditors in respect of the units / branches audited by
 them;
 
 c) The reports of the branch auditors on the accounts of units /
 branches audited by them have been received and considered by us in
 preparing this report after making such adjustments as we considered
 necessary;
 
 d) The balance sheet, profit and loss account and cash flow statement
 dealt with by this report are in agreement with the books of account
 and audited financial statements of the branches;
 
 e) In our opinion, the balance sheet, profit and loss account and cash
 flow statement dealt with by this report comply with Accounting
 Standards referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956 except to the extent referred to hereunder:-
 
 - Valuation of Inventories at cost in some of the units as against
 lower of cost or net realizable value - Accounting Standard-2 -
 Valuation of Inventories.
 
 - Lease charges in respect of land of Hotel Samrat not having been
 amortised. [Note No. 4(c)] - Accounting Standard -6 - Depreciation
 Accounting.
 
 - Conversion of balance with foreign bank in Iraqi dinar at the rate
 prevailing as on 31s March, 1991 instead of applying year end rates.
 [Refer Note No. 7(a)] - Accounting Standard-11- Accounting for Effect
 of Changes in Foreign Exchange Rates
 
 - Non-disclosure of complete details pertaining to transactions entered
 into during the year with related parties-Accounting Standard-18-
 Related Party Disclosure.
 
 - Non-disclosure of details required in respect of operating leases
 entered into by the Corporation. [Note No. 13(v) of Schedule-12] -
 Accounting Standard-19 - Leases.
 
 - Except to the extent referred to in note 13(viii) of Schedule 12, the
 corporation has not determined impairment in other assets in terms of
 Accounting Standard-28-Impairment of Assets during the year.
 
 From the available information, we are unable to quantify the impact on
 the financial statements due to non-compliance of The Accounting
 Standards referred to above.
 
 f) The provisions of clause (g) of sub-section (1) of Section 274 of
 the Companies Act, 1956, are not applicable to the Corporation in terms
 of notification No.G.S.R. 829(E) dated 21st October, 2003 issued by
 Government of India, Department of Company Affairs;
 
 6.  We further report that:-
 
 a) We are unable to comment on the extent of liability that may devolve
 upon the Corporation and impact the financial statements on resolution,
 of legal proceedings referred to in Para 4(i) and 4(iii)(a);
 
 b) The adjustments that may arise pertaining to matters referred to in
 Para 4(ii), 4(iii)(b), 4(vi), 4(vii), 4(viii), 4(viii), 4(ix) and 4(x),
 which cannot be quantified at this stage.
 
 c) The impact of our comments in Para 4(iv) and 4(v), some of which
 were subject matter of audit qualifications in the earlier years also,
 is given below:
 
                               Reported       Resultant       Impact
 Particulars                   figure         figure       (net of tax)
                            (Rs. in Lakhs)  (Rs. in Lakhs) (Rs. in Lakhs)
 
 A. Reserve & Surplus
 [Refer Paras 4(iv) & 4(v)       22802.59      21788.80       1013.79
 
 B Capital Work-in-progress       4457.46       4247.77        209.69
 [Refer Para 4(v)]
 
 C Current Assets, Loans and
 Advances                        47858.68       46532.56      1326.12
 [Refer Para 4(iv)].
 
 D  Current Liabilities and      30132.26       29610.24       522.02
    Provisions (Tax Impact)     
 
 7. Subject to our comments in paragraphs 5(e) and 6 above, in our
 opinion and to the best of our information and according to the
 explanations given to us, the said accounts read with the accounting
 policies and other notes, 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 balance sheet, of the state of affairs of the
 Corporation as at 31st March, 2010,
 
 ii) in the case of profit & loss account, of the loss 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 REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE ON THE
 ACCOUNTS OF INDIA TOURISM DEVELOPMENT CORPORATION LIMITED FOR THE YEAR
 ENDED 31st MARCH, 2010.
 
 1.  (a) The corporation has generally maintained proper records showing
 full particulars, including quantitative details and situation of fixed
 assets except at few branches / units where records were incomplete in
 respect of quantitative details and situation etc.
 
 (b) The fixed assets are reported to have been physically verified by
 the management generally at the yearend/reasonable intervals. In most
 of the branches/units and the head office, the book balance and
 physical balances have not been reconciled and hence, the
 discrepancies, if any, have not been ascertained for necessary
 adjustments in the books of account.
 
 (c) The corporation has not disposed off substantial portion of its
 fixed assets during the year and hence going concern assumption is not
 affected.
 
 2.  (a) The inventory has been physically verified by the management
 generally once in a year except at few branches / units where
 verification has been conducted at the end of every half year. Some of
 the branch auditors have reported that though the inventory has been
 physically verifiedthe frequency of verification is inadequate/ not
 reasonable and needs to be increased in view of the size and nature of
 the inventory.
 
 (b) The procedures of physical verification of inventories followed by
 the management are generally reasonable and adequate in relation to the
 size of the corporation and the nature of its business except at ATSS
 where the branch auditor have opined the procedures to be not
 reasonable. Some of the other branch auditors have reported that the
 procedures of physical verification of inventories need to be
 strengthened and provision made for evaporation loss / obsolescence for
 dead stock of stores/ spares/ provisions, crockery & cutlery items and
 stationery items.
 
 (c) The corporation is generally maintaining proper records of
 inventory except at few units wherein the branch auditors have reported
 that proper records of inventory were riot maintained. The
 discrepancies noticed on physical verification between the physical
 stocks and the book records were not material except at some branches
 where such discrepancies could not be ascertained in the absence of
 proper records of inventory. However, since the consumption of these
 stocks, stores, crockery, cutlery etc. had been worked out by taking
 opening balance, purchases and closing balance based on physical
 inventories, \he value of shortages etc. has not been ascertained and
 shown separately. In this connection refer to our comment in para 2(b)
 above also.
 
 3.  The Corporation has neither taken nor granted any loans, secured or
 unsecured from/to companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956.
 Accordingly provisions of clauses 4(iii)(b), (c), (d), (e), (f) and (g)
 of the said order are not applicable.
 
 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 Corporation and the nature of its business with
 regard to the purchase of inventory, fixed assets and with regard to
 the sale of goods and rendering of services except at some branches
 wherein the branch auditors have reported, that the evaluation of the
 prevailing internal control structure and its operation disclosed weak
 internal control systems and which is not adequate and commensurate
 with the size of the branch and the nature of its business, with regard
 to purchase of inventory and recording, purchase affixed assets, sale
 of goods and services, deposit of Foreign Currency cash at Duty free
 shop units, income from licenses, maintenance of accounting records,
 reconciliation of control accounts, extension of credit, issuance of
 credit notes, purchase and consumption of raw materials, cost of
 services rendered, stores, stocks, issuance of material, valuation of
 inventories at DFS units Cat Goa), and which need to be improved /
 strengthened. There has been continuing failure to correct major
 weaknesses in internal control systems, reported by the internal
 auditors in the previous year on similar lines, at these branches.
 
 5.  (a) According to the information and explanations given to us, we
 are of the opinion that there are no contracts or arrangements that
 need to be entered into the register maintained under Section 301 of
 the Companies Act, 1956.
 
 (b) Not applicable in view of para (a) above.
 
 6.  The Corporation has not accepted any deposits from public in terms
 of Sections 58A and 58AA of the Companies Act,1956 and the rules made
 there under.
 
 7.  In our opinion, the Corporation has an internal audit system which
 is generally commensurate with the size and nature of its business.
 However, as reported by some of the branch auditors, the coverage of
 internal audit needs to be enlarged to cover all areas of operation
 including timely submission and follow up of the reports.
 
 8.  As informed to us, the Central Government has not prescribed
 maintenance of cost records under clause (d) of sub-section (1) of
 Section 209 of the Companies Act, 1956.
 
 9.  (a) In our opinion the Corporation is generally regular in
 depositing with the appropriate authorities 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
 applicable to it except as reported by some of the branch auditors
 regarding irregularity in deposit/ non-deposit of undisputed statutory
 dues.
 
 According to the information and explanations given to us and as
 reported by the branch auditors in their reports, the undisputed
 amounts payable in respect of outstanding statutory dues that were in
 arrears, as on 31.03.2010for a period of more than six months from the
 date they became payable are given below :
 
 Name of the 
 Statute, Unit       Nature of dues    Amount    Period to which the
                                     (in lacs)   amount relates
 
 ESI, Vigyan Bhawan,       ESI         4.79      More than six months
 Hyderabad House                       1.72
 
 Sales Tax & VAT, ATT
 Chennai              Sales Tax VAT    1.25      More than six months
 
 (b) According to the information & explanations given to us and as
 reported by the branch auditors in their reports, dues of Provident
 Fund, Investor .  Education and Protection Fund, Employees State
 Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs
 Duty, Excise Duty and Cess that have not been deposited on account of
 disputes are given below: 
 
 Name of the                  Nature of           Amount
 Statue/Unit                  Dues
 
 The Delhi Sales             Local  Sales         8813.00
 tax Act, 1975               Tax
 
 The Central                 Central Sales          12.84
 Sales Tax  Act,             Tax
 1956
 
 Andhra  Pradesh             Local Sales           327.15
 VAT Act, 2005               Tax
 
 Karnataka Sales             Local Sales           420.71
 Tax Act, 2004               Tax
 
 Orissa Sales Tax            Sales Tax               1.07
 act
 
 Maharashtra                 Sales Tax            2465.62
 Sales Tax Act
 
 The Delhi Tax               Luxury Tax            266.88
 on Luxuries Act,
 1996
 
 The Income Tax              Income Tax            507.09
 Act, 1961
 
 Customs Act,                Custom Duty         21818.11
 1962 Mumbai
 
 Customs Act,                Custom Duty             2.14
 1962 Hyderabad
 
 Provident Fund              (PF)                    1.14
 Janpath
 
 Service Tax,                Service Tax            15.54
 IGIAR
 
 Customs                     Custom Duty            45.17
 Authority by
 Kolkata
 
 Name of the              Period to       Forum where
 Statue/Unit              which the       dispute is Pending
                          amount relates
 
 The Delhi Sales
 tax Act, 1975            1990 to 2006    Various Authorities
 
 The Central
 Sales Tax  Act,
 1956                     1987 to 2002    Various Authorities
 
 Andhra  Pradesh
 VAT Act, 2005            2005 to 2007    Hyderabad High
                                          Court
 
 Karnataka Sales
 Tax Act, 2004            2004-2005       Karnataka High
                                          Court
 
 Orissa Sales Tax
 act                      1988 to 2005    Various Authorities
 
 Maharashtra
 Sales Tax Act            1982 to 1996    Mumbai High
                                          Court, Maharashtra
                                          Sales Tax Tribunal
 
 
 The Delhi Tax
 on Luxuries Act,
 1996                     1997-98,        Assistant
                          2001-02         & Commissioner of
                          2002-03         Luxury Tax
 
 The Income Tax
 Act, 1961                1992-93,        Income Tax
                          1994-95 &       Appellate Tribunal
                          1995-96
                          2007-08         CIT (A)
 
 
 Customs Act,
 1962 Mumbai              1995 to 2008    Commissioner
                                          (Appeals)
 
 Customs Act,
 1962 Hyderabad           2006-07         Committee on
                                          Disputes
 
 Provident Fund
 Janpath                Earlier Years     High Court
 
 Service Tax,
 IGIAR                  2007-08 to        CESTAT, Delhi
                        2009-10
 
 Customs
 Authority by
 Kolkata                2003              Committee on
                                          Disputes
 
 
 
 Name of the                  Nature of           Amount
 Statue/Unit                  Dues
 
 Customs                     Custom Duty            9.26
 Authority, Delhi
 
 Excise Duty,                Excise Duty           13.33
 Kalinga
 
 Employees State             ESI
 
 Insurance
 
 Janpath                                           27.91
 
 Ashok                                            397.70
 
 Samrat                                            21.91
 
 IGIAR                                             11.04
 
 Taj Restt                                          7.25
 
 Employees State            ESI                     1.45
 Insurance
 Kalinga
 
 
 Name of the              Period to       Forum where
 Statue/Unit              which the       dispute is Pending
                          amount relates
 
 
 
 Customs
 Authority, Delhi           2005-06       Customs Authority
 
 Excise Duty,
 Kalinga                    2002-03       High Court,Orissa
 
 Employees State
 Insurance
 Janpath
 Ashok
 Samrat
 IGIAR
 Taj Restt                                High Court of
                            Earlier Years Delhi
 
 Employees State
 Insurance
 Kalinga                    Earlier Years Dist. Court, Khurda
 
 10.  Even after considering the effects of quantified qualifications,
 in our opinion, the Corporation does not have accumulated losses. The
 Corporation has incurred cash loss during the financial year covered by
 our audit and has not incurred cash losses in the immediately preceding
 financial year. However, the effect of resolution and quantification of
 matters reported / of un-quantified qualifications and others reported
 in the main Audit Report, which may in some cases be significant, have
 not been taken into consideration, as the amounts are not
 ascertainable.
 
 11.  Based on our audit procedures and as per the information and
 explanations given to us by the management, the Corporation has no dues
 towards banks, financial institutions or debenture holders, and, hence,
 provisions of clause 4(xi) of the Order are not applicable to the
 corporation.,.
 
 12.  According to the information and explanations given to us and
 based on the documents and records produced to us, the Corporation has
 not granted loans and advances on the basis of security by way of
 pledge of shares, debentures and other securities.
 
 13.  In our opinion, the Corporation is not a chit fund or a nidhi
 mutual benefit fund / society.
 
 14.  According to the information and explanations given to us, the
 Corporation is not dealing in shares, securities and other investments.
 The investments in the shares of subsidiary companies are held by the
 Corporation in its own name and are not traded.
 
 15.  Except for a guarantee of Rs. 90 lacs provided against loans
 obtained by a subsidiary company in the earlier year, and which is
 continuing, the Corporation has not given guarantees during the year
 for loans taken by others from banks or financial institutions.
 Further, the terms and conditions on which the corporation had given
 guarantees during earlier years for loans taken by others from bank or
 financial institutions are not prima facie prejudicial to the interest
 of the Corporation.
 
 16.  Based on information and explanations given to us by the
 management, no term loans have been raised by the corporation during
 the year.
 
 17.  According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Corporation, we
 report that no funds raised on short-term basis have been used for
 long-term investment.
 
 18.  The Corporation has allotted 1,82,50,000 Equity Shares of Rs. 10/-
 each at a premium of Rs. 30/- each to the President of India through
 Ministry of Tourism, Government of India (promoter) through
 preferential allotment.
 
 19.  The Corporation has not issued any debentures, hence this clause
 is not applicable to the Corporation.
 
 20.  The Corporation has not raised money by public issues during the
 year under audit, hence this clause is not applicable to the
 Corporation.
 
 21.  During the course of our examination of the books and records of
 the corporation, 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 corporation, noticed or reported during the year,
 nor have we been informed of such case by the management.
 
 
 For  General Lalla Mehta 
 
 Chartered Accountants (FRN 002830N)
 
 Ashok Grover
 (Partner>
 
 M. No. 81784
 Place: New Delhi
 Date: 07 12 10