IVRCL Infrastructure and Projects

1.  We have audited the attached Balance Sheet of IVRCL Infrastructures
 & Projects Limited as at March 31, 2009, the Profit and Loss Account
 for the year ended on that date and the Cash Flow Statement for the
 year ended on that date, both 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 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 (CARO)
 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 to the extent applicable.
 
 4.  Attention is invited to Note B-7.2 of Schedule 19 forming part of
 the financial statements regarding the Companys claim for the benefit
 of Rs.1,409.03 million and in respect of which no provision has been
 made for reasons explained therein. In the event the matter is decided
 against the Company, the Reserves and Surplus and net current assets as
 at March 31,2009 would be lower by Rs.1,409.03 million
 
 5.  Further to our comments in the Annexure referred to in paragraph 3
 above, we report as follows:
 
 a.  we have obtained all the information and explanations which, to the
 best of our knowledge and belief, were necessary forthe purposes of
 ouraudit;
 
 b.  in our opinion, proper books of account as required by law have
 been kept by the Company so far as it 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;
 
 e.  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 March 31,2009;
 
 (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 the Cash Flow Statement, of the cash flows forthe
 year ended on that date.
 
 6.  On the basis of written representations received from the directors
 as on March 31, 2009 and taken on record by the Board of Directors, we
 report that none of the directors is disqualified as on March 31, 2009
 from being appointed as a director in terms of clause (g) of
 sub-section (1) of section 274 of the Companies Act, 1956;
 
 ANNEXURE TO THE AUDITORS REPORT
 
 (Referred to in paragraph 3 of our report of even date)
 
 The nature of the Companys business/activities during the year was
 such that clauses (viii), (xii), (xiii) and (xiv) of paragraph 4 of
 CARO are not applicable to the Company.
 
 (I) In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of its fixed assets.
 
 (b) A major portion of the fixed assets has been physically verified
 during the year by the management in accordance with a programme of
 verification which, in our opinion, provides for physical verification
 of all the fixed assets at reasonable intervals having regard to the
 size of the Company and the nature of its assets. According to the
 information and explanations given to us, no material discrepancies
 were noticed on such verification.
 
 (c) The fixed assets disposed off duringthe year, in our opinion, do
 not constitute substantial part of the fixed\ assets of the Company and
 such disposal has, in ouropinion, not affected the going concern status
 of the Company.
 
 (ii) Inrespectof its inventories:
 
 (a) As explained to us, the inventories of project stores and spares
 and construction materials were physically verified during the year by
 the Management. In our opinion, having regard to the nature and
 location of stocks, 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) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of its
 inventories. The discrepancies noticed on verification between the
 physical stocks and the book records were not material.
 
 (iii) In respect of loans, secured or unsecured, granted or taken by
 the Company to or from companies, firms or from other parties covered
 in the register maintained under Section 301 of the Companies Act,
 1956, according to the information and explanationsgiven to us:
 
 (a) The Company hasgranted intercorporate loan tothree parties. Atthe
 year-end, the outstanding balance of such loan was Rs.3,213.16 million
 and the maximum amount involved during the year was Rs.3,569.43
 million.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 of the loan are not, prima facie, prejudicial to the interest of the
 Company.
 
 (c) In accordance with the terms of the loan, the principal, along with
 interest thereon is receivable in half yearly installments after a
 moratorium of two years. Accordingly no receipt of principal or
 interest was due during the year.
 
 (d) The company has not taken any loans, secured or unsecured, from
 companies, firms or other parties listed in the Register maintained
 under Section 301 of the Companies Act, 1956. Consequently, paragraphs
 (iii)(e), (f) and (g) of CARO are not applicable.
 
 (iv) 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 the nature of its business for the
 purchase of inventory and fixed assets and for the sale of goods and
 services and we have not observed any continuing failure to correct
 major weaknesses in such internal control systems.
 
 (v) In respect of contracts or arrangements entered in the register
 maintained in pursuance of section 301 of the Companies Act 1956, to
 the best of our knowledge and belief and according to the information
 and explanations given to us:
 
 (a) The particulars of contracts or arrangements referred to Section
 301 that needed to be entered into the register, maintained underthe
 said section have been so entered.
 
 (b) Where each of such transactions is in excess of Rs.5 lakhs in
 respect of any party, the transactions have been made at prices which
 are prima facie reasonable having regard to the prevailing market
 prices at the relevant time.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has generally complied with the provisions of
 Section 58 and 58AA or any other relevant provisions of the Companies
 Act, 1956, and the Companies (Acceptance of Deposits) Rules, 1975 with
 regard to the deposits accepted from the public.
 
 (vii) In our opinion, the internal audit functions carried out during
 the year by firms of Chartered Accountants appointed by the management
 have been commensurate with the size of the Company and the nature of
 its business.
 
 (viii) In respect of Statutory dues:
 
 (a) According to the information and explanations given to us, the
 Company has been generally regular in depositing undisputed statutory
 dues, including provident fund, investor education and protection fund,
 employees state insurance, income-tax, sales-tax, wealth tax, custom
 duty, excise duty, cess and any other material statutory dues
 applicable to it with the appropriate authorities during the year.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, income-tax,
 sales tax, wealth tax, custom duty, excise duty, cess and any other
 material statutory dues applicable to it were in arrears, as at March
 31,2009 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
 were no dues of custom duty, wealth tax, service tax, excise duty and
 cess which have not been deposited as on March 31,2009 on account of
 any dispute. The details of disputed income tax, sales tax and entry
 tax which have not been deposited as on March 31,2009 are given below:
 
 Name of the statute             Nature of     Amount
 				Dues          (Rs. Million)
 
 						  0.51
 Andhra Pradesh General                            1.52
 Sales Tax Act, 1957           Sales Tax           2.51     
 						  
 						  2.07
 Kerala General Sales Tax      Sales Tax           0.35
 Act                                               0.34
 
 Central Sales Tax Act,        Sales Tax           9.34
 1956                                              0.83
 
 A. P. Tax on Entry of                                     
 Motor Vehicles Act, 1996      Entry Tax           1.15
 
 						  1.22
 Value Added Tax                 Value             2.13
 			      Added Tax
 						 28.24
 
 						  5.74 
 Finance Act, 1994           Service Tax          82.43
 						 12.23
 
 Financial Years to which     Forum where dispute is pending 
 the matter pertains
 
 1997-98
 
 1998-99
 			      Sales Tax Appellate Tribunal
 2003-04
 
 2004-05
 
 1999-00
 			      Sales Tax Appellate Tribunal
 2000-01
 
 2001-02                       Deputy Commissioner, Appeals
 
 2005-06 & 2006-07             The Appellate Deputy
 & 2007-08                     Commissioner (CT)
 
 2001-02                       Appellate Tribunal of Commercial Tax
 
 2002-03                       The Appellate Deputy Commissioner
 			      (CT)
 
 2005-06                       Deputy Commissioner, Appeals
 
 2005-06                       The Joint Commissioner, Appeals
 
 2004-05                       The Joint Excise & Taxation 
 			       Commissioner, Appeals
 
 2005-06 & 2006-07             Commissioner, Appeals
 
 2004-05 & 2005-06
 
 2006-07 & 2007-08             CESTA
 
 (ix) The Company does not have accumulated losses and has not incurred
 cash losses during the financial year covered by our audit and the
 immediately preceding financial year.
 
 (x) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 financial institutionsand banks.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company for loans taken by others from banks and financial institutions
 are not prima facie prejudicial to the interests of the Company.
 
 (xii) To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, term loans
 availed by the Company were, prima facie, applied by the Company during
 the year for the purposes for which the loans were obtained, other than
 temporary deployment pending application.
 
 (xiii) According to the information and explanations given to us, and
 on an overall examination of the balance sheet of the Company, funds
 raised on short-term basis have, prima facie, not been used for
 long-term investment.
 
 (xiv) According to the information and explanations given to us, the
 Company has made preferential allotment of shares on exercise of
 options granted in earlier years under ESOP schemes to parties covered
 in the register maintained under Section 301 of the Companies Act,
 1956. The prices at which such shares are allotted are not prima facie
 prejudicial to the interests of the Company.
 
 (xv) According to the information and explanations given to us and the
 records examined by us, securities/charges have been created in respect
 of the debentures issued.
 
 (xvi) We have verified the end use of funds raised by public issue with
 the prospectus filed with SEBI and as disclosed in Note B-20 of
 Schedule 19 to the financial statements.
 
 (xvii) To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the Company
 was noticed or reported during the year.
 
 For Chaturvedi & Partners                For Deloitte Haskins & Sells
 Chartered Accountants                    Chartered Accountants
 
 R. N. Chaturvedi                           K. Rajasekhar
 Partner                                    Partner
 Membership No. 092087                      Membership No. 23341
 
 Place : Hyderabad 
 Date  : May 29, 2009