1.  We have audited the attached Balance Sheet of Lanco Infratech
 Limited (‘the Company'') as at March 31, 2011 and also the 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 purposes 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
 those books;
 
 iii. The balance sheet, profit and loss account and 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 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;
 
 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 required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India;
 
 a) in the case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 b) in the case of the profit and loss account, of the profit for the
 year ended on that date; and
 
 c) 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
 Re: Lanco Infratech Limited (‘the Company'')
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All fixed assets have not been physically verified by the
 management during the year but there is a regular programme of
 verification which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. As informed, no
 material discrepancies were noticed 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 (except stocks lying with third parties) at reasonable
 intervals during the year. In respect of inventory lying with third
 parties, these have substantially been confirmed by them.
 
 (b) 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 no
 material discrepancies were noticed on physical verification.
 
 (iii) (a) 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 Order are not applicable
 to the Company and hence not commented upon.
 
 (b) According to information and explanations given to us, the Company
 has not taken any loans, secured or unsecured, from 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)(e) to (g) of the Order are not applicable to the Company and
 hence not commented upon.
 
 (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 sale of goods and
 services. 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 Act that need to be
 entered into the register maintained under Section 301 have been so
 entered.
 
 (b) In respect of transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five lakhs entered into during
 the financial year, because of the unique and specialized nature of the
 items involved and absence of any comparable prices, we are unable to
 comment whether the transactions were made at prevailing market prices
 at the relevant time.
 
 (vi) The Company has not accepted any deposits from the public.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under Section 209(1)(d) of the Companies
 Act, 1956, related to the generation of power and are of the opinion
 that prima facie, the prescribed accounts and records have been made
 and maintained.
 
 (ix) (a) The Company is regular in depositing with 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.
 
 There are no dues on account of cess under Section 441 A of the
 Companies Act,1956, since the aforesaid section has not yet been made
 effective by Central Government of India.
 
 (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 undisputed 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 records of the Company, the dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and cess on account of any dispute, are as follows:
 
 Name of the 
 statute        Nature of    Amount    Period to 
                                       which the    Forum where
                                                    dispute is pending
                dues       ( in lakhs) amount 
                                       relates
 
 Income Tax Act, 
 1961           Income Tax    18.0     Assessment 
                                       year 2003-04 Income Tax
                                                    Appellate Tribunal
                                                    and with The 
                                                    Honourable High 
                                                    Court, Andhra 
                                                    Pradesh
 
 Andhra Pradesh 
 General        Sales Tax      8.5      Financial 
                                        Year 2000-01 The Sales Tax 
                                                     Appellate Tribunal,
 Sales Tax Act, 
 1956                                                Hyderabad
 
 Andhra Pradesh 
 Tax on         Entry Tax      1.8      Financial 
                                        Year 2007-08  The Appellate 
                                                      Deputy Commiss
                                                      -ioner CT, 
 Entry of Goods 
 Act,2001
                                                      Panjagutta-
                                                      Hyderabad
 
 Andhra Pradesh 
 General        Sales Tax      2.7      Financial 
                                        Year 2001-02  The Sales
                                                      Tax Appellate 
                                                      Tribunal,
 Sales Tax Act, 
 1956                                                 Hyderabad
 
 Andhra Pradesh 
 Value          Sales Tax      1.3      Financial 
                                        Year 2009-10  The Appellate
                                                      Deputy Commiss
                                                      -ioner CT,
 Added Tax Act, 
 2005                                                 Panjagutta-
                                                      Hyderabad
 
 The Finance 
 Act, 1994      Service Tax   13.8      April 2005-
                                        March 2008    Customs,
                                                      Central Excise and
                                                      Service Tax
                                                      Appellate Tribunal
 The Finance 
 Act, 1994      Service Tax   15.9      June 2005-
                                        August 2008   Customs,
                                                      Central Excise 
                                                      and Service Tax
                                                      Appellate 
                                                      Tribunal
 The Finance 
 Act, 1994     Service Tax 1,292.4     June 2007-
                                       March 2008     Customs,
                                                      Central Excise and
                                                      Service Tax
                                                      Appellate 
                                                      Tribunal
 The Finance 
 Act, 1994    Service Tax    385.9    June 2007-
                                      July 2008       Customs,
                                                      Central Excise and
                                                      Service Tax
                                                      Appellate 
                                                      Tribunal
 
 The Finance 
 Act, 1994    Service Tax  1,547.4    April 2005-
                                      March 2008      Customs, Central 
                                                      Excise and Service
                                                      Tax Appellate 
                                                      Tribunal
 The Finance 
 Act, 1994   Service Tax       1.3    April 2008-
                                      March 2009      Commissioner of 
                                                      Central Excise 
                                                      (Appeals)
 The Finance 
 Act, 1994   Service Tax      37.8    July 2008-
                                     September 2009   Commissioner of 
                                                      Central Excise 
                                                      (Appeals)
 
 The Finance 
 Act, 1994   Service Tax     657.8   April 2008-
                                     June 2009        Customs, Central 
                                                      Excise and Service
                                                      Tax Appellate 
                                                      Tribunal
 
 The Finance 
 Act, 1994   Service Tax     897.9  July 2009-
                                    March 2010       Commissioner of 
                                                     Central Excise
 
 (x) 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, bank or debenture holders.
 
 (xii) 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.
 
 (xiii) 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 (as 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 others from bank or
 financial institutions, the terms and conditions whereof in our opinion
 are not prima-facie prejudicial to the interest of the Company.
 
 (xvi) Based on 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 no funds raised on short-term basis have been used for long-term
 investment.
 
 (xviii) The 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.
 
 (xix) The Company did not have any outstanding debentures during the
 year.
 
 (xx) The Company has not raised any money by public issues and
 accordingly, provisions of clause 4(xx) of the Companies (Auditor''s
 Report) Order, 2003 (as amended) are not applicable to the company.
 
 (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 S. R. Batliboi & Associates           For Brahmayya & Co.
 
 Firm Registration Number: 101049W    Firm Registration Number: 000511S
 
 Chartered Accountants                  Chartered Accountants
 
 
 per Sanjay Vij                         per N. Sri Krishna
 
 Partner                                Partner
 
 Membership Number: 95169               Membership Number: 26575
 
 Place: Gurgaon                         Place: Gurgaon
 
 Date: May 29, 2011                     Date: May 29, 2011