1.  We have audited the attached Balance Sheet of Mahanagar Telephone
 Nigam Limited as at March 31, 2011, the Profit and Loss Account and the
 Cash Flow Statement of the Company for the year ended on that date,
 annexed thereto, in which, the accounts of 3 units namely Delhi unit,
 Mumbai unit and Mobile Service Unit (Delhi & Mumbai both) are
 incorporated. 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 the Auditing Standards
 generally accepted in India. These 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 (Auditor''s Report) Order 2003, as
 amended by the Companies (Auditor''s Report) Order, 2004 (together the
 ''Order''), issued by the Central Government of India in terms of Section
 227 (4A) of the Companies Act, 1956, and on the basis of such checks as
 we considered appropriate and according to the information and
 explanation given to us, we give in the Annexure-I, a statement on the
 matters specified in paragraphs 4 and 5 of the said Order, to the
 extent applicable to the company.
 
 4.  Further to our comments in the Annexure-I referred to in paragraph
 3 above and subject to:
 
 a) Note No.4 (a & b) regarding maintenance of a provision for income
 tax amounting to Rs. 4003.31 million for the years 1997-98 to 1999-2000
 oh account of disputed claim of deduction under section 80IA whereas
 the similar claims for subsequent years involving a tax liability of
 Rs. 4138.30 Million have been shown as Contingent Liabilities.  In view
 of the pending disputes with the Income Tax Departments at the High
 Court level, we are unable to comment on the adequacy or otherwise of
 the provision held in this regard.
 
 b) Note No. 4 (c) regarding accounting of Income tax and interest
 thereon of Rs. 105.16 million pending appeal effects and Rs. 4873.93
 million pending rectifications are subject to adjustment as per the
 final orders to be passed by the Income Tax Department.  The balances
 appearing in Advance Tax, Provisions for Income Tax and Interest on
 income Tax Refund are subject to reconciliation with the figures of the
 Income Tax Department.
 
 c) Note No. 34 (II) regarding the provision for employees benefits
 which have been made on the basis of actuarial valuation. The issue
 being technical, we are unable to comment on the adequacy or otherwise
 of these provisions.
 
 d) (i) Note No/26 regarding booking of income for Rs. 2850.00 million
 towards wet lease for infrastructure and other services provided in
 respect of Commonwealth Games out of which Rs. 430.00 million is
 subject to acceptance and final settlement and non booking of
 additional claim of Rs. 410.00 million which is also subject to
 acceptance and final settlement.
 
 (ii) Non availability of relevant records pertaining to contracts with
 M/s. HCL Infosys Ltd on account of Commonwealth Games Project as the
 same are informed to be taken by the investigating agencies. In view of
 the above, we are unable to comment on the lapses, if any, of internal
 control in awarding the contract.
 
 e) Note no. 17(c) (i) & (ii) regarding reconciliation of Cenvat Credit
 Receivable as per books with the balance outstanding as per CENVAT
 records maintained by the company for service tax purposes and
 accounting of service tax for transactions with BSNL. The resultant
 impact, if any, on the financial statements for the year can not be
 ascertained.
 
 f) License Fee to the DOT is being worked out on accrual basis as
 against the terms of License Agreements according to which the
 expenditures/ deductions from the Gross revenue are allowed on actual
 payment basis in respect of the Public Switching Telecom Network (PSTN)
 related call charges and roaming charges payable to BSNL and other
 service provider.
 
 g) Note No.15(a)&(b) regarding the amounts recoverable from DOT/ BSNL
 are subject to reconciliation and confirmation and in view of various
 pending disputes regarding each other''s claims we are unable to comment
 on the impact of the same on the profitability of the company and Note
 No. 16 regarding non provision of certain claims of the BSNL on account
 of signaling charges, Transit tariff, MP Bills, IUC Claims and IUC
 claims of MTNL rebutted by BSNL, Service Connection billing, Duct
 charges, TAX usage charges, infrastructure and other charges
 recoverable and payable, pending identification, reconciliation and
 settlement of these and other similar claims of the company the impact
 of the same is not ascertainable. Beside, Note no. 23 regarding non
 provision for interest payable/ receivable on balances during the year
 due to abc nee of agreement between the company and DOT/BSNL for
 interest recoverable/ payable on current account, except charging of
 interest on GPF claims receivable from DOT.
 
 h) The company has allocated the establishment overheads as per
 Annexure P and Administrative overheads as per Annexure Q. The
 company''s policy in this regard needs to be made more realistic &
 scientific and the same should avoid capitalizing the loss due to idle
 time of labour and machines.
 
 i) Note No.40 regarding non provision of impairment of assets in terms
 with Accounting Standard 28.
 
 j) Non provision of LTC/ encashment of LTC not availed by the
 employees^ bonus for last two years(amount unascertained) and Non
 provision of actuarial liability on account of medical expenses for
 retired employees in view of the Insurance policy being taken by the
 company and yearly premium is charged every year.
 
 k) Note No.7 regarding non provision of stamp duty for the properties
 where the conveyance/lease deed-is yet to be executed, and the amount
 is unasceirtainable.
 
 I) Accounting Policy No. 2 (iv) regarding valuation of
 scrapped/decommissioned assets which are not being revalued every year.
 
 m) Accounting Policy No. 1 (ii)(b) regarding exclusion of dues from
 operators for making provision for Doubtful debts.
 
 n) Note No. 24 regarding non valuation of vacant land and Guest
 Houses/Inspection quarters at fair market value as at the yearend for
 the purpose of wealth tax provisions.
 
 o) Note No.20 regarding non confirmation and reconciliation of amounts
 receivable and payable from various parties.
 
 p) Note No 14(b), regarding balance in subscribers'' deposits account of
 Rs.7206.33 Million and interest accrued thereon of Rs.22.25 Million,
 unlinked receipts from subscribers Rs.417.41 Million are subject to
 reconciliation (Refer Note No. 3). Balance of sundry debtors as per
 Ageing Summary is short by Rs. 89.51 Million with comparison to balance
 is general ledger though the same has been fully provided for (Refer
 Note No. 13 and 14(c)). The reconciliation of metered and billed calls
 in various units is in process. The reconciliation of leased,
 operational and billed circuits is in progress.  The final impact of
 above on the accounts is presently not ascertainable and the same may
 have an impact on the Profitability of the company.
 
 q) During the year no reconciliation of roaming receivables has been
 carried out. The impact of non-reconciliation of roaming debtors on
 profitability ,if any, is unascertainable
 
 r) The system of issuance of completion certificates by engineering
 department needs to be strengthened. The impact due to the delay in
 issuance of completion certificate on Fixed Assets and Depreciation is
 not ascertainable.
 
 s) Note No.12 regarding the Bank Reconciliation Statements as at 31st
 March, 2011 include the unmatched/ unlinked credits and debits
 aggregating Rs.78.03 million and Rs.71.36 million respectively, which
 have not been properly accounted, in the absence of adequate
 particulars. The impact of such entries on the Accounts cannot be
 ascertained.
 
 t) Note No. 25 regarding non provision for ADCC recoverable from
 Project Development Company and non accounting of interest thereon in
 absence of explicit agreement to that effect.
 
 u) Note No.4 (d) regarding non deduction of tax at source on services
 received from BSNL and treatment of the expenditure on account of
 Pension liability on the basis of actuarial valuation as an allowable
 expense based on experts opinion.
 
 v) Note No. 27 regarding a technical fraud involving a loss of
 Rs.258.94 million which was observed during the previous year and
 another case observed during the year for excess franchise commission
 paid for which amount is not ascertainable at this stage; however, no
 provision for the same has been made in the accounts as the cases are
 still under investigation.
 
 w) The loss on account of unusable subscriber''s instruments has not
 been ascertained and provided for,
 
 x) Note no. 2 regarding non ascertainment of Contingent liabilities and
 the estimated amount of the contracts of capital nature yet to be
 executed in respect of some of the units.
 
 y) Note No. 32 regarding no availability of the requisite information &
 details for the identification of Micro, Small & Medium enterprises, as
 such we are unable to comment upon the compliance of section 15 & 22 of
 the Micro Small & Medium [Enterprises Development Act-2006.
 
 z) Non availability of information about the transactions required to
 be entered in the registers maintained under section 301 of the
 Companies Act, 1956.
 
 aa) The Cdmpany has not made following disclosures required under
 Schedule VI of the Companies Act, 1956 as per references given after
 each items:
 
 i) Consumption of stores and spares (Para no.3 (x) (a) of part II)
 
 ii) Consumption of imported and indigenous stores and spares and
 Percentage to the total consumption (Para no.4 D (C) of Part II)
 
 iii) The classification of sundry debtors as unsecured without
 considering the security deposit that the company has received from
 subscribers.  ''
 
 iv) Debtor''s figures outstanding for more than six months and up to six
 months are ascertained by the management and relied upon by the
 auditors.
 
 v) Gross Block of scrapped/ decommissioned fixed assets, Accumulated
 Depreciation and Net Block separately.
 
 The overall impact of matters referred to in the preceding paras on the
 loss for the year is unascertainable.
 
 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 except that the following items referred to in paragraph
 (i) of Significant Accounting Policies are consistently accounted on
 cash basis, instead of on accrual basis as required under section 209
 of the Companies Act, 1956 :
 
 a) Interest Income / Liquidated Damages, when readability is uncertain.
 
 b) Annual recurring charges of amount up to Rs.0.10 Million each for
 overlapping period.
 
 c) Revenue on account of service connections is being accounted for
 when the recovery for the same is established.
 
 iii) The Balance Sheet, Profit and Loss Account and the 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 the
 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 except AS - 2 regarding Valuation of
 Inventories (Refer Significant Accounting Policy No.3); AS-4 regarding
 Contingencies and Events Occurring after the date of Balance Sheet; AS
 -5 regarding Net Profit or Loss for the Period, Prior Period Items and
 Changes in Accounting Policies [Refer Significant Accounting Policy
 No.1(i) and ii(a)]; AS- 6 regarding Depreciation Accounting [Refer
 Significant Accounting Policy No. 2(v)];- AS - 9 regarding Revenue
 Recognition [Refer Accounting Policy No 1 (ii); AS-10 regarding
 Accounting of Fixed Assets (Refer Significant Accounting Policy No.
 2);AS -15 regarding Accounting for Retirement Benefits in the Financial
 Statements of Employers (Refer Note No.34 ); AS 17 regarding Segmental
 Reporting: AS- 18 regarding disclosure of related party transactions;
 AS -19 regarding Leases: AS -28 regarding Impairment of Assets (Refer
 Note No. 40); AS-29 on Provisions for Contingent Liabilities and
 Contingent Assets.
 
 v) Since the company is a Government company, clause (g) of sub-section
 (1) of section 274 of the Companies Act, 1956 regarding obtaining
 written representations from the directors of the company, is not
 applicable to the Company in terms of Notification No.GSR-829 (E) dated
 21.10.2003);
 
 vi) Attention is further invited to the following without making them a
 subject matter of qualification: -
 
 a) Note No. 4 (c) regarding non creation of Deferred Tax Assets
 amounting to Rs. 15932.20 million due to absence of virtual certainty
 of taxable profits in future against which the said asset could be
 realized.
 
 b) Note No. 18(e) regarding the issue of pension liability on account
 of absorbed employees is yet to be settled with the DOT which will have
 substantial impact on the profitability of the company.
 
 c) Note No. 11 regarding over dues of Rs. 1000 million on account of
 Cumulative preference Shares of one of the Govt, company which have
 considered good on the basis of comfort letter issued by the concerned
 Ministry.
 
 d) Note No. 22 regarding retaining of outstanding liability of
 Rs.925.98 Million on account of decommissioned assets pending
 arbitration case.
 
 e) Note No. 17 (b) regarding accounting of Liquidated Damages subject
 to acceptance by the parties.
 
 f) Note No. 19 regarding non provision of diminution in the value of
 investments in subsidiaries and joint ventures.
 
 g) The amount of service tax included in debtors and adjusted from
 deposit is not generated from the system and is done on manual basis.
 Service Tax ageing is also not available.
 
 h) Revenue from pre paid services has been recognized on the basis of
 SIM activated and its usage output generated through system and
 certified by the management being a technical matter.
 
 i) Expenditure on replacement of assets, equipments, instruments and
 rehabilitation work is capitalized if it results in enhancement of
 revenue earning capacity as stated in Significant Accounting Policy
 2(iii). This being a technical matter, we have placed reliance on the
 opinion of the management.
 
 j) Non provision for CDMA instruments which are faulty and un
 returnable for less than three years having WDV of Rs. 126.30 million
 should also be provided for as provision for loss of assets.
 
 k) TDSAT judgment on the issue of components of Other Income for the
 purpose of calculation of license fee has not been adopted pending the
 decision of the Hon''ble Supreme Court of India on the appeal of the DOT
 on this judgment of the TDSAT. In view of the uncertainty involved, we
 are unable to comment on the amount of license fee being calculated in
 this regard.
 
 vii) In our opinion, and to the best of our information and according
 to the explanations given to us, the said accounts read with the
 significant Accounting Policies and together with the notes thereon,
 give the information required by the Companies Act, 1956, in the manner
 so required and also give, subject to our observations in paragraph 4
 foregoing, a true and fair view in conformity with the accounting
 principles generally accepted in India.
 
 (a) in the case of Balance Sheet, of the State of Affairs of the
 Company as at 31 st March, 2011;
 
 (b) in the case of the Profit & Loss Account, of the Loss of the
 Company for the year ended on that date; and
 
 (c) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 ANNEXURE -1 TO THE AUDITORS'' REPORT (REFERREDTO IN PARAGRAPH - 3 OF OUR
 REPORT OF EVEN DATE)
 
 As required by the Companies (Auditor''s Report) Order, 2003, issued by
 the Central Government of India in terms of section 227(4A) of the
 Companies Act, 1956 and as per the information and explanations given
 to us, the books and records examined by us in the normal course of
 audit and to the best of our knowledge and belief, we further report
 that:
 
 1.  (a) Delhi unit has maintained records of fixed assets''. In case of
 Mumbai Unit and MS unit Mumbai, fixed assets registers maintained
 w.e.f. 01.04.2002 are adequate in so far as these give full particulars
 of quantitative details. In MS unit - Delhi, records of fixed assets
 have been maintained except that the identification number is not
 mentioned in respect of office machinery and equipments. The Corporate
 Office has maintained fixed assets register showing full particulars
 including quantitative details.
 
 (b) As per the Accounting Policy of the company, Fixed Assets are
 required to be physically verified by the Management on rotation basis,
 once in three years. As certified by the management, lines and wires,
 furniture & fixtures and electrical appliances were physically verified
 in accordance with programmed of verification by the management in this
 year and relied on by us. In our opinion, the area of physical
 verification needs to be further strengthened.
 
 (c) The company has not disposed off any substantial part of its fixed
 assets during the year and as such there is no effect on the going
 concern.
 
 2.  (a) In our opinion, physical verification of inventory has been
 conducted by the management at reasonable intervals.
 
 (b) In our opinion, the procedure of physical verification of the
 inventory followed by the management needs to be further strengthened.
 According to the information and explanations given to us, the physical
 verification of all the items of stores was carried out during the year
 by Delhi and Mumbai units. However, detailed physical verification
 report was not made available for the verification.
 
 (c) The Company is maintaining proper records of inventory. As per the
 information provided to us, discrepancies noticed on physical
 verification of inventory were not material and have been properly
 dealt with in the books of accounts.
 
 3.  Due to Non availability kintormation about the transactions
 required to be entered in the registers maintained under section 301 of
 the Companies Act, 1956 we are unable to comment on the same.
 
 4.  In our opinion and according to the information and explanations
 given, to us, there are adequate internal control procedures
 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 / services. In our opinion the internal control
 procedures needs to be further strengthened in regard to procedures
 with respect to the purchases under tenders floated and evaluated,
 appointment and reviewal/ renewal of service contracts of consultants
 and lawyers. The system regarding reconciliation & confirmation of
 deposit to various departments, reconciliation between the exchanges
 generated calls & billed calls, reconciliation of the balance in
 subscriber deposit account with subsidiary record, needs to be
 strengthened. The overall internal control systems on revenue billing
 needs to be strengthened, as the amount of service tax is not generated
 from the system and service tax ageing is also not available. System of
 reconciliation of IUC payable needs to be strengthened, as the amount
 generated as per the system for payable in certain cases has to be
 reconciled with some operators. Further in our opinion there should be
 a system of cross checking of IUC billing to operators. In respect of
 pending insurance claims of theft, fire and damage cases, related
 parties transactions, Compliance of TDS provisions of the Income Tax
 Act 1961, more conscious perusal and follow up at apt interval is
 required.
 
 5.  The Company has not made purchase of material from companies, firms
 or other parties listed in the register required to be maintained under
 section 301 of Companies Act 1956, aggregating during the year to Rs.
 5,00,000/- or more in value in respect of each party.  The company has,
 however, obtained and provided the services from / to the companies,
 firms or other parties listed in the register required to be maintained
 under section 301 of the Companies Act, 1956. The above transactions,
 though required to be entered in the register required to be maintained
 under section 301 of the Companies Act, 1956, have not been entered.
 
 6.  As informed to us, the Company has not accepted any deposits from
 the public during the year within the meaning of section 58 A of the
 Companies Act, 1956 and the rules framed there under. Therefore, the
 directives issued by the Reserve Bank of India are not applicable.
 
 7.  In our opinion, the Internal Audit System of the company is not
 commensurate with the size of the Company and the nature of its
 business. Moreover, the authority and independence, extent of coverage
 of the areas of operations, frequency / quality of reporting /
 timeliness of the reporting and the follow up of internal audit
 observations need to be strengthened.
 
 8.  The Central Government has prescribed the maintenance of cost
 records under clause (d) of sub section (1) of section 209 of Companies
 Act, 1956 i.e. 01.04.2003. The company has maintained the required Cost
 Records for the year 2009-2010 and the same records for the year under
 audit would be prepared after the audit of the final account. We have
 not carried out any detailed verification of these cost records.
 
 9.  (a) There were no undisputed amounts payable in respect of
 Statutory Dues including Contributory Provident Fund, Investor
 Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax,
 Custom Duty, Excise Duty, Cess and any Other Statutory Dues outstanding
 as at 31.03.2011, for a period of more than six months from the date
 they become payable except service tax payable on amount lying in
 unlinked credits accounts in units (amount not ascertainable). As
 informed to us, the provisions of Employees State Insurance Act are not
 applicable to the company. There has generally been no delay in
 depositing CPF contribution to the trust. GPF contribution, in respect
 of employees on deemed deputation, is generally remitted regularly to
 DOT cell. GPF contribution, in respect of absorbed DOT employees, has
 been deposited with the GPF Trust after registration of the trust with
 Income Tax Department.  However, as at the year end there has been some
 delay in remitting funds to the Trust.
 
 (b) According to the information and explanation given to us, there are
 no dues in respect of Custom Duty, Excise Duty and Cess that have not
 been deposited with the appropriate authorities on account of any
 dispute. However, the Company has not deposited Sales Tax /VAT Dues,
 Service Tax and Income Tax Dues on account of disputes as under:
 
 Local Sales Tax and Central Sales Tax /VAT: (i) Sales Tax Delhi Unit
 
 Name of      Amount (Rs)   Amount (Rs)  Period  Authority where pending
 the Statute     L.S.T         C.S.T
 
 Delhi Sales 
 Tax Act          268131      92302769  1988-89  Addl.Comm. Sales Tax
 
 Delhi Sales 
 Tax Act          162120      20517000  1989-90  Addl.Comm. Sales Tax
 
 Delhi Sales 
 Tax Act         1006001      15337192  1990-91  Addl. Comm. Sales Tax
 
 Delhi Sales 
 Tax Act        11660806      63932673  1991-92  Addl. Comm. Sales Tax
 
 Delhi Sales 
 Tax Act         1437418     144392134  1992-93  Addl. Comm. Sales Tax
 
 Delhi Sales 
 Tax Act         1699669        176491  1993-94  Addl. Comm. Sales Tax
 
 Delhi Sales 
 Tax Act         1032760     201103762  1994-95  Addl. Comm. Sales Tax
 
 Delhi Sales 
 Tax Act          827253      88446906  1995-96  Addl. Comm. Sales Tax
 
 Delhi Sales 
 Tax Act           71319             0  1996-97  Addl. Comm. Sales Tax
 
 Delhi Sales 
 Tax Act               0        102613  1998-99  High, court
 
 Delhi Sales 
 Tax Act            1461        545178  1999-00  High court
 
 Delhi Sales 
 Tax Act           88527          5000  2000-01  High court
 
 Delhi Sales 
 Tax Act         2036407         15200  2001-02  Addl. Comm. Sales Tax
 
 Delhi Sales 
 Tax Act          371932             0  2002-03  Addl. Comm. Sales Tax
 
 Delhi Sales 
 Tax Act         1255424             0  2003-04  Addl. Comm. Sales Tax
 
 Delhi Sales 
 Tax Act               0     180544146  1987-88
                                          to     Addl. Comm. Sales Tax
                                        1993-94
 
 Delhi Sales 
 Tax Act        72041344          4234  2004-05  Addl. Comm. Sales Tax
 
 Delhi Sales 
 Tax Act         4459877             0  2005-06  Addl. Comm. Sales Tax
 
 Delhi Sales 
 Tax Act         1914095             0  2006-07  Addl. Comm. Sales Tax
 
 Delhi Sales 
 Tax Act        26524858             0  2007-08  Addl. Comm. Sales Tax
 
 TOTAL         365583127     807425298
 
 The unit has already deposited Rs. 154733054/- out of the total
 disputed liability stated above.
 
 Mumbai Unit
 
 Name of     Nature of Dues    Amount under   Year to  Forum where
 the Statute                      dispute     which   the dispute
                                  deposited   amount  is pending
                                              relates
 
 BST ACT     Assessed Amount        672968    1993-94   MSTT
 
 BST Act     Assessed Amount      52693370    1996-97   DC
 
 BST Act     Assessed Amount    3514698437    1997-98   Jt. Commr. of
                                                        Sales Tax Appeals
 
 BST Act     Assessed Amount      59424662    1998-99   MSTT
 
 BST Act     Assessed Amount    1013116938   1999-2000  Jt.Commr.of Sales
                                                        Tax Appeals
                                  35201675              MSTT
 
 BST Act     Assessed Amount      54329094    2000-01   MSTT             
 
 BST Act     Assessed Amount     101128984    2001-02   Jt.Commr.of Sales
                                                        Tax Appeals
 
 BST Act     Assessed Amount      49102898    2002-03   MSTT
 
 BST ACT     Assessed Amount    2161090302    2003-04   Jt.Commr.of Sales
                                                        Tax Appeals
 
 BST ACT     Assessed Amount    1015717015    2004-05   Assessment order
                                                        received on
                                                        19.4.2011. 
                                                        appeal to be
                                                        filed.
 
                                3381368293
 
 (ii) Service Tax
 
 Name of the Statute     Amount (Rs)    Period    Authority where pending
 
 Delhi Unit
 
 Service Tax Act             770447    2007-08          CESTAT
 
 Service Tax Act           59476320    2006-07 &        CESTAT
                                       2007-08
 
 Service Tax Act           42472842    2004-05          CESTAT
 
 Service Tax Act            6826503    2005-06          CESTAT
 
 Service Tax Act             633391    2006-07          CESTAT
 
 Service Tax Act             209390    2007-08          CESTAT
 
 Service Tax Act          110670398    Penalty          CESTAT
 
 Mumbai Unit
 
 Service Tax Act            4100000    2003-04          CESTAT
 
 Total                    225159291
 
 Statutory dues which have not been deposited in respect of Mumbai MS
 unit as on 31-03-2011.
 
 S.
 No   Nature of dues           Amount Under      Forum where the
                               dispute not       dispute is pending
                               deposited (Rs)
 
 1 Installation of BTS Site      2909233              CESTAT
 
 2 Installation of BTS Site      3210353              CESTAT
 
 3 Installation of BTS Site      2617816              CESTAT
 
 4 Service tax demand 2003-04    2080000         Jt. Comm. (Appeals)
 
 Total                          10817402
 
 (c) It may be noted that at present, no Rules relating to the amount of
 cess for rehabilitation or revival or protection of assets of sick
 industrial companies, payable by a company under section 441A of the
 Act have been notified by the Central Government. Thus, we are not able
 to comment on the regularity or otherwise about on this particular
 issue.
 
 10.  The company has no accumulated losses, however the company has
 incurred cash losses amounting to Rs. 13917.68 million during the year
 covered by our Audit and Rs. 8514.78 million in the immediately
 preceding financial year.
 
 11.  As per records of the company and according to the information and
 explanation provided by the management, we report that there is no
 default in repayment of dues for the loan taken from financial
 institution during the period under our audit.
 
 12.  The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 Accordingly, clause 4 (xii) of the order is not applicable.
 
 13.  The Company is not a Chit Fund or a Nidhi Mutual Benefit Fund /
 Society. Accordingly, clause 4(xiii) of the order is not applicable.
 
 14.  The Company is not dealing in or trading in shares, securities,
 debentures and other investments. Accordingly, clause 4(xiv) of the
 Order is not applicable.
 
 15.  According to the information and explanation given to us, the
 Company has not given any guarantees for loans taken by others from
 banks or financial institutions. Accordingly, clause 4(xv) of the Order
 is not applicable.
 
 16.  According to the information and explanation provided by the
 management, we report that during the year Company has taken term loans
 from financial institution and utilized the same for the purpose for
 which it was taken.
 
 17.  According to the information and explanations given to us and on
 an overall examination of Balance sheet of the company, we report that
 no funds raised on short term basis have been used for long term
 investment by the company.
 
 18.  The Company has not made any preferential allotment of-shares to
 parties and companies covered in the register maintained under section
 301 of the Act.
 
 19.  The Company has not issued any debentures. Accordingly, clause
 4(xix) of the Order is not applicable.
 
 20.  The Company has not raised any money by public issues during the
 year. Accordingly, clause 4(xx) of the Order is not applicable.
 
 21. According to the information and explanations given to us, no major
 fraud on or by the company has been noticed or reported during the year
 except as reported in Note No. 27 (b) of Schedule T. The details with
 regard to status of frauds till 31.03.2011 have not been provided to us
 as such provision in this regard, if any, could not be ascertained.
 
 For Bansal Sinha & Co.                        For Goel Garg & Co.
 
 Chartered Accountants                       Chartered Accountants
 
 FRN-06184N                                             FRN-00397N
 
 sd/-                                                         sd/-
 
 (Ravinder Khullar)                                 (Ajay Rastogi)
 
 (Partner)                                               (Partner)
 
 (Mem. No. 82928)                                 (Mem. No. 84897)
 
 Place: New Delhi 
 
 Date: June 30,2011