1.  We have audited the attached balance sheet of MphasiS Limited (the
 Company) as at 31 October 2010 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
 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 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 (Auditors 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.  Without qualifying our opinion, we draw attention to Note 2(c) to
 the financial statements. In accordance with the order of the Honble
 High Court of Karnataka and Honble High Court of Judicature at Madras,
 the goodwill of Rs 173,468,380 accounted at the time of acquisition of
 MphasiS FinSolusitions Private Limited and deficit of Rs 4,298,664 in
 net assets acquired by the Company as of appointed date of 1 November
 2009 has been reduced from the securities premium account of the
 Company and expenses of Rs 622,311 incurred by the Company in
 connection with the amalgamation scheme have been adjusted against the
 general reserves of the Company which is different from the
 requirements of Accounting Standard 14 for Accounting for
 Amalgamations and Generally Accepted Accounting Principles as
 discussed in the said note.
 
 5.  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 31 October 2010, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31 October 2010 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 31 October 2010;
 
 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:
 MphasiS Limited (the Company)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The Company has a regular programme of physical verification of
 fixed assets which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. In accordance with
 this programme, certain fixed assets were physically verified by the
 management during the year and we are informed that no material
 discrepancies were noticed on such verification.
 
 (c) There was no substantial disposal of fixed assets during the year.
 
 (ii) The Company is a service company, primarily rendering information
 technology solutions and related services.  Accordingly, it does not
 hold any physical inventories. Thus, paragraph 4(ii) of the Companies
 (Auditors Report) Order, 2003 (as amended) is not applicable to the
 Company.
 
 (iii) As informed, the Company has neither granted nor taken any loans,
 secured or unsecured, to or from companies, firms or other parties
 covered in the register maintained under section 301 of the Companies
 Act, 1956.
 
 (iv) In our opinion and according to the information and explanations
 given to us the activities of the Company do not involve purchase of
 inventories and the sale of goods. 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 fixed assets and for the sale of
 services. During the course of our audit, no major weakness has been
 noticed in the internal control system in respect of these areas.
 During the course of our audit, we have not observed any continuing
 failure to correct major weakness in internal control system of the
 company.
 
 (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 our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five lakhs have been entered
 into during the financial year at prices which are reasonable having
 regard to the 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) To the best of our knowledge and as explained, 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 for
 services rendered by the Company.
 
 (ix) (a) Undisputed statutory dues including investor education and
 protection fund, employees state insurance, income-tax, sales-tax,
 labour welfare fund, provident fund, wealth-tax, customs duty, excise
 duty, professional tax, central sales tax, cess have generally been
 regularly deposited with the appropriate authorities though there have
 been delays in remittance of service tax and Value Added Tax in few
 cases.
 
 Further, there were no dues on account of cess under section 441A of
 the Companies Act, 1956 since the date from which the aforesaid section
 comes in to force has not yet been notified by the 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, there are no dues of
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and cess which have not been deposited on account of any dispute
 except the following:
                                                          Disputed
 Name of the                Nature ot dues                Amount
 statue                                                   
  
 Income Tax Act, 1961      Adjustment for transfer
                           pricing and other            245,934,507
                           disallowances                   
 
                                                        452,240,663
 
                                                        120,900,000
 
 Income Tax Act, 1961      Disallowances under            18194 392
                           section 10A                    
 
                                                          6,843,257
 
                                                         13,377,287
 
 Customs Act, 1962         Debonding charges              5,990,000
 Karnataka Sales Tax Act,  Sales tax                      3 934 982
 1957                                                     1,196,557
 
 Finance Act, 1994         Service tax                   21,926,611
 
 
 
 Name of the        Amount Paid    Period to which the    
 
                                                         Forum where 
                                                         dispute is
                    under protest     amount relates     pending    
                       (Rs)        (financial year)
 
 
 Income Tax Act, 1961                                  In the process
                                                        of filing
                         Nil            2005-06        appeal before 
                                                       Income Tax
                                                      Appellate Tribunal
 
                     53,500,000         2004-05   Commissioner ot Income
                                                       Tax (Appeals)      
 
                         Nil            2003-04     Income Tax Appellate
                                                           Tribunal
 
 Income Tax Act, 
 1961                10,000,000         2001 -02  Commissioner of Income
 
                         Nil            2002-03   Tax
 
                      6,500,000         2005-06   
 
 Customs Act, 1962                                Commissioner of Customs
                         Nil            2002-03   (Appeals)           
 
 Karnataka Sales Tax Act,
 1957                 3,934,982         2004-05   Sales Tax Appellate
 
                      1,196,559         2003-04   Tribunal, Karnataka
 
 Finance Act, 1994        Nil         2005-2007   CESTAT, Karnataka
 
 (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.  As at the year end, the
 Company did not have any outstanding dues to any financial institutions
 and 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 (Auditors 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 (Auditors Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 (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 through a public issue during
 the year.
 
 (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 & Co.
 
 Firm registration number: 301003E
 Chartered Accountants
 
 per Navin Agrawal
 
 Partner
 
 Membership No.: 56102
 
 Place : Bangalore
 
 Date  : 22 November 2010