Mphasis

We have audited the attached balance sheet of MphasiS Limited (the
 Company) as at 31 October 2008, and also the profit and loss account
 and the cash flow statement for the period from 1 April 2008 to 31
 October 2008, 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.
 
 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 management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 As required by the Companies (Auditors Report) Order, 2003 (the
 Order), 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.
 
 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, the 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;
 
 (v) on the basis of written representations received from the
 directors, as at 31 October 2008 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as at
 31 October 2008 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956 on the
 said date; and
 
 (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 2008;
 
 (b) in the case of the profit and loss account, of the profit of the
 Company for the period from 1 April 2008 to 31 October 2008; and
 
 (c) in the case of the cash flow statement, of the cash flows of the
 Company for the period from 1 April 2008 to 31 October 2008.
 
 Annexure to the Auditors Report on the Financial Statements
 
 The Annexure referred to in our report to the members of the Company
 for the period from 1 April 2008 to 31 October 2008.  We report that:
 
 1.  The Company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 2.  The Company has a regular programme of physical verification of its
 fixed assets by which all fixed assets are verified in a phased manner
 over a period of three years. In our opinion, this periodicity of
 physical verification is reasonable having regard to the size of the
 Company and the nature of its assets. In accordance with this
 programme, the Company has physical verified certain fixed assets and
 are in the process of reconciliation with the books of accounts.
 Management represents that discrepancies, if any are not expected to be
 material.
 
 3.  Fixed assets disposed off during the year were not substantial, and
 therefore, do not affect the going concern assumption.
 
 4.  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 Order is
 not applicable.
 
 5.  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.
 
 6.  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 with regard
 to purchase of fixed assets and sale of services. The activities of the
 Company do not involve purchase of inventories and the sale of goods.
 We have not observed any major weakness in the internal controls during
 the course of the audit.
 
 7.  In our opinion, and according to the information and explanations
 given to us, there are no contracts and arrangements the particulars of
 which need to be entered in to the register maintained under section
 301 of the Companies Act, 1956.
 
 8.  The Company has not accepted any deposits from the public.
 
 9.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 10.  The Central Government of India has not prescribed the maintenance
 of cost records under section 209(1 )(d) of the Companies Act, 1956 for
 services rendered by the Company.
 
 11.  According to the information and explanations given to us and on
 the basis of our examination of the records of the Company, amounts
 deducted/ accrued in the books of account in respect of undisputed
 statutory dues including Provident Fund, Employees State Insurance,
 Income-tax, Sales-tax, Service tax, Customs duty, Wealth tax and any
 other material statutory dues have been generally regularly deposited
 during the period by the Company with the appropriate authorities,
 though there has been a slight delay in a few cases. As explained to
 us, the Company did not have any dues on account of Investor Education
 and Protection Fund and Excise duty.
 
 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.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Employees
 State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax,
 Customs duty and other material statutory dues were in arrears as at 31
 October 2008 for a period of more than six months from the date they
 became payable.
 
 12. According to the information and explanations given to us, there
 are no dues in respect of Wealth tax, Service Tax, Excise duty and Cess
 which have not been deposited with the appropriate authorities on
 account of any dispute.
 
 According to the information and explanations given to us, the
 following dues of Income-tax, Sales-tax and Customs Duty have not been
 deposited by the Company on account of disputes:
 
 Name of the Statute      Nature of the Dues        Amount (Rs.)*
 
 Internal Revenue          Tax/Interest               46,513,169
 Services (IRS), USA
 
 Income tax Act, 1961      Tax/penalty/interest      120,900,000
 
 Customs Act, 1962         Customs duty/penalty          800,000
 
 Customs Act, 1962         Customs duty/penalty        5,190,000
 
 Karnataka Sales tax       Tax/penalty/interest        2,067,781
 Act, 1957
 
 Period to which        Forum where dispute
 the amount relates     is pending
 
 2002 - 05              IRS Supervisor
 
 2004 - 05              CIT Appeals
 
 2002   03              Commissioner of
                        Customs (Appeals)
 
 2002 - 03              Commissioner of
                        Customs (Appeals)
 
 2004 - 05              Sales Tax Appellate
                        Tribunal, Karnataka
 
 * The amounts paid under protest have been reduced from the amounts
 demanded in arriving at the aforesaid disclosure.
 
 13.  The Company does not have any accumulated losses at the end of the
 financial period and has not incurred cash losses in the current period
 and in the immediately preceding financial year.
 
 14.  In our opinion and according to the information and explanation
 given to us, the Company has not defaulted in repayment of dues to its
 bankers. The Company did not have any outstanding dues to any financial
 institutions and debentureholders during the period.
 
 15.  The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 16.  In our opinion and according to the information and explanation
 given to us, the Company is not a chit fund or a nidhi/mutual benefit
 fund/society.
 
 17.  According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 18.  According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 19.  The Company did not have any term loans outstanding during the
 period.
 
 20.  According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we are of
 the opinion that the funds raised on short-term basis have not been
 used for long-term investment.
 
 21.  The Company has not made any preferential allotment of shares to
 companies/firms/parties covered in the register maintained under
 section 301 of the Companies Act, 1956.
 
 22.  The Company did not have any outstanding debentures during the
 period.
 
 23.  The Company has not raised any money by public issues during the
 period.
 
 24.  According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
                                                   for B S R & Co.
                                            Chartered Accountants
 
                                                    Zubin Shekary
                                                          Partner
                                             Membership No. 48814
 Bangalore
 26 November 2008