Patni Computer Systems

We have audited the attached Balance Sheet of Patni Computer Systems
 Limited (the Company) as at 31 December 2008, 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.
 
 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.
 
 As required by the Companies (Auditors Report) Order, 2003 (the
 Order) issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956 (the Act),
 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:
 
 a) 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;
 
 b) 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;
 
 c) 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;
 
 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 Act;
 
 e) on the basis of written representation received from the directors
 of the Company, as at 31 December 2008 and taken on record by the Board
 of Directors, we report that none of the directors are disqualified as
 at 31 December 2008 from being appointed as a director in terms of
 clause (g) of sub-section (1) of Section 274 of the Act, and
 
 f) 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 Act 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 31 December 2008;
 
 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 for the
 year ended on that date.
 
 Annexure to the Auditors’ Report (Referred to in our report of even
 date)
 
 1 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 its
 fixed assets, by which all fixed assets are verified in a phased manner
 over a period of three years. During the current year, as part of a
 cyclical plan, the Company has carried out physical verification of
 certain fixed assets and no material discrepancies were noticed upon
 such verification. In our opinion, this periodicity of physical
 verification is reasonable having regard to the size of the Company and
 the nature of its assets.
 
 c) Fixed assets disposed off during the year were not substantial and,
 therefore, do not affect the going concern assumption.
 
 2 The Company is a service company, primarily rendering IT consulting
 and software development services. Accordingly it does not hold any
 physical inventories. Thus, paragraph 4(ii) of the Order is not
 applicable.
 
 3 The Company has neither granted nor taken any loans, secured or
 unsecured, to/from companies, firms or other parties covered in the
 register maintained under Section 301 of the Act.
 
 4 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 nature of its business with regard to
 purchase of fixed assets and with regard to sale of services.  The
 activities of the Company do not involve purchase of inventory and the
 sale of goods. We have not observed any major weakness in the internal
 control system during the course of the audit.
 
 5 a) In our opinion and according to the information and explanations
 given to us, the particulars of contracts or arrangements referred to
 in Section 301 of the Act, have been entered in the register required
 to be maintained under that section.
 
 b) In our opinion, and according to the information and explanations
 given to us, the transactions made in pursuance of contracts and
 arrangements referred to in (a) above and exceeding the value of Rs. 5
 lakh with any party during the year have been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 6 The Company has not accepted any deposits from the public.
 
 7 In our opinion, the Company has an internal audit system commensurate
 with the size and nature of its business.
 
 8 The Central Government has not prescribed the maintenance of cost
 records under Section 209(1)(d) of the Act, for any of the services
 rendered by the Company.
 
 9 a) 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, Wealth tax, Service tax, Customs duty, Excise
 duty, Cess and other material statutory dues have been generally
 regularly deposited during the year by the Company with the appropriate
 authorities. As explained to us, the Company did not have any dues on
 account of Investor Education and Protection Fund.
 
 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, Excise duty, Cess and other material statutory dues were
 in arrears as at 31 December 2008 for a period of more than six months
 from the date they became payable.
 
 There were no dues on account of Cess under section 441A of the Act,
 since the date from which the aforesaid section comes into force has
 not yet been notified by the Central Government.
 
 b) According to the information and explanations given to us, the
 following dues of Income tax have not been deposited by the Company on
 account of disputes:
 
 Name of       Nature of      Demand
 statute       dues           (Rs. in mn.)
 
 Income tax    Income tax      274
 Act, 1961
 Income tax    Income tax      459
 Act, 1961
 Income tax    Income tax       18
 Act, 1961
 Income tax    Income tax      630
 Act, 1961
 Income tax    Income tax    1,131
 Act, 1961
 
 Amount paid      Period           Forum where
 (Rs. in mn.)                      dispute is
                                   pending
 
     -            Assessment       Income Tax
                  year 2002-03     Appellate
                                   Tribunal
 
     -            Assessment       Commissioner
                  year 2003-04     of Income Tax
                                   Appeals
                                  (Demand stayed)
 
     -            Assessment       Income tax
                  year 2003-04     Appellate
                                   Tribunal
 
     -            Assessment       Income Tax
                  year 2004-05     Appellate
                                   Tribunal
 
     -            Assessment       Commissioner
                  year 2005-06     of Income tax
                                   Appeals
                                  (Demand stayed)
 
 10 The Company does not have accumulated losses at the end of the
 financial year and has not incurred cash losses in the current
 financial year and in the immediately preceding financial year.
 
 11 The Company did not have any outstanding dues to any financial
 institution, banks or debentureholders during the year.
 
 12 The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13 In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund/ nidhi / mutual benefit
 fund / society.
 
 14 According to the information and explanations given to us, the
 Company is not dealing in or trading in shares, securities, debentures
 and other investments.
 
 15 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.
 
 16 The Company did not have any term loans outstanding during the year.
 
 17 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.
 
 18 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.
 
 19 The Company did not have any outstanding debentures during the year.
 
 20 We have verified the end-use of money raised by public issue as
 disclosed in the notes to the financial statements.
 
 21 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 BSR & Co.  
                                        Chartered Accountants
 
                                         Natrajan Ramkrishna
 Mumbai                                              Partner
 12 February 2009                      Membership No: 032815