1.  We have audited the attached Balance Sheet of Punj Lloyd Limited
 (''the Company'') as at March 31, 2011 and also the profit and Loss
 account and the cash fl ow 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 fi
 nancial 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.  We did not audit the financial statements of certain branches of
 the Company, whose financial statements (net of eliminations) refl ect
 total assets of Rs. 25,733,173 thousand as at March 31, 2011, total
 revenue of Rs. 13,273,095 thousand and cash fl ows amounting to Rs.
 2,025,443 thousand for the year then ended. We also did not audit the
 financial statements of certain unincorporated joint ventures of the
 Company, whose financial statements (net of eliminations) refl ect, to
 the extent of the proportionate share of the Company, total assets of
 Rs. 1,160,918 thousand as at March 31, 2011, total revenue of Rs.
 1,979,803 thousand and cash fl ows amounting to Rs. 373,499 thousand
 for the year then ended.  These financial statements and other fi
 nancial information of branches and unincorporated joint ventures not
 audited by us have been audited by other auditors whose reports have
 been furnished to us, and our opinion in so far as it relates to the
 amounts included for such branches and unincorporated joint ventures,
 is based solely on the report of other auditors.
 
 5.  (a) Attention is invited to note 30 of schedule ''M'' to the fi
 nancial statements. The Company during the previous year had taken
 credit for a claim of Rs. 2,430,300 thousand on a contract and had also
 not accounted for liquidated damages amounting to Rs. 654,891 thousand
 deducted by the customer in view of the reasons stated in the said
 note. Further, there are other debtors outstanding of Rs. 844,527
 thousand and unbilled work in progress inventory of Rs. 1,603,397
 thousand relating to the said contract as at March 31, 2011. Due to the
 uncertainty over ultimate collection of the said amounts, we are unable
 to comment on the same. Our previous year ended March 31, 2010 audit
 report was also qualified in respect of the same matter.
 
 (b) Attention is invited to note 31 of schedule ''M'' to the financial
 statements. The Company during the year has taken credit for a claim of
 Rs. 897,346 thousand on two contracts, which are pending acceptance by
 the customers. Due to the uncertainty over ultimate collection of the
 said amounts, we are unable to comment on the same.
 
 6.  As stated in note 19 of schedule ''M'' to the financial statements,
 due to civil and political disturbances and unrest in Libya, the work
 on all the projects in Libya has stopped. There are aggregate assets of
 Rs. 9,909,622 thousand, aggregate revenues of Rs. 1,954,565 thousand,
 profits before tax of Rs. 96,816 thousand and cash fl ows of
 Rs.1,803,620 thousand for the year then ended in Libya Branch, which
 have been audited by another auditor in Libya. However, we were unable
 to perform certain procedures that we considered necessary under the
 requirements of Statement on Auditing SA600 (Using the work of another
 auditor) issued by the Institute of Chartered Accountants of India,
 including obtaining corroborative information and/ or audit evidence,
 in relation to certain components of financial statements of Libya
 Branch. The ultimate outcome of above matters cannot presently be
 ascertained in view of the uncertainty as stated above. Accordingly, we
 are unable to comment on the consequential effects of the foregoing on
 the financial statements.
 
 7.  Without qualifying our opinion, we draw attention to note 11 (a) of
 schedule ''M'' to the financial statements regarding deductions made/
 amounts withheld by some customers aggregating to Rs. 725,128 thousand
 on various accounts which are being carried as sundry debtors. Due to
 dispute and other pending matters with the customers, the ultimate
 outcome of the above matters cannot presently be determined although
 the Company is of the view that such amounts are recoverable and hence
 no provision is required there against.
 
 8.  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 and proper returns adequate for the purposes of our audit
 have been received from branches and unincorporated joint ventures not
 visited by us except to the extent stated in paragraph 6 above. The
 branches and unincorporated joint ventures Auditor''s Reports have been
 forwarded to us and have been appropriately dealt with;
 
 iii. The balance sheet, profit and loss account and cash fl ow
 statement dealt with by this report are in agreement with the books of
 account and with the audited returns from the branches and
 unincorporated joint ventures;
 
 iv.  In our opinion, the balance sheet, profit and loss account and
 cash fl ow 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 to the extent of our comments in
 paragraph 5 above.
 
 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.  Without considering our observations in paragraph 5 and 6 above,
 the impact whereof on the Company''s profits is not presently
 ascertainable, in our opinion and on consideration of reports of other
 auditors on separate financial statements and on the other financial
 information 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 fl ow statement, of the cash fl ows for the year
 ended on that date.
 
 Annexure referred to in paragraph [3] of our report of even date Re:
 Punj Lloyd Limited (''the Company'')
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) As informed to us, the physical verification of part of the Plant
 and Machinery which was due during the year in accordance with a phased
 programme of verifying all fixed assets once in three years, is under
 progress and has not been completed. The Management is confident that
 no material discrepancies shall exist therein as compared to fixed
 assets records. In the absence of complete physical verification, we
 are unable to comment on the discrepancies therein, if any.
 
 (c) There was no substantial disposal of fixed assets during the year.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 (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, and having regard to the explanation that certain project
 materials and fixed assets purchased are of specialized nature and
 alternate sources do not exist for obtaining quotations thereof, 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, 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 Companies Act, 1956,
 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 the value of Rupees five lakhs entered into
 during the financial year, because of the unique and specialized
 nature of the items involved, no comparison of prices paid can be made
 with 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
 the products of the Company.
 
 (ix) (a) 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 have generally been
 regularly deposited with the appropriate authorities though there have
 been slight delays in a few cases.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under section 441 A of the Companies Act, 1956,
 we are not in a position to comment upon the regularity or otherwise of
 the Company in depositing the same.
 
 (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 dues                    Amount in
                                                             Rs.'' 000
 
 Andhra Pradesh General    Sales Tax on the material 
                           components of                        6,987
 Sales Tax Act, 1956       the works contract.
 
 Andhra Pradesh General    Sales Tax on the material 
                           components of                       22,248
 
 Sales Tax Act, 1956       the works contract.
 
 Andhra Pradesh General    Penalty for use of G Form 
                           against material                    18,688
 
 Sales Tax Act, 1956       purchases
 
 Andhra Pradesh General    Penalty for use of G Form 
                           against material                    42,333
 
 Sales Tax Act, 1956       purchases
 
 Andhra Pradesh General    Penalty for suppression of 
                           Turnover                             3,248
 
 Sales Tax Act, 1956
 
 Andhra Pradesh General    Penalty for suppression of 
                           Turnover                             2,872
 Sales Tax Act, 1956
 
 Uttar Pradesh Central 
 Sales                     Penalty against Form C usage
                           for purchase                         2,847
 Tax Act, 1956             of machinery
 
 Uttar Pradesh Central 
 Sales                     Penalty against Form C usage 
                           for purchase                         2,140
 Tax Act, 1956             of machinery
 
 Uttar Pradesh Trade 
 Tax Act,                  Entry tax demand                       499
 1948
 
 Uttar Pradesh Trade Act,  Entry tax demand                       196
 1948
 
 Uttar Pradesh Trade Act,  Entry tax demand                        65
 1948
 
 Uttar Pradesh Trade Act,  Sales tax form not accepted by the   1,140
 1948                      department
 
 Gujarat Sales Tax 
 Act, 1969                 Differential Sales Tax for non 
                           submission of                       62,087
                           statutory forms.
 
 Gujarat Sales Tax 
 Act, 1969                 CST against sales in transit           720
 
 Haryana Local Area        Entry Tax demand                     3,995
 Development Tax 
 Act, 2000
 
 Maharashtra VAT Act, 2002 VAT on Transportation,               4,560
                           Travelling Charges & Penalty
 
 Madhya Pradesh Entry Tax  Entry Tax demand                       588
 Act, 1976
 
 Haryana Value Added Tax   Disallowance of deduction           53,985
 Act, 2003
 
 Kerala VAT Act, 2003      Disallowance of deduction           85,997
 
 Rajasthan Tax on the 
 Entry                     Entry Tax on Material Equipment      9,107
 of Goods into the Local 
 Area Act, 2001
 
 Chattisgarh Entry Tax Act Entry tax demand on material 
                           component                            2,279
 1976
 
 Karnataka Sales Tax Act,  Interest on Entry Tax imposed 
                           by DCCT,                             2,347
 1957                      Bangalore
 
 West Bengal Vat Act, 2003 Disallowance of deduction           11,492
 
 Central Excise Act, 1944  Non-Payment of Excise duty           9,567
 
 The Finance Act, 2004 and Penalty for late deposit of 
                           Service Tax                        108,068
 the Service Tax Rules
 
 The Finance Act, 2004 and Penalty for late deposit of  
                           Service Tax                         64,728
 the Service Tax Rules
 
 The Finance Act, 2004 and Disallowance of deduction for
                           value of                            15,915
 the Service Tax Rules     goods sold
 
                           Period to which the Forum where dispute is 
                                               pending
                           amount relates
 
 
 Andhra Pradesh General
 Sales Tax Act, 1956       1998-1999, 2000-    Sales Tax Appellate 
                                               Tribunal, Hyderabad,
                           2001 and 2004-2005  Andhra Pradesh
 
 Andhra Pradesh General
 Sales Tax Act, 1956       2001-2002           High Court, Hyderabad,
                                               Andhra Pradesh
                           to 2003-2004
 
 Andhra Pradesh General
 Sales Tax Act, 1956       2001-2002           Sales Tax Appellate
                                               Tribunal, Vizag, Andhra
                           to 2004-2005        Pradesh
 
 Andhra Pradesh General
 Sales Tax Act, 1956       2002-2003           Appellate Deputy 
                                               Commissioner, Vizag,
                           to 2004-2005        Andhra Pradesh
 
 Andhra Pradesh General
 Sales Tax Act, 1956       2003-2004           Sales Tax Appellate
                                               Tribunal, Vizag, Andhra
                           to 2004-2005        Pradesh
 
 Andhra Pradesh General
 Sales Tax Act, 1956       2004-2005           Appellate Deputy 
                                               Commissioner, Vizag,
                                               Andhra Pradesh
 
 Uttar Pradesh Central 
 Sales Tax Act, 1956       1998-1999           Allahabad, High Court,
                                               Uttar Pradesh
 Uttar Pradesh Central 
 Sales Tax Act, 1956       1998-1999           Sales Tax Appellate 
                                               Tribunal, Agra, Uttar
                                               Pradesh
 
 Uttar Pradesh Trade Tax 
 Act, 1948                 1999-2000           Joint Commissioner, 
                                               Appeal, Mathura,
                           to 2000-2001        Uttar Pradesh
 
 Uttar Pradesh Trade Act,
 1948                      2004-2005           Allahabad, High Court,
                                               Uttar Pradesh
 
 Uttar Pradesh Trade Act,
 1948                      2002-2003 and       Commercial tax tribunal,
                                               Agra
                           2004-2005
 
 Uttar Pradesh Trade Act,
 1948                      2010-2011           Allahabad, High Court,
                                               Uttar Pradesh
 
 Gujarat Sales Tax 
 Act, 1969                 1998-1999           Sales Tax Appellate
                                               Tribunal, Ahmedabad,
                           to 1999-2000        Gujarat.
 
 Gujarat Sales Tax Act, 
 1969                      2002-2003           Dy. Commissioner 
                                              (Appeals), Baroda
 
 Haryana Local Area
 Development Tax Act, 2000 2003-2004           Supreme Court, New Delhi
 
 Maharashtra VAT Act, 2002 2006-2007           Joint Commissioner 
                                               Appeal, Nasik,
                                               Maharashtra
 
 Madhya Pradesh Entry Tax
 Act, 1976                 2003-2004           High court, Gwalior 
                                               bench, Madhya Pradesh
 
 Haryana Value Added Tax
 Act, 2003                 2003-2004           Sales Tax Appellate 
                                               Tribunal Chandigarh,
                           & 2004-2005         Haryana
 
 Kerala VAT Act, 2003      2005-2006           Dy. Commissioner 
                                              (Appeals) – Ernakulam,
                           & 2006-2007         Kerala
 
 Rajasthan Tax on the 
 Entry of Goods into the 
 Local Area Act, 2001      2005-2006           High Court, Jodhpur,
                                               Rajasthan
 
 Chattisgarh Entry Tax 
 Act, 1976                 2005-2006           Supreme Court, New Delhi
 
 Karnataka Sales Tax Act,
 1957                      2003-2004           Joint Commissioner 
                                              (Appeals), Bangalore
 
 West Bengal Vat Act, 2003 2007-2008           Sr. Joint Commissioner, 
                                               Midnapur Circle,
                                               West Bengal
 
 Central Excise Act, 1944  2006-2007           Commissioner of Customs 
                                               and Excise
 
 The Finance Act, 2004 and
 the Service Tax Rules     2005-2006           CESTAT, Delhi
                           to 2006-2007
 
 The Finance Act, 2004 and
 the Service Tax Rules     2003-2004           CESTAT, Delhi
                           to 2006-2007
 
 The Finance Act, 2004 and
 the Service Tax Rules     2003-2004           CESTAT, Delhi
                           to 2006-2007
  
 (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 the repayment of dues to financial
 institution, banks 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 (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 guarantees for loans taken by subsidiaries/ joint
 ventures from banks and 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) According to the information and explanations given to us, the
 Company had issued 3,000 debentures of Rs. 1,000,000 each during the
 period covered by our audit report. The Company has created charge in
 respect of debentures so issued.
 
 (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 Raj Agrawal
 
 Partner
 
 Membership No.: 82028
 
 Place : Gurgaon
 
 Date : May 30, 2011