Punj Lloyd

1.  We have audited the attached Balance Sheet of Punj Lloyd Limited
 (‘the Company’) as at March 31, 2009 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 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
 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 (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 (net of eliminations) of
 certain branches of the Company, whose financial statements reflect
 total assets of Rs. 29,189,349 thousand as at March 31, 2009, total
 revenue of Rs. 32,250,963 thousand and cash flows amounting to Rs.
 2,069,455 thousand for the year then ended. These financial statements
 and other financial information of branches not audited by us have been
 audited by other auditors whose reports have been furnished to us, and
 our opinion is based solely on the report of other auditors.
 
 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 and proper returns adequate for the purposes of our audit
 have been received from branches not visited by us. The Branch
 Auditor’s Reports have been forwarded to us and have been appropriately
 dealt with;
 
 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 and with the audited returns from the branches;
 
 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 at March 31, 2009, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as at
 March 31, 2009 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 qualifying our opinion, we draw attention to Note 11 in
 Schedule ‘M’ to the financial statements regarding deductions made/
 amounts withheld by some customers aggregating to Rs. 605,083 thousand
 (Previous year Rs. 461,224 thousand) on various accounts which are
 being carried as sundry debtors.  The Company is also carrying work in
 progress inventory of Rs.  95,455 thousand (Previous year Rs. 95,455
 thousand) relating to these 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.
 
 vii.  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, 2009;
 
 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:
 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) All fixed assets have not been physically verified by the
 management during the year but there is a regular programme of
 verification which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. As informed, no
 material discrepancies were noticed on such verification.
 
 (c) During the year, the Company has disposed off a substantial part of
 the plant and machinery of the ISP division of the Company. Based on
 the information and explanation given by the management and on the
 basis of audit procedures performed
 
 by us, we are of the opinion that the sale of the aforesaid plant and
 machinery has not affected the going concern status of the Company.
 
 (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) As informed, 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, clauses 4 (iii) (b, c and d) of the Companies (Auditor’s
 Report) Order, 2003 (as amended) are not applicable to the Company.
 
 (b) As informed, 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, clauses 4 (iii) (f and g) of the Companies (Auditor’s
 Report) Order, 2003 (as amended) are not applicable to the Company.
 
 (iv) As per the information and explanations given to us, certain fixed
 assets purchased are of specialized nature for which comparable prices
 are not available. Read with the above, in our opinion, 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.
 
 (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 respect of transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five lakhs entered into during
 the financial year, because of the unique and specialized nature of the
 items involved and absence of any comparable prices, we are unable to
 comment whether the transactions were made at 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 and cess
 have generally been regularly deposited with the appropriate
 authorities though there has been slight delay in a few cases.
 
 (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
 
 Andhra Pradesh General Sales Tax Act, 1956
 Andhra Pradesh General Sales Tax Act, 1956
 Andhra Pradesh General Sales Tax Act, 1956
 Andhra Pradesh General Sales Tax Act, 1956
 Andhra Pradesh General Sales Tax Act, 1956
 Andhra Pradesh General Sales Tax Act, 1956
 Assam Entry Tax Act, 2001
 Assam Value Added Tax Act, 2003
 Central Sales tax Act, 1956
 Central Sales tax Act, 1956
 Chhattisgarh Entry Tax Act, 1976
 Delhi Sales tax Act, 1975
 Gujarat Sales Tax Act, 1969
 Haryana Local Area Development Tax Act 2000
 Kerala General Sales Tax Act, 1963
 Maharastra VAT Act, 2002
 MP Entry Tax Act, 1976
 MP Commercial Tax Act
 The Finance Act, 2004 and the Service Tax Rules
 UP Trade Tax Act, 1948
 
 Nature of dues
 
 Sales Tax on the material components of the works contract.
 Sales Tax on the material components of the works contract.
 Penalty for use of G Form against material purchases.
 Penalty for use of G Form against material purchases.
 Penalty for suppression of Turnover.
 Penalty for suppression of Turnover.
 Entry Tax on materials / equipment brought into the state.
 Sales tax demand for disallowance of deductions.
 Penalty against Form C usage for purchase of machinery.
 Penalty against Form C usage for purchase of machinery.
 Entry Tax on materials / equipment brought into the state.
 Sales tax demand on internet services.
 Differential Sales Tax for non submission of statutory forms.
 Entry Tax demand.
 Differential Sales Tax for dis-allowance of deduction on purchases u/s
 3 of the CST Act, 1956.
 VAT on Transportation, Travelling Charges & Penalty.
 Entry Tax Demand.
 Sales tax on the material components of the works contract.
 Penalty for late deposit of Service Tax for UTPL Project.
 Entry Tax Demand.
 
 Amount in INR000          Period to which the amount relates
 
  2,550                         1998-99 and 2000-01
 38,112                         2001-02 to 2003-04
 18,688                         2001-02 to 2004-05
 55,996                         2002-03 to 2003-04
  3,248                         2003-04 to 2004-05
  2,872                         2004-05
  4,786                         2006-07
 15,218                         2006-07
  2,593                         1998-99
  3,293                         1998-99
  4,285                         2005-06
 39,877                         2000-01 to 2003-04
 62,087                         1998-99 to 1999-00
  3,995                         2003-04
  3,645                         1998-99 & 1999-00
  5,861                         2005-06
    588                         2003-04
    470                         2003-04
 108,068                        2005-06 to 2006-07
                                1999-00 to 2000-01 
 730                             and 2004-05
 
 Forum where dispute is pending
 
 Sales Tax Appellate Tribunal, Hyderabad, Andhra Pradesh
 High Court, Hyderabad
 Sales Tax Appellate Tribunal, Vizag, Andhra Pradesh
 ADC, Vizag, Andhra Pradesh
 Sales Tax Appellate Tribunal, Vizag, Andhra Pradesh
 ADC, Vizag, Andhra Pradesh
 Guwahati High Court
 Guwahati High Court
 Allahabad, High Court
 Jt Commissioner, Appeals, Mathura
 Bilaspur High Court
 Jt Commissioner, Appeals, Delhi
 Sales Tax Appellate Tribunal, Ahmedabad, Gujarat.
 Supreme Court, New Delhi
 Dy Commissioner, Sales Tax (Appeals), Kochi, Kerala
 Jt Commissioner, Appeals, Nasik
 Dy. Commissioner Comm Tax (Appeals) Gwalior, MP
 Tribunal, MP
 CESTAT Delhi
 
 Jt Commissioner, Appeals, Mathura
 (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 banks and
 debenture holders. The Company has no outstanding dues in respect of a
 financial institution.
 
 (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, during
 the period covered by our audit report, the Company had issued 1,500
 debentures of Rs. 1,000,000 each. The Company has created security or
 charge in respect of debentures 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.
 Chartered Accountants
 Per Raj Agrawal
 Partner
 Membership No. : 82028
 Place : Gurgaon 
 Date : May 18, 2009