Puravankara Projects

1.  We have audited the attached Balance Sheet of Puravankara Projects
 Limited, (the ‘Company’) as at 31 March 2008 and also the Profit and
 Loss Account and the Cash Flow Statement for the year ended on that
 date annexed thereto (collectively referred as the ‘financial
 statements’). 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 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 misstatements. 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 (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
 (the ‘Act’), we enclose in the Annexure a statement on the matters
 specified in paragraphs 4 and 5 of the Order.
 
 4.  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 financial statements dealt with by this report are in agreement
 with the books of account;
 
 d.  On the basis of written representations received from the
 directors, as on 31 March 2008 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31 March 2008 from being appointed as a director in terms of clause (g)
 of sub-section (1) of Section 274 of the Act;
 
 e.  In our opinion and to the best of our information and according to
 the explanations given to us, the financial statements dealt with by
 this report comply with the accounting standards referred to in
 sub-section (3C) of Section 211 of the Act and the Rules framed there
 under and 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, in the case of:
 
 i) the Balance Sheet, of the state of affairs of the Company as at 31
 March 2008;
 
 ii) the Profit and Loss Account, of the profit for the year ended on
 that date; and
 
 iii) the Cash Flow Statement, of the cash flows for the year ended on
 that date.
 
 Annexure to the Auditors’ Report
 
 Annexure to the Auditors’ Report of even date to the members of
 Puravankara Projects Limited, on the financial statements for the year
 ended 31 March 2008.
 
 Based on the audit procedures performed for the purpose of reporting a
 true and fair view on the financial statements of the Company and
 taking into consideration the information and explanations given to us
 and the books of account and other records examined by us in the normal
 course of audit, we report that:
 
 (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 its
 fixed assets by which 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. No material discrepancies were noticed on
 such verification.
 
 (c) In our opinion, a substantial part of fixed assets has not been
 disposed off during the year.
 
 (ii) (a) The inventory has been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 (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) There are two companies covered in the register maintained
 under Section 301 of the Act to which the Company has granted unsecured
 loans. The maximum amount outstanding during the year was
 Rs.449,198,061 and the year-end balance was Rs.228,628,633.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 of such loans are not, prima facie, prejudicial to the interest of the
 Company.
 
 (c) The principal amounts, are repayable on demand and there is no
 repayment schedule, the payment of interest has been regular.
 
 (d) In respect of the said loans, the same are repayable on demand and
 there are no overdue amounts.
 
 (e) The Company had taken interest free loans from three parties
 covered in the register maintained under Section 301 of the Act. The
 maximum amount outstanding during the year was Rs.419,851,751 and the
 year-end balance was Rs.15,414,816.
 
 (f) In our opinion, the rate of interest and other terms and conditions
 for such loans are not, prima facie, prejudicial to the interest of the
 Company.
 
 (g) The principal amounts, are repayable on demand and there is no
 repayment schedule.
 
 (iv) 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.
 
 (v) (a) In our opinion, the particulars of all contracts or
 arrangements that need to be entered into the register maintained under
 Section 301 of the Act have been so entered.
 
 (b) Owing to the unique and specialized nature of the items involved
 and in the absence of any comparable prices, we are unable to comment
 as to whether the transactions made in pursuance of such contracts or
 arrangements have been made at prevailing market prices at the relevant
 time.
 
 (vi) The Company has not accepted any deposits from the public within
 the meaning of Sections 58A and 58AA of the Act and the Companies
 (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of
 clause 4(vi) of the Order are not applicable.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with its size and the nature of its business.
 
 (viii) To the best of our knowledge and belief, the Central Government
 has not prescribed maintenance of cost records under clause (d) of
 sub-section (1) of Section 209 of the Act and accordingly, the
 provisions of clause 4(viii) of the Order are not applicable.
 
 (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, as applicable, have generally been
 regularly deposited with the appropriate authorities, though there has
 been a slight delay in a few cases. No undisputed amounts payable in
 respect thereof were outstanding at the year end for a period of more
 than six months from the date they became payable.
 
 (b) There are no dues in respect of income tax, sales tax, wealth tax,
 service tax, customs duty, excise duty and cess that have not been
 deposited with the appropriate authorities on account of any dispute.
 
 (x) In our opinion, the Company has no accumulated losses at the end of
 the financial year and it has not incurred cash losses in the current
 and the immediately preceding financial year.
 
 (xi) In our opinion, the Company has not defaulted in repayment of dues
 to a financial institution or a bank or debenture holders during the
 year.
 
 (xii) The Company has not granted any loans and advances on the basis
 of security by way of pledge of shares, debentures and other
 securities. Accordingly, the provisions of clause 4(xii) of the Order
 are not applicable.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi/
 mutual benefit fund/ society. Accordingly, the provisions of clause
 4(xiii) of the Order are not applicable.
 
 (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 Order are not applicable.
 
 (xv) The Company has not given any guarantees for loans taken by others
 from banks or financial institutions.  Accordingly, the provisions of
 clause 4(xv) of the Order are not applicable.
 
 (xvi) In our opinion, the Company has applied the term loans for the
 purpose for which the loans were obtained.
 
 (xvii) In our opinion, 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 Act. Accordingly, the provisions of clause 4(xviii) of the
 Order are not applicable.
 
 (xix) The Company has not yet created a security in respect of
 debentures issued during the year for Rs.250,000,000.
 
 (xx) We have verified that the end use of money raised by public issue
 is as disclosed in the notes to the financial statements covered by our
 audit report.
 
 (xxi) No fraud on or by the Company has been noticed or reported during
 the year covered by our audit.
 
                                           For Walker, Chandiok & Co.
                                           Chartered Accountants
 
                                           Per Aashish Arjun Singh
                                           Partner
                                           Membership No. 210122
 
 Bangalore
 30 April 2008