Teledata Informatics

We have audited the attached Balance Sheet of TELEDATA INFORMATICS LTD
 (the Company) as at March 31, 2008, and also the Profit and Loss
 Account and the Cash Flow Statement of the Company for the year ended
 on that date both annexed thereto in which are incorporated the returns
 from the USA Branch and Dubai Branch audited by another firm of
 auditors. 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 and audit report of
 overseas branch auditors.
 
 1 .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.
 
 2. As required by the Companies (Auditors Report) Order, 2003 issued
 by the Central Government of India in terms of sub-section (4A) of
 Section 227 of the Companies Act, 1956 and on the basis of such checks
 as we considered appropriate, and according to the information and
 explanations given to us, we give in the Annexure a statement on the
 matters specified in paragraphs 4 and 5 of the said Order to the extent
 applicable to the Company.
 
 3. Further to our comments in the Annexure referred to in paragraphs
 (2) 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 and proper returns adequate for the purpose of audit have been
 received from the Branches not visited by us. The Branch auditors
 report has been forwarded to us and appropriately dealt with.;
 
 c) the Balance Sheet and Profit and Loss Account and 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
 Companies Act, 1956 except for non compliance in respect of prescribed
 method of valuation of employee benefits and required disclosures in
 accordance with Accounting Standard 15 -Employee Benefits (revised
 2005), issued by the Institute of Chartered Accountants of India.
 
 e) on the basis of written representations received from the directors,
 as on March 31st, 2008, and taken on record by the Board of Directors
 of the Company, we report that none of the directors is disqualified as
 on March 31 st, 2008 from being appointed as a director in terms of
 clause (g) of sub-section (1) of section 274 of the Companies Act,
 1956.
 
 4.  Financial statements of overseas branches which reflect total
 assets of Rs. 156.18 Crore as at March 31st, 2008, total revenues of
 Rs. 310.38 Crore and net profits amounting to Rs.56.13 Crore for the
 year then ended, have been audited by branch auditors whose reports
 have been furnished to us, and our opinion, in so far as it relates to
 the amounts included in respect of these overseas branches, is based
 solely on their reports.
 
 5.  a)We draw attention to Note no.20 of Schedule Q on booking of
 revenue on sale of products to marketing agents.
 
 Thequantification and evaluation of amount for products lying unsold
 cannot be determined.
 
 b)We are unable to comment on the ultimate realisability of investments
 amounting to Rs 1110.33 Crore in Rainforest trading Limited and amount
 advanced to Baytech Inc B VI of Rs 126.13 Crore in the absence of
 audited financials for last two years of their ultimate subsidiary Esys
 Technologies Pte Limited which is the substance of the said
 investments/advances as referred in Note no. 14 (a) of Schedule Q.
 
 c) We draw attention to:
 
 1. Note no. 17 of Schedule Q wherein debtors amounting to Rs 451.97
 crores which are outstanding for considerable period of time as on the
 date of this report are considered good and recoverable.
 
 ii. Note No 19 of Schedule  Q regarding sales done during the year
 with respect to which the bank guarantees amounting to Rs 253.89 crores
 from its customers have been revoked subsequent to the close of the
 year with regard to which no provision or adjustment has been made as
 the same considered good and recoverable in the opinion of management.
 
 We are unable to express an opinion on the ultimate realisability of
 the said amounts.
 
 6.  Subject to the comments made in paragraph 5 above and the effect in
 respect of which on the profit and loss account of the Company for the
 period under consideration is not ascertainable, in our opinion and to
 the best of our information and according to the explanations given to
 us, the said accounts read together with the notes thereon and in
 particular Note no. 9 of Schedule Q on business of demerged companies
 being carried out in the overseas branches till the end of the year,
 Note no. 16 of Schedule Q on confirmation of balances from parties,
 Note no.21(b) of Schedule Q on valuation of plantations, 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 March 31, 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.
 
 Nature of Due and            Disputed Amount
 Assessment year             (Rs. in Crore)
 
 Income Tax
 
 1998-99                          0.11
 
 1999-00                          0.86
 
 2000-01                          2.14
 
 2003-04                          3.21
 
 2004-05                          2.56
 
 Forum where pending
 
 The Income Tax Appellate
 Tribunal, Chennai
 
 The Commissioner of Income-
 Tax, Appeals
 
 -do-
 
 The Income Tax Appellate
 Tribunal, Chennai
 
 The Commissioner of Income-
 Tax, Appeals
 
 10) Based on our audit procedures and according to the informations and
 explanation given to us, we are of the opinion that the Company has
 defaulted in repayment of dues to banks arising out from the invocation
 of bank guarantee which as on the date of the balance sheet stood at
 Rs.48.43 Crore
 
 11) The company has no accumulated losses and has not incurred any cash
 losses during the financial year covered by our audit or in the
 immediately preceding financial year.
 
 12) In our opinion and according to the information and explanation
 given to us, no loans and advances have been granted by the company on
 the basis of security by way of pledge of shares, debentures and other
 securities.
 
 13) In our opinion, the company is not a chit fund or a Nidhi/ mutual
 benefit fund/ society. Therefore, clause 4(xiii) of the Companies
 (Auditors Report) Order, 2003 is not applicable to the Company.
 
 14) The Company has not dealt or traded in shares, securities,
 debentures or other investments during the year. All securities and
 other investments have been held by the Company in its own name except
 in case of investments in certain foreign companies where shares are
 held by its directors/nominees as referred to in Note no. 14(a) of
 Schedule Q and Note no. 14(e) of Schedule Q of notes to accounts where
 in the share certificate for the investments are not in the possession
 of the Company.
 
 15) As per information and explanations given to us, the company has
 given guarantees to Banks or Financial Institutions for loans taken by
 its wholly owned subsidiary Baytech Inc., BVI for investment in the
 ultimate subsidiary Esys Technologies Pte Limited,Singapore in respect
 of which we are informed that the same is not prejudicial to the
 interest of the Company. The Company is of the further opinion that the
 corporate guarantees given to parties other than subsidiaries are in
 the ordinary course of business and hence are not prejudicial to the
 interest of the Company.
 
 16) In our opinion and according to the information and explanations
 given to us, the term loans taken from banks have been applied for the
 purpose for which they were raised.
 
 17) According to the information and explanations given to us, and on
 overall examination of the balance sheet of the Company, we are of the
 opinion that, no funds raised on a short- term basis, have been used
 for long-term investments.
 
 18) The Company has made preferential allotment of shares during the
 year in pursuance of conversion of share warrants issued in the
 previous year to the promoters and their relatives being the parties
 covered in the register maintained under section 301 of the Companies
 Act, 1956 in accordance with the price determined as per the
 regulations prescribed by the Securities Exchange Board of India after
 considering the write off as per the Scheme of Demerger sanctioned by
 the Honourable High Court of Madras.
 
 19) In our opinion and according to the information and explanations
 given to us, the Company has not issued any secured debentures during
 the period covered under our report. Accordingly provisions of clause
 4(xix) of the Companies (Auditors Report) Order, 2003 are not
 applicable to the Company.
 
 20) The company has not raised any money by public issue during the
 year.
 
 21) Based upon the audit procedures performed and 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 CHATURVEDI AND SHAH
                                                Chartered Accountants
 
                                                      Amit Chaturvedi
                                                              Partner
                                            Membership Number: 103141
 Place : Mumbai
 Date  : 7th November, 2008