We have audited the attached Balance Sheet of M/s. TELEDATA INFORMATICS
 LTD (the Company) as at March 31, 2010 and the Profit and Loss
 Account and the Cash Flow Statement of the Company for the year ended
 on that date 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
 management of the Company. Our responsibility is to express an opinion
 on these financial statements based on our audit and audit reports of
 overseas branches auditors.
 
 1.  We have conducted the 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, as
 amended, issued by the Central Government of India in terms of section
 227(4A) of the Companies Act, 1956, we enclose in the Annexure a
 statement on the matters specified in the said order.
 
 3.  Financial Statements of overseas branches which reflect total
 assets of Rs. 143.43 crores as at March 31, 2010, total revenues of
 Rs.59.00 crores and net profits of Rs. 2.45 crores 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.
 
 4.  a.  We draw attention to Note No.20 of Schedule Q on booking of
 revenue on sale of products to marketing agents. The quantification and
 evaluation of amounts for products lying unsold cannot be determined.
 
 b.  We are unable to comment on the ultimate realisability of
 investments amounting to Rs.110.33 crores in Rainforest Trading Limited
 and amount advanced to Baytech Inc BVI to the tune of Rs.186.13 crores,
 due to ongoing litigation against eSys Technologies Pte Limited which
 is the substance of the said investments/advances as referred to in
 Note No.15 of Schedule Q
 
 c.  We draw attention to Note No.18 of Schedule Q regarding bank
 guarantees amounting to Rs.2.21crores which have been invoked by
 customers during the year with regard to which no provision or
 adjustment has been made as the same is considered good and recoverable
 in the opinion of the management and yet to be realized from the said
 customers as at the Balance Sheet date.
 
 We are unable to express an opinion on the ultimate realisability of
 the said amounts.
 
 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 accounts 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;
 
 iii.  The Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement
 with the books of account;
 
 iv.  In our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt by with this report
 have been prepared in all material respects in compliance with the
 applicable Accounting Standards referred to in Section 211(3C) of the
 Companies Act, 1956 except for non-compliance in respect of prescribed
 method of valuation of Employee Benefits and required disclosure in
 accordance with Accounting Standard 15 – Employee Benefits (Revised)
 and non-compliance in respect of the reinstatement of debtors,
 creditors and advances in accordance with Accounting Standard 11 –
 Effects of Changes in Foreign Exchange Rates (Revised);
 
 v.  On the basis of written representations received from the directors
 as on March 31, 2010 and taken on record by the
 Board of Directors of the Company, none of the directors are
 disqualified as on March 31, 2010 from being appointed as a Director in
 terms of Section 274(1)(g) of the Companies Act, 1956
 
 6.  Subject to the comments made in paragraph 4 and 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 together with the notes
 thereon give in the prescribed manner the information required by the
 Companies Act, 1956 of India 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 March 31, 2010 and ii.  In the case of the Profit and
 Loss Account, of the profit for the year ended on that date.  iii. In
 the case of the Cash Flow statement, of the cash flows for the year
 ended on that date.
 
 ANNEXURE referred to in paragraph 2 of our report of even date to the
 members of TELEDATA INFORMATICS LTD for the year ended 31st March 2010.
 
 1.  a. The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b.  All the 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 nature of its assets. No material discrepancies were noticed on
 such verification.
 
 c.  The Company has not disposed off substantial part of its fixed
 assets during the year.
 
 2.  In our opinion, the valuation and maintenance of records of
 inventories is not applicable to the present activities of the Company.
 Therefore, clause (ii) of paragraph 4 of the order is not applicable to
 the Company.
 
 3.  a.
 
 I. According to the information and explanations given to us, the
 Company has granted interest-free unsecured loans to seven parties
 listed in the register maintained under section 301 of the Companies
 Act, 1956. The maximum balance outstanding during the year was
 Rs.202.52 crores and the year end balance of the loans was Rs. 191.41
 crores.
 
 ii. As explained to us by the management, the other terms and
 conditions of the above said loans are prima facie not prejudicial to
 the interest of the Company.
 
 iii.  The principal amount has not fallen due in this year as the same
 is payable on demand.
 
 iv. There are no overdue amounts of more than rupees one lakh in
 respect of the loans granted and accordingly, paragraph 4 (iv)(d) of
 the Order is not applicable to the Company.
 
 b.
 
 i. According to the information and explanations given to us, the
 Company has taken interest-free unsecured loans from three parties
 listed in the register maintained under section 301 of the Companies
 Act, 1956. The maximum balance outstanding during the year was
 Rs.178.11 crores and the year end balance of the loans was Rs.162.77
 crores.
 
 ii. As explained to us by the management, the other terms and
 conditions of the above said loans are prima facie not prejudicial to
 the interest of the Company.
 
 iii.  The principal amount has not fallen due for repayment during the
 year.
 
 4.  In our opinion and according to the information and explanations
 given to us and having regard to the explanation that purchases of
 certain items of contents and consumables for projects are for the
 Companys specialized requirements for which suitable alternate sources
 are not available to obtain comparable quotations, there are adequate
 internal control procedures commensurate with the size of the Company
 and the nature of its business with regard to purchase of contents
 through approval by the technical committee, fixed assets and with
 regard to the provision of services. In our opinion and according to
 the information and explanations given to us , we have not observed any
 continuing failure to correct major weaknesses in internal controls
 except incase of the sale of goods and services wherein the Company
 does not keep the details of the end users of the software licenses
 sold through the agents.
 
 5.
 
 i. In our opinion and according to the information and explanations
 given to us, we are of the opinion that the transactions that need to
 be entered in the register maintained under section 301 of the
 Companies Act, 1956, have been so entered.
 
 ii. In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956 and exceeding the value of rupees five lakhs in
 respect of any party during the year have been made at prices which are
 reasonable having regard to prevailing market prices at the relevant
 time. This being a technical matter, we have relied on the management
 assessment.
 
 6.  In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposits from public as
 per the provisions of section 58A and 58AA or any other relevant
 provisions of the Companies Act,1956.  Accordingly, paragraph 4(vi) of
 the Order is not applicable to the Company.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  The Company has not been required by the Central Government to
 maintain cost records under section 209 (1) (d) of the Companies Act,
 1956. Accordingly, paragraph 4(viii) of the Order is not applicable to
 the Company.
 
 9.  i.  According to the information and explanations given to us, the
 Company is not regular in depositing with appropriate
 
 authorities undisputed statutory dues including provident fund,
 employees state insurance, income tax, sales tax, wealth tax, service
 tax and other statutory dues applicable to it. As explained to us, the
 Company did not have any dues on account of customs duty and excise
 duty.
 
 Further, since the Central Government has till date not prescribed the
 amount of Cess payable under section 441A 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.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of the aforesaid dues were
 outstanding as at March 31st, 2010 for a period of more than six months
 from the date of becoming payable other than:
 
 a.  income tax of earlier years amounting to Rs.38.44 crores and
 advance income tax payable for the financial year 2009- 10 of Rs.0.16
 Crores and
 
 b.  wealth tax, the amount in respect of which has not been ascertained
 by the Company.
 
 ii. According to the information and explanations given to us, there
 are no dues of sales tax, wealth tax, service tax and Cess which have
 not been deposited on account of any dispute. However, according to the
 information and explanations given to us, the following dues of income
 tax under the Income Tax Act, 1961 have not been deposited by the
 Company on account of disputes:
 
 Assessment    Disputed amount   Appeal Pending Before
 Year          (Rs. in crores)
 
 1998-1999       0.38            The Income Tax Appellate 
                                 Tribunal, Chennai
 
 1999-2000       1.10            The Income Tax Appellate 
                                 Tribunal, Chennai
 
 2000-2001       2.74            The Income Tax Appellate 
                                 Tribunal, Chennai
 
 2003-2004       0.93            Honorable High Court of 
                                 Madras
 
 2004-2005       0.47            The Commissioner of Income 
                                 Tax, Appeals
 
 2006-2007       1.71            The Commissioner of Income 
                                 Tax, Appeals
 
 2007-2008      12.71            The Commissioner of Income 
                                 Tax, Appeals
 
 10.The Company has no accumulated losses and has not incurred cash
 losses during the immediately preceding financial year and during the
 financial year under audit.
 
 11.Based on our audit procedures and according to the information and
 explanations given to us, the Company has defaulted in repayment of
 dues to banks and the advances received by the Company from the State
 Bank of India to the tune of Rs.314.99crores as on the Balance Sheet
 Date have been classified as Non-Performing Assets (NPAs) by the Bank
 with effect from June 2009.
 
 12.In our opinion and according to the information and explanations
 given 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. Accordingly, paragraph 4(xii) of the Order is not
 applicable to the Company.
 
 13.In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund or a nidhi / mutual benefit
 fund / society.  Accordingly, paragraph 4(xiii) of the Order is not
 applicable to the Company.
 
 14.According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments. 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.15(a) of Schedule Q of notes to accounts wherein
 the share certificate for the investments are not in name of the
 Company.
 
 15.According to the information and explanations given to us, the
 Company has given guarantees to banks and financial institutions for
 loans taken by its wholly owned subsidiary Baytech Inc BVI for
 investment in Esys Technologies Pte Limited, Singapore in respect of
 which, we are informed that the same is not prejudicial to the
 interests of the Company. The Company is of further opinion that the
 corporate guarantees given to the parties other than the subsidiaries
 are in the ordinary course of business and hence not prejudicial to the
 interests of the Company.
 
 16.In our opinion and according to the information and explanations
 given to us, the Company did not have any Term Loans outstanding during
 the year. Accordingly, paragraph 4(xvi) of the Order is not applicable
 to the Company.
 
 17.According to the information and explanations given to us and on
 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.
 
 18.According to the information and explanations given to us, the
 Company has not made any preferential allotment of shares during the
 year, to parties and companies covered in the register maintained under
 section 301 of the Act. Accordingly, paragraph 4(xviii) of the Order is
 not applicable to the Company.
 
 19.According to the information and explanations given to us, the
 Company has not issued any debentures during the period covered by our
 audit. Accordingly, paragraph 4(xix) of the Order is not applicable to
 the Company.
 
 20.The Company has not raised any money by way of public issue during
 the year. Accordingly, paragraph 4 (xx) of the Order is not applicable
 to the Company.
 
 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 N R KRISHNAMOORTHY & CO.
 
 Chartered Accountants
 
 Firm Registration Number: 001492S
 
 N R Krishnamoorthy
 
 Partner
 
 Membership Number: 20638
 
 Place: Chennai
 Date:   30.08.2010