Auditor Report of Emco Ltd.

Mar 31, 2016

INDEPENDENT AUDITOR''S REPORT

To the Members of EMCO Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of EMCO Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2016, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of the appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and fair presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements 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, of the state of affairs of the Company as at 31st March, 2016, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

1. We refer to note 28 of the accompanying financial statement regarding the investments and loan aggregating to Rs.9919.64 Lacs into its wholly owned subsidiary EMCO Power Limited (EPL), which is setting up power projects in the state of Chhattisgarh and Odisha through joint venture companies. There has been temporary suspension of work on these projects by the management for the reasons stated therein. In the event, prolong delay, carrying value of the said investment will require to be adjusted for impairment.

2. We refer to note 27(b) of the accompanying financial statement regarding the liquidated damages/deduction made by customers aggregating to Rs,5805 Lacs, which are carried as Trade Receivables. The company has or is in the process of taking legal action for recovery of the same. Pending outcome of the matters which are presently unascertainable, no adjustments have been made in the accompanying financial statements.

Our opinion is not qualified in these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act , we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143(3) of the Act, we report that:

a) We have sought and 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 Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the aforesaid standalone financial statements comply with the accounting standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) The matters described under the Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016, from being appointed as a director in terms of section 164(2) of the Act.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".

h) With respect to the other matters to be included in the Auditor''s Report in accordance with Rules 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 26(II) to the financial statements.

ii. The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure A" to Independent Auditors'' Report referred to in Paragraph 1 under the heading of "Report on other legal and

regulatory requirements" of our report of even date.

1) In respect of its fixed assets :

a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, 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 physical verification.

c) According to the information and explanations given to us and the title deeds / lease deeds and other records examined by us, we report that the title deeds / lease deeds in respect of all the immovable properties of lands which are freehold, immovable properties of land that have been taken on lease and disclosed as fixed assets in the financial statement and buildings are held in the Company''s name or in the Company''s erstwhile name as at the balance sheet date except freehold land and buildings situated at Baroda and Rajkot having gross carrying value of ''21.02 lacs as at balance sheet date which are in the name of Urja Engineers Limited, the transferor company, which got amalgamated in to the Company.

2) As explained to us, physical verification of the inventories have been conducted at reasonable intervals by the management, which in our opinion is reasonable, having regard to the size of the Company and nature of its inventories. No material discrepancies were noticed on such physical verification.

3) The Company has granted unsecured loans to two wholly owned subsidiaries covered in the register maintained under Section 189 of the Act. The terms and conditions of the grant of such loans are not prejudicial to the interest of the company except in case of one subsidiary, company has given interest free loan. There is no schedule of repayment of principal and are repayable on demand. Also, there is no stipulation as to date of payment of interest. In view of this, question of overdue does not arise.

4) In respect of loans, investments, guarantees and security given by the Company:

a) Company has not directly or indirectly advanced loan to the persons or given guarantees or securities in connection with the loan taken by persons covered under Section 185 of the Act.

b) According to the information and explanations given to us, the activity of the Company falls under the definition of infrastructural facilities as defined under explanation to section 186 of the Act. Since section 186 of the Act is not applicable to such companies, the requirement of clause (iv)(b) of paragraph 3 of the Order is not applicable.

5) According to the information and explanations given to us, the Company has not accepted any deposits within the meaning of provisions of sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Therefore, the clause (v) of paragraph 3 of the Order is not applicable to the Company.

6) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 prescribed by the Central Government under subsection (1) of Section 148 of the Act applicable in respect of certain activities undertaken by the company and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7) In respect of Statutory dues :

a) According to the records of the Company, there have been delays in depositing undisputed statutory of Tax Deducted at Source, Sales Tax, VAT, Service Tax, LBT, Excise Duty with appropriate authorities. According to the information and explanations given to us and on the basis of our examination of the books of account, the Company is generally regular in depositing undisputed statutory dues of income tax, custom duty, Provident Fund, ESlC and other material statutory dues during the year with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues, were outstanding as at March 31, 2016 for a period of more than six months from the date they became payable.

b) According to the records of the Company and the information and explanations given to us, the disputed dues on account of income tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess that have not been deposited with appropriate authorities are as under:

Name of Statute	Nature of Dues	Amount in ''	Period to which the amount relates	Forum where the dispute is pending
Sales Tax Act	West Bengal VAT	77,30,205	2007-08 & 2009 -10	Joint Commissioner of Sales Tax, Behala Circle
Sales Tax Act	Jharkhand VAT	27,98,182	2009-09 & 2010 -11	Deputy Commissioner of Commercial Tax

Name of Statute	Nature of Dues	Amount in ''	Period to which the amount relates	Forum where the dispute is pending
Sales Tax Act	Rajasthan VAT	9,71,76,846	2011-12 & 2012 -13	Rajasthan Tax Board, Ajmer.
Sales Tax Act	Maharashtra VAT	16,68,76,205	2005 -06	Joint Commissioner, Mazgaon.
Sales Tax Act	Uttar Pradesh VAT	6,64,000	2011 -12	Asst.Commissioner Sales Tax, Barabanki, Circle-1
Sales Tax Act	Rajasthan VAT	1,62,466	2012 -13	Assistant Commissioner Works & Leasing Tax Bikaner, Rajasthan
Central Excise Act	Short Payment of Duty	697,889	2007-08	Customs, Excise and Service Tax Appellate, Mumbai
Central Excise Act	Excise Duty	1,25,99,049	2007-08, 2009-10, 2011-13	Additional Commissioner Central Excise & Customs
Central Excise Act	Excise Duty	86,27,775	2009-10	Commissioner of central excise & Customs, Nasik
Central Excise Act	Excise Duty	1,06,32,851	Oct 2013 to May 2014	Customs, Excise and Service Tax Appellate, Ahmadabad
Central Excise Act	Excise Duty	3,83,85,129	April 2009-Sept 2013	Commissioner of central excise & Customs, Ahmadabad
Central Excise Duty 12,63,37,485 Excise Act			Nov,2001 to May 2015 & April,2009 to Aug,2010	Customs, Excise and Service Tax Appellate Tribunal, Mumbai
Central Excise Act	Excise Duty	861,560	April 2009 to May 2015	Assistant Commissioner of Central Excise, Thane
Central Excise Act	Excise Duty	2,57,41,820	2006-2012	Commissioner of Central Excise and Custom
Central Excise Act	Excise Duty	14,209,518	July.2011 to Feb.2012	Commissioner, Central Excise & Customs, Nasik
Central Excise Act	Excise Duty	4,151,743	July.2011 to Feb.2012	Additional Commissioner, Central Excise & Customs, Nasik
Central Excise Act	Excise Duty	588,694	March 2007 to June 2008	Customs, Excise and Service Tax Appellate
Central Excise Act	Excise Duty	21,61,338	April 2014 to July 2015	Asst. Commissioner of Central Excise & Customs, Jalgaon
Income Tax Act	Income Tax	32,51,285	Ass. Yr. 2010-11 to 2013-14	Commissioner of Income Tax (Appeals), Thane
Income Tax Act	Income Tax	45,50,292	2008-09	Assistant Commissioner of Income Tax
Service Tax	Service Tax and Penalty	8,857,210	Jan 2005 -June 2006	Commissioner (Appeals), Central Excise and Customs, Vadodra
Service Tax	Service Tax ,lnterest and Penalty	132,71,799	Jan 2007- Oct 2010	Commissioner (Appeals), Central Excise, Mumbai Zone-I
Service Tax	Penalty	14,52,674	Jan-2007 to Oct-2010	Commissioner of Service Tax (Appeals)-ll, Mumbai- VII
Service Tax	Penalty	430,491	Aug 2006 to Mar 2010	Customs Excise & Service Tax Appellate Tribunal
Service Tax	Service Tax and Penalty	85,815	Oct.2007 to Dec.2008	Customs Excise & Service Tax Appellate Tribunal
Service Tax	Penalty	847,854	April 2010 to March 2011	Customs Excise & Service Tax Appellate Tribunal

In the following matters, the department has preferred appeals at higher levels:

Name of the Statute	Nature of Dues	Amount in ''	Financial Year to which the amount relates	Forum where dispute is pending
Central Excise Act	Excise Duty	1,41,32,088	1996-01	Supreme Court
Central Excise Act	Excise Duty	313,841	2008-09	Customs, Excise and Service Tax Appellate

8) In our opinion and according to the information and explanations given to us, the Company has not delayed in repayment of loans to a financial institution or government or dues to debenture holders of the company. The Company has delayed in repayment of dues to banks during the year. The lender wise details are tabulated as under:

Name of Lender	Amount (in Lakhs)	Delay in Days	Remarks, If any
Dena Bank	2907	-	Overdrawn Working capital
Federal Bank	478	-	Overdrawn Working capital
Union Bank	2871	-	Overdrawn Working capital
Exim Bank	200	30 to 59	Working Capital term Loan
	6456

9) In our opinion and according to the information and explanations given to us, the company has utilized the money raised by way of term loans during the year for the purposes for which they were raised.

10) Based on the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

11) In our opinion and according to the information and explanations given to us, managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

12) In our opinion company is not a nidhi company. Therefore, the provisions of clause (xii) of paragraph 3 of the Order are not applicable to the company.

13) In our opinion and according to the information and explanations given to us, all transactions with related parties are in compliance with sections 177 and 188 of the Act and their details have been disclosed in the financial statements etc., as required by the applicable accounting standards.

14) In our opinion and according to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year and hence clause (xiv) of paragraph 3 of the Order is not applicable to the company.

15) In our opinion and according to the information and explanations given to us, the Company has not entered into any non-cash transaction with the directors or persons connected with him and covered under section 192 of the Act. Hence, clause (xv) of the paragraph 3 of the Order is not applicable to the Company.

16) To the best of our knowledge and as explained, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

Annexure B" to Independent Auditors'' Report referred to in paragraph 2(f) under the heading "Report on other legal and regulatory requirements of our report of even date.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the Internal Financial Control over financial reporting of EMCO Limited

("the company") as of 31st March, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year then ended.

Management Responsibility for the Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor''s Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

For P. RAJ & CO. For Chaturvedi & Shah

Chartered Accountants Chartered Accountants

Firm Registration No. 108310W Firm Registration No. 101720W

Sd/- Sd/-

S. V. Chheda Jignesh Mehta

Partner partner

Membership No. 103938 Membership No. 102749

Mumbai, May 30, 2016 Mumbai, May 30, 2016

---

Mar 31, 2015

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of EMCO Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of Significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements 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, of the state of affairs of the Company as at March 31, 2015, its Profit and its cash flows for the year ended on that date.

Emphasis of Matter

1. We refer to note 28 of the accompanying financial statement regarding the Investments and loan aggregating to Rs. 9341.04 Lacs into its wholly owned subsidiary EMCO Power Limited (EPL), which is setting up power projects in the state of Chhattisgarh and Odisha through joint venture companies. There has been temporary suspension of work on these projects by the management for the reasons stated therein. In the event, prolong delay, carrying value of the said investment will require to be adjusted for impairment.

2. We refer to note 27(b) of the accompanying financial statement regarding the liquidated damages/deduction made by customers aggregating to Rs. 5805 lacs, which are carried as Trade Receivables. The company has or is in the process of taking legal action for recovery of the same. Pending outcome of the matters which are presently unascertainable, no adjustments have been made in the accompanying financial statements.

Our opinion is not qualified in these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by Section 143(3) of the Act, we report that:

a. We have sought and 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. On the basis of the written representations received from the directors as on March 31, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015, from being appointed as a director in terms of Section 164(2) of the Act.

f. With respect to the other matters to be included in the Auditor's Report in accordance with Rules 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note 26 (II) to the financial statements.

ii. The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring required amount to the Investor Education and Protection Fund by the Company.

Annexure referred to in paragraph 1 under the heading Report on other legal and regulatory requirements of our report of even date

i. a. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b. The fixed assets have been physically verified by the management as per a phased programme of verification. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets. The discrepancies reported on verification were not material and have been properly dealt with in the books of account.

ii. a. The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories 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. The discrepancies noticed on verification between physical inventories and the book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

iii. The Company has not granted any unsecured loans to companies, firms or other parties covered in the register maintained under Section 189 of the Act.

iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and nature of its business for the purchases of fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in such internal control system.

v. The Company has not accepted any deposits from public.

vi. To the best of our knowledge and as explained, the Company has maintained the cost records specified under Companies (Cost Records and Audit) Rules, 2014 issued under sub section (1) of Section 148 of the Act, in respect of Company's product to which the said rules are made applicable and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate.

vii. a. There have been delays in depositing undisputed statutory dues of provident fund, employees state insurance, service tax, value added tax, sales tax, WCT and Tax deducted at source with the appropriate authorities. According to the information and explanations given to us and on the basis of our examination of the books of account, the Company is regular in depositing undisputed statutory dues of income tax, wealth tax, custom duty, and other material statutory dues during the year with the appropriate authorities. As on March 31, 2015, there are no such undisputed dues payable for a period of more than six months from the date they became payable.

b. As at 31st March, 2015 according to the records of the Company and the information and explanations given to us disputed dues on account of Income Tax, Sales Tax, Service Tax, Excise Duty, Custom Duty, Value added Tax or Cess (as applicable) that have not been deposited before appropriate authorities are as under:-

Name of Nature of Dues Amount in Rs. Period to which the Statute Lakhs amount relates

Sales Tax West Bengal VAT 42.91 2007-08 Act

Sales Tax West Bengal VAT 44.83 2009-10 Act

Sales Tax Jharkhand VAT 4.24 2008-09 Act

Sales Tax Jharkhand VAT 24.60 2010-11 Act

Sales Tax Rajasthan VAT 347.23 2011-12 Act

Central Short Payment of 6.98 2007-08 Excise Act Duty

Central Excise Duty 5.86 2007-08 Excise Act

Central Excise Duty 37.00 2011-12 Excise Act

Central Excise Duty 48.22 2012-13 Excise Act

Central Excise Duty 76.40 2005-11 Excise Act

Central Excise Duty 106.33 Oct 2013 to Excise Act May 2014

Central Excise Duty 383.85 April 2009- Excise Act Sept 2013

Central Excise Duty 5.89 March 2007 to Excise Act June 2008

Service Tax Service Tax and 88.57 2004-07 Penalty

Service Tax Service Tax, Interest 130.83 April 2007 – and Penalty March 2008

Name of Statute Forum where the dispute is pending

Sales Tax Act West Bengal Commercial Taxes Appellate and Revision Board

Sales Tax Act Joint Commissioner of Sales Tax

Sales Tax Act Deputy Commissioner of Commercial Tax

Sales Tax Act Deputy Commissioner of Commercial Tax

Sales Tax Act Asst. Commissioner

Central Excise Act Customs, Excise and Service Tax Appellate

Central Excise Act Additional Commissioner Central Excise & Customs

Central Excise Act Commissioner (Appeals)

Central Excise Act Additional Commissioner Central Excise & Customs

Central Excise Act Commissioner (Appeals)

Central Excise Act Customs, Excise and Service Tax Appellate

Central Excise Act Commissioner of central excise & Customs

Central Excise Act Customs, Excise and Service Tax Appellate,Jalgaon

Service Tax Commissioner (Appeals), Central Excise and Customs, Vadodra

Service Tax Commissioner (Appeals), Central Excise, Mumbai Zone

In the following matters, the department has preferred appeals at higher levels:

Name of Nature of Dues Amount in Rs. Financial Year to Forum where dispute is the Statute Lakhs which the amount pending relates

Sales Tax Rajasthan VAT 6.38 2008-10 Commercial Tax Officer Act

Central Excise Duty 141.32 1996-01 Supreme Court Excise Act

Central Excise Duty 4.10 1993-98 High Court Excise Act

Central Excise Duty 3.14 2008-09 Customs, Excise and Service Excise Act Tax Appellate

c. The amount required to be transferred to investor education and protection fund in accordance with the provisions of the Companies Act, 2013 and rules made there under has been transferred to such fund within time.

viii. The Company does not have any accumulated losses at the end of the financial year and has not incurred any cash losses in the current and immediately preceding financial year

ix. Based on our audit procedures and as per the information and explanations provided by the management, we are of the opinion that Company has not defaulted in repayment of dues to banks and debentures holders except during the year there has been overdrawn in working capital facilities from banks. The details of such overdrawn during the year and as at year end are as under:

Nature of Dues Overdrawn Range Overdrawn Range (Amount in Rs.) (in no. of days)

Working Capital / Cash Credit / Packing Rs. 2,000 lakhs to Rs. 7,000 lakhs Up to 89 days Credits / Other fund based working capital facilities*

* Aggregate principal amount overdrawn as at 31.3.2015 – Rs. 3,300 lakhs

x. According to the information and explanations provided to us and the records examined by us, the Company has given guarantee for loan taken by its wholly owned subsidiary from bank. According to information and explanation given to us, we are of the opinion that terms and conditions of guarantee given is not prejudicial to the interest of the Company.

xi. In our opinion and according to the information and explanations given to us, term loan taken during the year have been applied for the purpose for which they were obtained.

xii. 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 provided 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 P. RAJ & CO. For Chaturvedi & Shah

Chartered Accountants Chartered Accountants

Firm Registration No. 108310W Firm Registration No. 101720W

Sd/- Sd/-

S. V. Chheda Amit Chaturvedi

Partner Partner

Membership No. 103938 Membership No. 103141

Mumbai, May 29, 2015 Mumbai, May 29, 2015

---

Mar 31, 2014

We have audited the accompanying financial statements of EMCO Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements 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:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note 28 to these financial statements regarding the Company''s investment and net loan aggregating to Rs. 8,123.20 Lakhs into its wholly owned subsidiary EMCO Power Limited, which is setting up power projects in the state of Chhattisgarh and Orissa through joint venture companies. Said Investment has been utilised towards project development expenditure like feasibility studies, acquisition of land, allocation of water, EIA studies and other pre-operative expenses. There are delays in these projects mainly on account of economic scenario and uncertainty in coal allocation policy. In the event, prolonged delay, carrying value of said Investment will require to be adjusted for impairment.

Our opinion is not qualified in this matter

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, 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 purpose 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 Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. in our opinion, the Balance Sheet, the Profit and Loss statement comply with the accounting standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

e. on the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors are disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure referred to the Auditors'' Report

(Referred to in Paragraph 1 under the heading Report on other legal and regulatory requirements of our Report of even date)

1. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

As explained to us, the fixed assets have been physically verified by the management as per a phased programme of verification. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such verification were not material and have been properly dealt with in the books of account.

The Company has not disposed off a substantial part of fixed assets during the year.

2. The management has conducted physical verification of inventories at reasonable intervals. In respect of stocks lying with the third parties, confirmation for most of the stocks has been received.

In our opinion and according to information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

The Company is maintaining proper records of inventories. The discrepancies noticed on verification between physical inventories and the book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3. In respect of the loans, secured or unsecured, granted or taken by the Company to / from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a) According to the information and explanations provided to us and as per the records examined by us, as at 31st March 2014, Company has granted unsecured loans to three of its wholly owned subsidiaries covered in the register maintained under section 301 of the Companies Act, 1956. The maximum balance outstanding at any time during the year was Rs. 15,111.24 lakhs and the year-end balance is Rs. 14,874.54 lakhs.

In our opinion and according to the information and explanations given to us, the rate of interest other terms and conditions of such loan are prima facie not prejudicial to the interest of the Company.

The loan granted to one of wholly owned subsidiary is repayable on demand and to other two wholly owned subsidiary is not due during the year for repayment; hence question of overdue principal amount doesn''t arise. In cases, where there is no stipulation as to payment of interest, same is converted into loan, therefore, question of receipt of interest does not arise in this case. In other cases, company is regular in receipt of interest.

b) As per information and explanations provided 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. Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations provided to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventories, 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 controls in respect of these areas.

5. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

In our opinion and according to the information and explanations provided to us, the transactions made in pursuance of such contracts or arrangements have been made at reasonable prices having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations provided to us, the Company has not accepted any deposits from the public. Therefore, the provisions of Clause (vi) of paragraph 4 of the Order are 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. We have broadly reviewed the cost records maintained by the Company pursuant (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1) (d) and are of the opinion that prima facie the prescribed records have been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. According to the information and explanations provided to us and on the basis of our examination of the books of account, the Company has been, except for certain cases generally regular in depositing undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Value Added Tax, Service Tax , Customs Duty, Wealth Tax, Excise Duty, Cess, Investor Education and Protection Fund, and other material statutory dues during the year with the appropriate authorities. As on 31st March 2014, there are no undisputed dues payable for a period of more than six months from the date they became payable.

As at 31st March 2014, according to the records of the Company and the information and explanations given to us, disputed dues on account of Income Tax, Sales Tax, Service Tax, Excise Duty and other material statutory taxes that have not been deposited before appropriate authorities are as under:-

Name of Statute Nature of Dues Amount Period to which the Forum where the dispute is pending

(in lakhs) amount relates

Sales Tax Act West Bengal VAT 42.91 2007-08 West Bengal Commercial Taxes Appellate

and Revision Board

Sales Tax Act West Bengal VAT 34.39 2009-10 Joint Commissioner of Sales Tax

Sales Tax Act Jharkhand VAT 3.38 2008-09 Deputy Commissioner of Commercial Tax

Sales Tax Act Gujarat VAT 5.54 2008-09 Assistant Commissioner of Sales Tax

Central Excise Act Penalty Proceeding 1.51 2002-05 CESTAT

Central Excise Act Short Payment of Duty 6.98 2007-08 CESTAT

Central Excise Act Interest 2.86 2009-10 CESTAT

Central Excise Act Excise Duty 37.00 2011-12 Commissioner (Appeals)

Central Excise Act Excise Duty 5.86 2007-08 Additional Commissioner Central Excise & Customs

Central Excise Act Excise Duty 48.22 2012-13 Additional Commissioner Central Excise

& Customs

Service Tax Service Tax and 88.57 2004-07 Commissioner (Appeals), Central Excise

Penalty & Customs

Service Tax Service Tax, Interest 175.18 Jan 2007 To Oct Additional Commisioner of Service Tax

and Penalty 2010

Service Tax Service Tax 5.89 March 2007 to June CESTAT

2008

In the following matters, the department has preferred appeals at higher levels:

Name of the Statute Nature of Dues Amount Financial Year to which the Forum where dispute is pending

(in lakhs) amount relates

Sales Tax Act Rajasthan VAT 6.38 2008-10 Commercial Tax Offcer

Central Excise Act Excise Duty 141.32 1996-01 Supreme Court

Central Excise Act Excise Duty 4.10 1993-98 High Court

Central Excise Act Excise Duty 3.14 2008-09 CESTAT

10. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses in current financial year and in the immediately preceding financial year.

11. Based on our audit procedures and as per the information and explanations provided by the management, we are of the opinion that Company has not defaulted in repayment of dues to banks and debenture holders except default during the year relating to repayment of overdrawn working capital facilities from banks. The balances due towards such overdrawn working capital facilities as at year end are as under:

Nature of Dues Principal Amount due as at

31.3.2014 (Rs. in Lakhs)

Working Capital / Cash Credit / Packing Credit / Other Fund based Facilities Overdrawn 3,356

The Company has not borrowed any funds from financial institutions under audit.

12. Based on our audit procedures and according to the information and explanations provided 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.

13. In our opinion, the Company is not a chit fund / nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14. In our opinion, the Company is not dealing in or trading in shares, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

15. According to the information and explanations provided to us and the records examined by us, the Company has given guarantee for loan taken by its wholly owned subsidiary from bank. According to information and explanation given to us, we are of the opinion that terms and conditions of guarantee given is 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 have been applied for the purposes for which they were obtained.

17. According to the information and explanations provided to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

18. According to the information and explanations provided to us and on the basis of records examined by us, during the year Company has not made a preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. According to the information and explanations provided to us and the records examined by us, the Company had created security and charge in respect of debentures.

20. The Company has not raised any money through a public issue during the year.

21. 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 provided 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 P. RAJ & CO. For Chaturvedi & Shah

Chartered Accountants Chartered Accountants

Firm Registration No. 108310W Firm Registration No. 101720W

sd/- sd/-

Sanjay Chheda Amit Chaturvedi

Partner Partner

Membership No. 103938 Membership No. 103141

Mumbai, Mumbai,

25th April, 2014 25th April, 2014

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fi nancial statements of Emco Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2013, and the Statement of Profi t and Loss and the Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information.

Management s Responsibility for the Financial Statements

Management is responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor s Responsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the fi nancial statements 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:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2013;

(b) in the case of the Statement of Profi t and Loss, of the profi t for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub- section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specifi ed in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, 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 purpose 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 Balance Sheet, Statement of Profi t and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. in our opinion, the Balance Sheet, Statement of Profi t and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e. on the basis of written representations received from the directors as on 31st March, 2013, and taken on record by the Board of Directors, none of the directors are disqualifi ed as on 31st March 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure referred to the Auditors Report

(Referred to in paragraph 1 of our report of even date)

1. The Company has maintained proper records showing full particulars, including quantitative details and situation of fi xed assets.

As explained to us, the fi xed assets have been physically verifi ed by the management as per a phased programme of verifi cation. In our opinion, the frequency of verifi cation is reasonable having regard to the size of the Company and the nature of its fi xed assets. The discrepancies noticed on such verifi cation were not material and have been properly dealt with in the books of account.

The Company has not disposed off a substantial part of fi xed assets during the year.

2. The management has conducted physical verifi cation of inventories at reasonable intervals. In respect of stocks lying with the third parties, confi rmation for most of the stocks has been received.

In our opinion and according to information and explanations given to us, the procedures of physical verifi cation of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

The Company is maintaining proper records of inventories. The discrepancies noticed on verifi cation between physical inventories and the book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3. In respect of the loans, secured or unsecured, granted or taken by the Company to / from companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a) According to the information and explanations provided to us and as per the records examined by us, as at 31st March 2013, Company has granted unsecured loans to two of its wholly owned subsidiaries covered in the register maintained under section 301 of the Companies Act, 1956. The maximum balance outstanding at any time during the year was 12,357.09 lakhs and the year-end balance is 11,646.87 lakhs.

In our opinion and according to the information and explanations given to us, the rate of interest, other terms and conditions of such loan are prima facie not prejudicial to the interest of the Company.

The loan granted to one of wholly owned subsidiary is repayable on demand and to other wholly owned subsidiary is not due during the year for repayment; hence question of overdue principal amount doesn t arise. In respect of one of subsidiary receipt of interest is regular and for other wholly owned subsidiary there is no stipulation as to payment of interest, which is annually converted into loan.

b) As per information and explanations provided to us, the Company has not taken any loans, secured or unsecured from companies, fi rms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations provided to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventories, fi xed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls in respect of these areas.

5. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

In our opinion and according to the information and explanations provided to us, the transactions made in pursuance of such contracts or arrangements have been made at reasonable prices having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations provided to us, the Company has not accepted any deposits from the public. Therefore, the provisions of Clause (vi) of paragraph 4 of the Order are 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. We have broadly reviewed the cost records maintained by the Company pursuant (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1) (d) and are of the opinion that prima facie the prescribed records have been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. According to the information and explanations provided to us and on the basis of our examination of the books of account, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income-tax, Customs Duty, Wealth Tax, Service Tax, Value Added Tax, Excise Duty, Cess, Investor Education and Protection Fund, and other material statutory dues during the year with the appropriate authorities. As on 31st March 2013, there are no undisputed dues payable for a period of more than six months from the date they became payable.

As at 31st March 2013, according to the records of the Company and the information and explanations given to us, disputed dues on account of Income Tax, Sales Tax, Service Tax, Excise Duty and other material statutory taxes that have not been deposited before appropriate authorities are as under:-

Name of Statute Nature of Dues Amount Period to which ( in lakhs) the amount relates

Sales Tax Act Maharashtra Sales Tax 18.53 1992-93

Sales Tax Act Tamil Nadu VAT 137.51 2006-08

Sales Tax Act West Bengal VAT 42.91 2007-08

Sales Tax Act Gujarat VAT 0.35 2007-08

Sales Tax Act West Bengal VAT 34.39 2009-10

Sales Tax Act Jharkhand VAT 3.38 2008-09

Sales Tax Act Uttar Pradesh VAT 4.80 2011-12

Central Excise Act Penalty Proceeding 1.51 2002-05

Central Excise Act Short Payment of Duty 6.98 2007-08

Central Excise Act Interest 2.86 2009-10

Central Excise Act Excise Duty 37.00 2011-12

Service Tax Service Tax and 88.57 2004-07 Penalty

Service Tax Service Tax 6.24 2006-09

Service Tax Service Tax 3.49 2006-10

Service Tax Service Tax 3.89 2009-10

Service Tax Service Tax 1.18 2010-11

Service Tax Service Tax 5.86 2010-11

NAME Forum where the dispute is pending

Service Tax Assistant Commissioner of Sales Tax

Service Tax The Appellate Deputy Commissioner

Service Tax West Bengal Commercial Taxes Appel- late and Revision Board

Service Tax Deputy Commissioner of Commercial Tax

Service Tax Joint Commissioner of Sales Tax

Service Tax Deputy Commissioner of Commercial Tax

Service Tax Additional Commissioner Grade II

Service Tax CESTAT

Service Tax CESTAT

Service Tax CESTAT

Service Tax Commissioner (Appeals)

Service Tax Commissioner (Appeals), Central Excise and Customs

Service Tax CESTAT

Service Tax CESTAT

Service Tax CESTAT

Service Tax CESTAT

Service Tax Commissioner (Appeals), Central Excise and Customs

10. The Company does not have accumulated losses at the end of the fi nancial year. The Company has not incurred cash losses in current fi nancial year and in the immediately preceding fi nancial year.

11. Based on our audit procedures and as per the information and explanations provided by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to any fi nancial institution or bank or to debenture holders as at the Balance Sheet date.

12. Based on our audit procedures and according to the information and explanations provided 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.

13. In our opinion, the Company is not a chit fund / nidhi / mutual benefi t fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14. In our opinion, the Company is not dealing in or trading in shares, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

15. According to the information and explanations provided to us and the records examined by us, the Company has given guarantee for loan taken by its wholly owned subsidiary from bank. According to information and explanation given to us, we are of the opinion that terms and conditions of guarantee given is not prejudicial to the interest of the Company.

16. The Company has not raised any term loans during the year covered under audit.

17. According to the information and explanations provided to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

18. According to the information and explanations provided to us and on the basis of records examined by us, during the year Company has not made a preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. According to the information and explanations provided to us and the records examined by us, the Company has created security and charge in respect of debentures issued.

20. The Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the fi nancial statements and as per the information and explanations provided by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

By order of the Board of Directors

For EMCO LIMITED

Sd/-

Place: Mumbai Praveen Kumar

Date: 9th May, 2013 Company Secretary

---

Mar 31, 2012

1. We have audited the attached Balance Sheet of Emco Limited as at 31st March 2012, the Statement of Profit and Loss 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 have 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 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 the 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 (Auditors' Report) Order, 2003 ("the Order") 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. 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow statement dealt with by this report are in agreement with the books of account;

d. In our opinion, the Balance Sheet, the Statement Profit and Loss and the 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;

e. On the basis of written representations received from the directors, as on 31st March 2012 and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 31st March 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f. In our opinion, and to the best of our information and according to the explanations provided to us, they said financial statements read with the notes thereon, 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:

i. in the case of Balance Sheet, of the state of affairs of the Company as at 31st March 2012;

ii. in the case of Statement of Profit and Loss, of the profit for the year ended on that date; and

iii. in case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure referred to the Auditors' Report

(Referred to in paragraph 3 of our report of even date)

1. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

As explained to us, the fixed assets have been physically verified by the management as per a phased programme of verification. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such verification were not material and have been properly dealt with in the books of account.

In our opinion, the Company has not disposed off a substantial part of fixed assets during the year and going concern status of the Company is not affected.

2. The management has conducted physical verification of inventories at reasonable intervals. In respect of stocks lying with the third parties, confirmation for most of the stocks has been received.

In our opinion and according to information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

The Company is maintaining proper records of inventories. The discrepancies noticed on verification between physical inventories and the book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3. In respect of the loans, secured or unsecured, granted or taken by the Company to / from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a. According to the information and explanations provided to us and as per the records examined by us, as at 31st March 2012, Company has granted unsecured loans to two of its wholly owned subsidiaries covered in the register maintained under section 301 of the Companies Act, 1956. The maximum balance outstanding at any time during the year was Rs. 15,243.60 lakhs and the year-end balance is Rs. 11,964.54 lakhs.

b. In our opinion and according to the information and explanations given to us, the rate of interest, other terms and conditions of such loan are prima facie not prejudicial to the interest of the Company.

c. As per information and explanations provided 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. Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.

4. In our opinion and according to the information and explanations provided to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventories, 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 controls in respect of these areas.

5. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

In our opinion and according to the information and explanations provided to us, the transactions made in pursuance of such contracts or arrangements have been made at reasonable prices having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations provided to us, the Company has not accepted any deposits from the public. Therefore, the provisions of Clause (vi) of paragraph 4 of the Order are 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. We have broadly reviewed the cost records maintained by the Company pursuant (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1) (d) and are of the opinion that prima facie the prescribed records have been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. According to the information and explanations provided to us and on the basis of our examination of the books of account, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Income-tax, Customs Duty, Wealth Tax, Service Tax, Value Added Tax, Excise Duty, Cess, Investor Education and Protection Fund and other material statutory dues during the year with the appropriate authorities. As on 31st March 2012, there are no undisputed dues payable for a period of more than six months from the date they became payable.

As at 31st March 2012, according to the records of the Company and the information and explanations given to us, disputed dues on account of Income Tax, Sales Tax, Service Tax, Excise Duty and other material statutory taxes that have not been deposited before appropriate authorities are as under:

(All amount in Rs. lakhs, unless otherwise stated)

Period to which the Forum where the dispute is

Name of Statute Nature of Dues Amount amount relates pending

Sales Tax Act Levy of Sales Tax on Excise 18.53 1992-93 Assistant Commissioner of Duty on Deemed Export Sales Tax

Sales Tax Act Non Deduction of TDS on 137.51 2006-08 The Appellate Deputy Works contract Commissioner

Sales Tax Act Non Deduction of TDS on 42.91 2007-08 West Bengal Commercial Taxes Works contract Appellate and Revision Board

Sales Tax Act Non submission of 9.87 2007-08 Deputy Commis sioner of Declaration Forms Commercial Tax

Central Excise Act Additions made in 141.32 1996-01 Supreme Court Assessable Value

Central Excise Act Additions made in 4.69 2000-03 CESTAT Assessable Value

Central Excise Act Penalty Proceeding 1.51 2002-05 CESTAT

Central Excise Act Interest on Differential Duty 15.94 2004-09 High Court

Central Excise Act Additions made in 3.14 2008-09 CESTAT Assessable Value

Central Excise Act Interest on Differential Duty 5.73 2009-10 CESTAT

Service Tax Service Tax on Erection & 88.57 2004-07 Commissioner (Appeals),

Commissioning and Penalty Central Excise and Customs thereon

Service Tax Disallowance of Input 12.02 2006-09 CESTAT Service Credit

Service Tax Service Tax on Testing 5.86 2010-11 Commissioner (Appeals), Charges Central Excise and Customs

Income Tax Act Disallowance of Expenses 0.73 2006-07 Commissioner of Income Tax- (Appeal)

Income Tax Act Disallowance of Expenses 47.72 2006-07 ITAT

10. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses in current financial year, but had incurred cash losses in the immediately preceding financial year.

11. Based on our audit procedures and as per the information and explanations provided by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to any financial institution or bank or to debenture holders as at the Balance Sheet date.

12. Based on our audit procedures and according to the information and explanations provided 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.

13. In our opinion, the Company is not a chit fund / nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14. In our opinion, the Company is not dealing in or trading in shares, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

15. According to the information and explanations provided to us and the records examined by us, the Company has given guarantee for loan taken by its wholly owned subsidiary from bank. According to information and explanation given to us, we are of the opinion that terms and conditions of guarantee given is not prejudicial to the interest of the Company.

16. The Company has raised term loans during the year. According to the information and explanations provided to us and the records examined by us, we are of opinion that the term loans outstanding at the beginning of the year and those raised during the year have been applied by the Company for the purpose for which they were obtained.

17. According to the information and explanations provided to us and on an overall examination of the balance sheet and cash flow statement of the Company, we are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment.

18. According to the information and explanations provided to us and on the basis of records examined by us, during the year Company has not made a preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. According to the information and explanations provided to us and the records examined by us, the Company has created security and charge in respect of debentures issued.

20. The Company has not raised any money through a public issue during the year.

21. 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 provided 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 P. RAJ & CO. For CHATURVEDI & SHAH

Chartered Accountants Chartered Accountants

Firm Registration No. 108310W Firm Registration No. 101720W

Sd/- Sd/-

P. S. Shah Amit Chaturvedi

Partner Partner

Membership No. 44611 Membership No. 103141

Mumbai, 15th May 2012 Mumbai, 15th May 2012

---

Mar 31, 2011

1) We have audited the attached Balance Sheet of EMCO Limited as at 31st March 2011, Profit and Loss Account and the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2) We have 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 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 the 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 (Auditors' Report) Order, 2003 (“the Order”) 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) 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 Balance Sheet, Profit and Loss Account and the 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 the 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;

e. On the basis of written representations received from the directors, as on 31st March 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f. In our opinion, and to the best of our information and according to the explanations provided to us, the said financial statements read with the notes thereon, 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:

i. in the case of Balance Sheet, of the state of affairs of the Company as at 31st March 2011;

ii. in the case of Profit and Loss Account, of the loss for the year ended on that date; and

iii. in case of the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE REFERRED TO THE AUDITORS' REPORT (Referred to in paragraph 3 of our report of even date)

1) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

The fixed assets have been physically verified by the management as per a phased programme of verification. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such verification were not material and have been properly dealt with in the books of accounts.

Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern assumption.

2) The management has conducted physical verification of inventory at reasonable intervals. In respect of stocks lying with the third parties, confirmation for most of the stocks has been received.

In our opinion, 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.

The Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical inventories and the book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3) According to the information and explanations provided to us and as per the records examined by us, as at 31st March 2011, Company has granted interest free unsecured loans amounting to ` 684,043 lakhs to two of its wholly owned subsidiaries covered in the register maintained under section 301 of the Companies Act, 1956. The maximum balance outstanding during the year amounted to ` 684,043 lakhs.

In our opinion, other terms and conditions of such loan are prima facie not prejudicial to the interest of the Company.

As per information and explanations provided 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.

4) In our opinion and according to the information and explanations provided to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory, 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 controls.

5) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

In our opinion and according to the information and explanations provided to us, the transactions made in pursuance of such contracts or arrangements have been made at reasonable prices having regard to the prevailing market prices at the relevant time.

6) In our opinion and according to the information and explanations provided to us, the Company has not accepted any deposits from the public.

7) In our opinion the Company has an internal audit system commensurate with the size and nature of its business.

8) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

9) According to the information and explanations provided to us and on the basis of our examination of the books of account, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Income-tax, Customs Duty, Wealth Tax, Service Tax, Value Added Tax, Excise Duty, Cess, Investor Education and Protection Fund, and other material statutory dues during the year with the appropriate authorities. As on 31st March 2011, there are no undisputed dues payable for a period of more than six months from the date they became payable.

As at 31st March 2011, according to the records of the Company and the information and explanations given to us, following are the particulars of disputed dues on account of Income Tax, Sales Tax, Service Tax, Excise Duty and other material statutory dues :

Name of Statute Nature of Dues Rs in Lakhs

Sales Tax Act Levy of Sales Tax on Excise Duty on 18.53 Deemed Export

Sales Tax Act Non Deduction of TDS on Works 29.47 contract

Sales Tax Act Non submission of Declaration 33.52 Forms

Central Excise Act Additions made in Assessable Value 234.74

Central Excise Act Additions made in Assessable Value 4.69

Central Excise Act Penalty Proceeding 1.51

Central Excise Act Interest on Differ -ential Duty 21.63

Central Excise Act Additions made in Assessable Value 3.14

Service Tax Service Tax on Erection & Commis- 88.57 sioning and Penalty thereon

Service Tax Disallowance of Input Service Credit 6.24

Income Tax Act Penalty Proceeding under Section 41.34 271(1)(c)

Income Tax Act Non Credit of Tax Deducted at 7.62 Source paid IT,

Income Tax Act Disallowance of Expenses 35.76

Income Tax Act Disallowance of Expenses 0.73

Income Tax Act Disallowance of Expenses 51.90

Income Tax Act Short credit for TDS Certifcates 78.96

Income Tax Act Non Credit of Tax Deducted at 24.85 Source paid

Income Tax Act Non Credit of Tax Deducted at 100.86 Source paid





Name of Statute Period to which Forum where the the amount relates dispute is pending

Sales Tax Act 1992-93 Assistant Commissioner of Sales Tax

Sales Tax Act 2007-08 Joint Commissioner of Commercial Taxes

Sales Tax Act 2006-07 Deputy Commissioner of Commercial Taxes

Central Excise Act Additions 1996-01 Supreme Court

Central Excise Act Additions 2000-03 CESTAT

Central Excise Act 2002-05 CESTAT

Central Excise Act 2004-09 CESTAT

Central Excise Act 2008-09 CESTAT

Service Tax 2004-07 Commissioner (Appeals), Central Excise and Customs

Service Tax 2006-09 CESTAT

Income Tax Act 2005-06 Commissioner of Income Tax-(Appeal)

Income Tax Act 2005-06 Deputy Commissioner of

Income Tax Act 2006-07 Income Tax Appellate Tribunal

Income Tax Act 2006-07 Commissioner of Income Tax-(Appeal)

Income Tax Act 2007-08 CIT-(Appeal)

Income Tax Act 2007-08 Additional commissioner of IT

Income Tax Act 2007-08 Deputy Commissioner of IT, TDS Circle

Income Tax Act 2008-09 Deputy Commissioner of IT, TDS Circle



10) Company has incurred cash losses in the current financial year. The Company does not have accumulated losses at the end of the financial year and has not incurred cash losses in the immediately preceding financial year.

11) Based on our audit procedures and as per the information and explanations provided by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to any financial institution or bank or to debenture holders as at the Balance Sheet date.

12) Based on our audit procedures and according to the information and explanations provided 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.

13) In our opinion and according to the information and explanations provided to us, the nature of activities of the Company does not attract the provisions of clause 4(xiii) of the Companies (Auditors' Report) Order, 2003.

14) In our opinion, the Company is not dealing in or trading in shares, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

15) According to the information and explanations provided to us and the records examined by us, the Company has given guarantee for loan taken by its wholly owned subsidiary from bank. In our opinion, terms and conditions of guarantee given is not prejudicial to the interest of the Company.

16) According to the information and explanations provided to us and the records examined by us, in our opinion, the term loans were applied by the Company for the purpose for which they were obtained.

17) According to the information and explanations provided to us and on an overall examination of the balance sheet and cash flow statement of the Company, in our opinion, the funds raised on short-term basis have not been used for long- term investment.

18) According to the information and explanations provided to us and on the basis of records examined by us, the Company has made a preferential allotment of shares to a party covered in the register maintained under section 301 of the Companies Act, 1956. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the Company.

19) According to the information and explanations provided to us and the records examined by us, the Company has created security and charge in respect of debentures issued.

20) The Company has not raised any money through a public issue during the year.

21) Based up on the audit procedure performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations provided 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 P. RAJ & CO. Chartered Accountants

Sd/- P. S. Shah Proprietor Membership No. 44611 Firm Registration No. 108310W

Mumbai, 30th May, 2011

---

Mar 31, 2010

1) We have audited the attached Balance Sheet of EMCO Limited as at 31 st March 2010, related Profit and Loss Account and the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit,

2) We have 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 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 the 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 (Auditors Report) Order, 2003 ("the Order") 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) 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 Balance Sheet, Profit and Loss Account and the 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 the 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;

e. On the basis of written representations received from the directors, as on 31st March 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 st March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f. In our opinion, and to the best of our information and according to the explanations provided to us, the said financial statements read with the notes thereon, 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:

i. in the case of Balance Sheet, of the state of affairs of the Company as at 31 st March 2010;

ii. in the case of Profit and Loss Account, of the profit for the year ended on that date; and

iii. in case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure referred to Auditors Report (Referred to in paragraph 3 of our report of even date)

1) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets,

The fixed assets have been physically verified by the management as per a phased programme of verification. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such verification were not material and have been properly dealt with in the books of accounts,

Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern assumption.

2) The management has conducted physical verification of inventory at reasonable intervals. In respect of stocks lying with the third parties, confirmation for most of the stocks has been received.

In our opinion, 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.

The Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical inventories and the book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3) According to the information and explanations provided to us and as per the records examined by us, ason 31 st March 201 0, Company has granted unsecured interest free loans amounting to Rs. 4,645.48 lakh to three of its wholly owned subsidiaries covered in the register maintained under section 301 of the Companies Act, 1956. The maximum balance outstanding during the year amounted to Rs. 9,419.86 lakh.

In our opinion, other terms and conditions of such loan are prima facie not prejudicial to the interest of the Company.

In the absence of terms of repayment, we are not able to comment on the regularity of the repayment of loans.

As per information and explanations provided 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.

4) In our opinion and according to the information and explanations provided to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory, 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 controls.

5) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

In our opinion and according to the information and explanations provided to us, the transactions made in pursuance of such contracts or arrangements have been made at reasonable prices having regard to the prevailing market prices at the relevant time.

6) In our opinion and according to the information and explanations provided to us, the Company has not accepted any deposits from the public.

7) In our opinion the Company has an internal audit system commensurate with the size and nature of its business.

8) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

9) According to the information and explanations provided to us and on the basis of our examination of the books of accounts, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Customs Duty, Wealth Tax, Sales Tax, Service Tax, Excise Duty, Cess and other statutory dues during the year with the appropriate authorities. As on 31 st March 2010, there are no undisputed dues payable for a period of more than six months from the date they became payable.

As at 31 st March 2010, according to the records of the Company and the information and explanations given to us, the following are the particulars of disputed dues on account of Sales Tax, Income Tax, Excise Duty, Service Tax and

Name of Statute Nature of Dues Amount

(Rupees in lakhs)

Sales Tax Act Levy of Sales Tax on Excise 18.53

Duty on Deemed Export

Sates Tax Act Non-submission of Statutory 12.49

Forms

Central Excise Act Interest on Differential Duty 21.63

Central Excise Act Interest on Wrong Utilization 5.00

of Cenvat Credit

Service Tax Service Tax on Erection and 1.74

Commissioning

Service Tax Service Tax on Erection and 44.28

Commissioning

Income Tax Act Disallowance of Expenses 90.56

Income Tax Act Disallowance of Expenses 0.73

Income Tax Act Non Credit of Taxes and 18.39

Interest



name of Statute Period to which the Forum where the amount relates dispute is pending

Sales Tax Act 1992-93 Assistant

Commissioner of Sales Tax

Sales Tax Act 2000-01 Assistant

Commissioner of Sales Tax

Central Excise Act 2004-09 CESTAT

Central Excise Act 2007-08 The Commissioner

of Central Excise

(Appellant)

Service Tax 1999-02 CESTAT

Service Tax 2005-06 Additional

Commissioner of Central Excise

Income Tax Act 2006-07 Commissioner of

Income Tax (Appeals)

Income Tax Act 2006-07 Commissioner of

Income Tax (Appeals)

Income Tax Act 2006-07 Assistant

Commissioner of Income Tax



10) The Company does not have accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

11) Based on our audit procedures and as per the information and explanations provided by the management, we are of the opinion that, the Company has not defaulted in repayment of dues to any financial institution or bank or to debenture holders as at the Balance Sheet date.

1 2) Based on our audit procedures and according to the information and explanations provided 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.

13) In our opinion and according to the information and explanations provided to us, the nature of activities of the Company does not attract the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003.

14) In our opinion, the Company is not dealing in or trading in shares, debentures and other investments.

Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

15) According to the information and explanations provided to us and the records examined by us, the Company has given guarantee for loan taken by its wholly owned subsidiary from bank. In our opinion, terms and conditions of guarantee given is not prejudicial to the interest of the Company.

16) According to the information and explanations provided to us and the records examined by us, in our opinion, the term loans were applied by the Company for the purpose for which they were obtained.

17) According to the information and explanations provided to us and on an overall examination of the balance sheet and cash flow statement of the Company, in our opinion, the funds raised on short term basis have not been used for long-term investment.

18) According to the information and explanations provided to us and on the basis of records examined by us, the Company has made a preferential allotment of shares to party covered in the register maintained under section 301 of the Companies Act, 1 956. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the Company

19) According to the information and explanations provided to us and the records examined by us, the Company has created security and charge in respect of debentures issued.

20) The Company has not raised any money through a public issue during the year.

21) 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 provided 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 P. RAJ & CO.

Chartered Accountants

P. S. Shah

Proprietor

Membership No. 44611

Firm Registration No. 10831OW

Mumbai, 26th May 2010