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Auditor Report of PAE Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of PAE 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 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 provisions 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 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 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 thereunder.

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 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 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 qualified audit opinion on the standalone financial statements

Basis for Qualified opinion

The Company has made Long Term Investment of Rs785.66 lacs in its subsidiary, Shurjo Energy Pvt Ltd. ('SEPL'). It has also given loans and advances of Rs655.47 lacs which is recoverable as at end of current year. The subsidiary has made a loss of Rs116.99 lacs in the current year. Its accumulated losses as at the end of the year amounting to Rs1121.34 lacs has exceeded its Net Worth. Despite this, for the reasons mentioned in Note No.13 to the standalone financial statement, the Company considers that the losses in SEPL are temporary in nature and no diminution is required in the value of its investment in the subsidiary. Also the loans and advances given to SEPL are considered as fully recoverable. However we do not have appropriate audit evidence to determine the extent of adjustments that may be required to the carrying value of the said investment or to the value of loans and advances recoverable from SEPL and the impact it will have on the going concern basis of the Company.

The company also holds long term investment of Rs1176.00 lacs in PAE Renewables Private Limited ('PAER') which in turn has invested in its step down wholly owned subsidiary Sovox Renewables Private Limited ('SRPL'). During the year PAE Renewables Pte Limited, wholly owned subsidiary of PAER has entered into MOU for sale of its investment in SRPL, resulting into erosion in the value of the abovementioned investments. No diminution in the value of investments in PAER is provided. The impact of such non-provision on the loss for the year and net assets position as at the year-end is presently not ascertainable. Refer note 13 to the standalone financial statements.

Qualified Opinion

In our opinion, except for the possible effects of the matters described in the Basis for qualified opinion paragraph 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 and its loss and its Cash Flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note No. 38 in the standalone financial statements which indicates that though the net worth of the Company is positive at the end of the year, it has incurred substantial losses of Rs2430.26 lacs till the end of the year including loss of Rs1018.69 lacs for the current year. The accounts have been prepared on going concern basis for the reasons mentioned in the said note. These conditions indicate existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.

Our opinion is not modified in respect of above matter.

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.

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 purpose of our audit;

b) In our opinion, except for the effect of the matters described in the Basis for Qualified Opinion paragraph above, 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 accounts;

d) Except for the effects of the matter described in the Basis of Qualified Opinion paragraph above, 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 matter described in the Basis for Qualified Opinion paragraph and Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.

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

h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 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 does not have any pending litigations which would impact its financial position;

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

iii) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

(Referred to in paragraph 1 under the heading 'Report on Other Legal and Regulatory Requirements' of our Report of even date on the financi -al statements for the year ended on March 31,2015 of PAE Limited.)

(i) (a) The Company has maintained proper records showing full particu -lars including quantitative details and situation of fixed assets.

(b) The fixed assets have been physically verified by the management during the year and in our opinion the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification.

(ii) (a) The inventory has been physically verified during the year by the management at reasonable intervals.

(b) 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) In our opinion and according to the explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and properly dealt with in the books of account.

(iii) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly, sub- clause (a) and (b) of the Order are not applicable.

(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 the nature of its business, with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in the internal control system.

(v) The Company had accepted deposits prior to the commencement of Companies Act, 2013. In terms of section 74(1)(b) of the Companies Act, 2013 such deposits amounting to Rs259.84 Lacs have been repaid during the year and an amount of Rs307.69 Lacs is unpaid as at the year end. We are informed that these earlier deposits will be repaid on the respective due dates as per the terms of acceptance of the same, in terms of explanation to Rule 19 of the Companies (Acceptance of Deposits) Rules, 2014.

During the year, the Company has not accepted any deposits from public in terms of section 73 of the Companies Act, 2013.

We are informed that no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or Court or any other tribunal.

Accordingly, the Company has complied with the provisions of section 73 to 76 of the Companies Act, 2013.

(vi) We have been informed that the Company is not required to maintain cost records under Section 148(1) of the Companies Act, 2013.

(vii) (a) According to the records of the Company,

Provident fund, Employees' State Insurance, Income tax, Sales Tax, Wealth tax, Service tax, Custom Duty, Excise Duty, Value added tax, Cess and other material statutory dues applicable to it have been generally regularly deposited during the year with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of above were in arrears as at March 31, 2015, for a period of more than six months from the date they became payable.

Name of the Statute Nature of dues Period to which the (Rs.in lacs) amount relates

Central Sales Tax and VAT Act VAT, CST, 1992-93 3.05 penalty and interest

VAT Act VAT, penalty and interest 2006-07 2.89

Various States VAT Act VAT, penalty and interest 2007-08 9.75

Various States VAT Act VAT,penalty and interest 2008-09 16.17

Various States VAT Act VAT,penalty and interest 2009-10 27.86

Central Sales Tax and Various States VAT Act VAT, CST, penalty and interest 2010-11 31.40

Central Sales Tax and Various States VAT Act VAT, CST, penalty and interest 2011-12 3.23

Central Sales Tax Act CST, penalty and interest 2012-13 12.98

Central Sales Tax Act CST, penalty and interest 2013-14 1.32

Total 108.65



(c) Based on our examination of the records maintained during the year, the Company is not liable to make any payments towards Investor Education Protection Fund.

(viii) The Company has accumulated losses as per the Balance Sheet as at the end of the financial year. The Company has incurred cash losses during the financial year covered by our audit and also in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution and banks. The Company does not have any outstanding debentures.

(x) The Company has given a corporate guarantee for loans taken by PAE Renewables Pvt Ltd from the bank. However, the terms and conditions thereof are not prejudicial to the interest of the Company.

(xi) The term loan has been applied for the purpose for which they were raised.

(xii) According to the information and explanations furnished by the management, which have been relied upon by us, there were no frauds on or by the Company noticed or reported during the year.

For K.S. Aiyar & Co. Chartered Accountants ICAI Firm Registration No. 100186W

Sd/- Sachin A. Negandhi Partner Membership No.: 112888

Place: Mumbai Date: May 29, 2015


Mar 31, 2014

We have audited the accompanying financial statements of PAE Limited ("the Company"), which comprise the Balance Sheet as at March 31,2014, 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 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 referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (''the Act'') which shall continue to apply in respect of section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated September 13, 2013 issued by the Ministry of Corporate Affairs. This responsibility includes the design, implementation and maintenance of internal control 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 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 entities 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.

Basis for Qualified Opinion

The company has made Long Term Investment of Rs. 785.66 lacs in its subsidiary, Shurjo Energy Private Limited (SEPL). It has also given loans and advances of Rs. 717.30 lacs which is recoverable as at end of current year. The subsidiary has made a loss ofRs. 92.84 lacs in the current year. Its accumulated losses as at the end of the year amounting to Rs. 1004.35 lacs and has exceeded its Net Worth. Despite this, for the reasons

mentioned in note 34 to financial statements, the Company considers that the losses in SEPL are temporary in nature and no diminution is required in the value of its investment in the subsidiary. Also the loans and advances given to SEPL are considered as fully recoverable. However we do not have appropriate audit evidence to determine the extent of adjustments that may be required to the carrying value of the said investment or to the value of loans and advances recoverable from SEPL.

Opinion

Subject to the extent of adjustment that may be required as aforesaid, 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 loss 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.

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, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (''the Act'') which shall continue to apply in respect of section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated September 13, 2013 issued by the Ministry of Corporate Affairs;

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 is 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.

(Referred to in paragraph 1 under the heading ''Report on Other Legal and Regulatory Requirements'' of our Report of even date on the financial statements for the year ended on March 31,2014 of PAE Limited.)

(i) (a) The Company has maintained proper records

showing full particulars, including quantitative details and situation of fixed assets.

(b) A substantial portion of fixed assets have been physically verified by the management during the year. In our opinion the same is reasonable having regard to the size of the Company and the nature of its fixed assets. No material discrepancies were noticed on such verification.

(c) During the year the Company has not disposed off any substantial part of its fixed assets.

(ii) (a) The inventory has been physically verified during

the year by the management at reasonable intervals.

(b) The procedures for physical verification of inventory followed by the management are reasonable and adequate in relation to size of the Company and nature of its business.

(c) In our opinion and according to the explanation given to us, The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and properly dealt within the books of accounts.

(iii) (a) During the year the Company has taken unsecured

loan in the form of inter-corporate deposit from a company covered in the register maintained under Section 301 of the Companies Act, 1956, wherein balance payable at the year end is Rs. 597.99 lacs (Previous year Rs. 484.28 lacs). Maximum balance during the year was Rs. 606.23 lacs (Previous year Rs. 978.43 lacs.)

(b) Based on the information and explanations given to us, we are of the opinion that the rate of interest and other terms and conditions of loan taken from such party covered in the Register maintained under Section 301 is not prima facie prejudicial to the interests of the Company.

(c) The Company has not granted during the year any loans, secured or unsecured to companies covered in the Register maintained under Section 301 of the Act. Hence the provisions of clause (iii)(b),(c),(d) of paragraph 4 are not applicable to the Company.

(iv) (a) In our opinion and according to the information and

explanations given to us, there is adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control.

(v) (a) According to the information and explanations

provided by management, we are of the opinion that the particulars of contracts or arrangements

that are referred to in Section 301 have been entered in the register required to be maintained under that section.

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

(vi) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. No order has been passed by the Company Law Board, National Law Tribunal or Reserve Bank of India or any other court or any other tribunal.

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

(viii) Rules made by the Central Government for the maintenance of cost records under Section 209 (1)(d) of the Companies Act, 1956 are not applicable to the activities of the company.

(ix) (a) The Company is generally regular in depositing

with appropriate authorities, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employee''s State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory dues applicable to it and there are no arrears outstanding as at the year end for a period of more than six months from the date they became payable.

(b) According to the records of the company, there are no disputed Wealth Tax, Customs Duty, Service Tax or Cess. The details of dues in respect of Sales Tax, which have not been deposited on account of any dispute are given below:

Name of the Statute Nature of the dues Period to which Sales Tax the amount relates Commissioner Rs in Lacs

VAT Acts VAT, penalty 2006-07 2.89 and interest

VAT Acts VAT, penalty 2007-08 9.88 and interest

VAT Acts VAT, penalty 2008-09 16.17 and interest

VAT Acts VAT, penalty 2009-10 27.86 and interest Central Sales Tax Sales Tax, 2010-11 31.39 and Various penalty and State VAT Acts interest

Central Sales Tax Sales Tax, 2011-12 3.23 and Various penalty and State VAT Acts interest

Total 91.42

(x) The Company has accumulated losses as per the Balance Sheet as at the end of the financial year. The Company has incurred cash losses during the financial year covered by our audit and also in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a Chit Fund or a Nidhi/Mutual Benefit Fund/Society. Therefore, the provisions of Clauses 4(xiii) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

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

(xv) The Company has given a corporate guarantee for loans taken by Shurjo Energy Private Limited and PAE Renewables Private Limited from the bank. However, the terms and conditions thereof are not prejudicial to the interest of the company.

(xvi) The term loan has been applied for the purpose for which it was raised.

(xvii) According to the information and explanations given to us, and on an overall examination of Balance Sheet of the Company, we report that Rs. 219.14 lacs of short term funds have been used for long term investments (upon excluding the current maturities of Rs. 267.51 lacs of long term loans raised, this is not the case).

(xviii) During the year under audit the Company has made preferential allotment of shares to parties covered in the register maintained under Section 301 of the Companies Act, 1956. The price at which the warrants have been issued has been determined as per the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirement) Regulations, 2009, which in our opinion is not prejudicial to the interest of the Company.

(xix) The Company has not issued any debentures during the financial year.

(xx) The Company has not raised any money during the year by public issue.

(xxi) As per the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.



For K.S.Aiyar & Co; Chartered Accounts Registeration No.100186W

Sachin A. Negandhi Place : Mumbai Partner Date : May 23, 2014 Membership No.: 112888


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of PAE Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, 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 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 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 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 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. 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, 2013;

(b) in the case of the Statement of Profit and Loss, of the loss 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 No.34(d) to the financial statement regarding companies exposure in the nature of long term Investment of Rs. 785.66 lacs and loans and advances of Rs. 1296.62 lacs given to its subsidiary, Shurjo Energy Private limited (SEPL). For the reason mentioned in the note the management considers the diminution in the value of investment as temporary in nature despite losses incurred by the SEPL exceeding its networth as at the end of the year. Also loans and advances due from SEPL have been considered as fully recoverable. Our opinion is not qualified in respect of 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 o ur 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, Statement of Profit and Loss, and Cash Flow Statement 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 March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(Referred to in paragraph 1 under the heading ''Report on Other Legal and Regulatory Requirements'' of our report of even date on the financial statements for the year ended on March 31, 2013 of PAE Limited.

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of Fixed Assets.

(b) A substantial portion of fixed assets have been physically verified by the management during the year In our opinion the same is reasonable having regard to the size of the Company and the nature of its fixed assets. No material discrepancies were noticed on such verification.

(c) During the year the Company has not disposed off any substantial part of its fixed assets.

(ii) (a) The inventory has been physically verified during the year by the management at reasonable intervals.

(b) The procedures for physical verification of inventory followed by the management are reasonable and adequate in relation to size of the Company and nature of its business.

(c) In our opinion and according to the explanation given to us, The Company is maintaining proper records of inventory.The discrepancies noticeon verification between the physical stocks and the book records were not material and properly dealt within the books of accounts.

(iii) (a) During the year the Company has taken unsecured loan in the form of inter-corporate deposit from a company covered in the register maintained under Section 301 of the Companies Act, 1956, wherein balance payable at the year end is Rs. 484.28 lacs (Previous year Rs. 518.38 lacs). Maximum balance during the year was Rs. 978.43 lacs (Previous year Rs. 518.38 lacs.)

(b) Based on the information and explanations given to us, we are of the opinion that the rate of interest and other terms and conditions of loan taken from such party covered in the Register maintained under Section 301 is not prima facie prejudicial to the interests of the company.

(c) The company has given unsecured inter-corporate deposit to two companies covered in the register maintained under Section 301 of the Companies Act, 1956, wherein the balance receivable as at the year end is Rs. 1283.67 lacs (Previous year Rs. 1536.56 lacs). Maximum balance during the year was Rs. 2291.30 lacs (Previous year Rs. 1536.56 lacs.)

(d) In our opinion and according to the explanations given to us, the rate of interest and other terms and conditionsof the aforesaid loan given are not, prima facie, prejudicial to the interests of the company.

(e) In our opinion and according to the explanations given to us, the company is regular in receiving the principal and interest as stipulated.

(iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the company and the nature of its business with regard to fixed assets and with regard to the sale of goods and services. We have not observed any continuing failure to correct major weaknesses in internal control system. However, in the case of reconciliation of balances with debtors, further strengthening of internal control procedures at certain branches is recommended so as to be commensurate with the current size of the company.

(v) (a) According to the information and explanations provided by management, we are of the opinion that the particulars of contracts or arrangements that are referred to in Section 301 have been entered in the register required to be maintained under that section.

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

(vi) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. No order has been passed by the Company Law Board, National Law Tribunal or Reserve Bank of India or any other court or any other tribunal.

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

(viii) Rules made by the Central Government for the maintenance of cost records under Section 209 (1)(d) of the Companies Act, 1956 are not applicable to the activities of the company.

(ix) (a) The Company is generally regular in depositing with appropriate authorities, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employee''s State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory dues applicable to it and there are no arrears outstanding as at the year end for a period of more than six months from the date they became payable.

(b) According to the records of the company, there are no disputed Wealth Tax, Customs Duty, Service Tax or Cess. The details of dues in respect of Sales Tax, which have not been deposited on account of any dispute are given below: (Rs.in lacs)

Name of Nature of Period to Forum where the Statute the dues which the dispute is pending amount pending relates Sales Tax Commissioner

VAT Acts VAT, penalty 2006-07 2.89 and interest

VAT Acts VAT, penalty 2007-08 10.02 and interest

VAT Acts VAT, penalty 2008-09 17.69 and interest

VAT Acts VAT, penalty 2009-10 27.86 and interest

Central Sales VAT, Central 2010-11 31.39 Tax and Sales Tax, Various penalty and State VAT Acts interest

Total 89.85

(x) The Company has accumulated losses as per the Balance Sheet as at the end of the financial year. The Company has incurred cash losses during the financial year covered by our audit and also in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a Chit Fund or a Nidhi/Mutual Benefit Fund/Society. Therefore, the provisions of Clauses 4(xiii) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

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

(xv) The company has given guarantees for loans taken by subsidiaries from the banks and prima facie the terms and conditions thereof are not prejudicial to the interest of the company.

(xvi) The term loan has been applied for the purpose for which it was raised.

(xvii) According to the information and explanations given to us, and on an overall examination of Balance Sheet of the Company, we report that funds raised on short-term basis have not been used for long term investment/ applications.

(xviii) The Company has made preferential allotment of preference shares to parties covered in the register maintained under section 301 of the Companies Act, 1956 at par in terms of Special Resolution passed at the Annual General Meeting of the company. According to the information and explanations given to us, the price at which shares have been issued is not prejudicial to the interest of the company.

(xix) The Company has not issued any debentures during the financial year.

(xx) The Company has not raised any money during the year by public issue.

(xxi) As per the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For K.S.Aiyar & Co.

Chartered Accountants Registration No: 100186W

Satish K. Kelkar

Place: Mumbai Partner

Date: May 27, 2013 Membership Number: 38934


Mar 31, 2012

1. We have audited the attached Balance Sheet of PAE Limited as at March 31, 2012 and also 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 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) Order, 2004, 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 in paragraph 3 above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books;

(iii) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of accounts;

(iv) In our opinion, Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

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

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said Financial Statements together with the significant accounting policies and notes thereon, give the information required by the Companies Act, 1956, in the manner so required and present 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 31,2012;

(b) in the case of the Statement of Profit and Loss, of the loss 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.

Referred to in paragraph 3 of our report of even date on the Accounts for the year ended March 31,2012 of PAE Limited.

(I) (a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) A substantial portion of the fixed assets have been physically verified by the management during the year and the company has also instituted a program for periodic verification of assets which is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year were not substantial. According to the information and explanation given to us, we are of the opinion that the disposal of the fixed assets has not affected the going concern status of the company.

(ii) (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and according to the explanations given to us, the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and properly dealt with in the books of account.

(iii) (a) During the year the Company has taken unsecured loan in the form of inter-corporate deposit from a company covered in the register maintained under Section 301 of the Companies Act, 1956, wherein balance payable at the year end is Rs.518.38 lacs (Previous year Rs.200 lacs). Maximum balance during the year was Rs.518.38 lacs (Previous year Rs.200.36 lacs.)

(b) Based on the information and explanations given to us, we are of the opinion that the rate of interest and other terms and conditions of loan taken from such party covered in the Register maintained under Section 301 is not prima facie prejudicial to the interests of the company.

(c) The company has given unsecured inter-corporate deposit to two companies covered in the register maintained under Section 301 of the Companies Act, 1956, wherein the balance receivable as at the year end is Rs.1,536.56 lacs (Previous year Rs.60.51 lacs). Maximum balance during the year was Rs.1,536.56 lacs (Previous year Rs.106.58 lacs.)

(d) In our opinion and according to the explanations given to us, the rate of interest and other terms and conditions of the aforesaid loan given are not, prima facie, prejudicial to the interests of the company.

(e) In our opinion and according to the explanations given to us, the company is regular in receiving the principal and interest as stipulated.

(iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. We have not observed any continuing failure to correct major weaknesses in internal control system. However, in the case of reconciliation of balances with debtors, further strengthening of internal control procedures at certain branches is recommended so as to be commensurate with the current size of the company.

(v) (a) According to the information and explanations provided by management, we are of the opinion that the particulars of contracts or arrangements that are referred to in Section 301 have been entered in the register required to be maintained under that section.

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

(vi) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. No order has been passed by the Company Law Board, National Law Tribunal or Reserve Bank of India or any other court or any other tribunal.

(vii) In our opinion, the company has an internal audit system commensurate with the size and nature of its business.

(viii) The Central Government has not prescribed maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956.

(ix) (a) According to the records of the company, the company is regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Cess and other statutory dues applicable to it.

According to the information and explanations given to us, there are no undisputed statutory dues which are outstanding as at March 31, 2012 for the period of more than six months from the date they become payable. Excise Duty is not applicable to the company.

(b) According to the records of the company, there are no disputed Wealth Tax, Customs Duty, Service Tax or Cess. The details of dues in respect of Sales Tax, which have not been deposited on account of any dispute are given below:

(Rs. in lacs)

Name of Nature of Period to Forum where dispute the the dues which the is pending Statute amount Sales Tax Sales Tax relates Commi- Appellate ssioner Tribunal

Central Sales Tax VAT, penalty 2007-08 0.23 - and Various State and interest VAT Acts

Central Sales Tax VAT, penalty 2006-07 2.05 - and Various State and interest VAT Acts

VAT Acts VAT, penalty 2007-08 6.25 - and interest

VAT Acts VAT, penalty 2008-09 12.42 - and interest

Central Sales Tax Sales Tax, 1992-93 - 1.23 and Various State penalty and Sales Tax Acts interest

Local Sales Tax Sales Tax, 1992-93 - 1.18 penalty and interest

Local Sales Tax Sales Tax, 2001-02 0.25 - penalty and interest Total

Total 21.20 2.41

(x) The company does not have any accumulated losses at the end of the financial year and has incurred cash losses of Rs. 492.23 lacs during the financial year covered by our audit and the company has not incurred cash losses during the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions or banks. The company does not have any outstanding debentures.

(xii) The company has not granted loans and advances on the basis of security by way of pledge of shares and other securities.

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

(xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Order are not applicable to the company.

(xv) The company has given guarantees for loans taken by subsidiaries from banks and prima facie the terms and conditions thereof are not prejudicial to the interests of the company.

(xvi) The term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short- term basis have been used for long-term investment.

(xviii) The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

(xix) The company has not issued any secured debentures during the year.

(xx) The company has not raised any money by way of public issues during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of audit.

K. S. Aiyar & Co.

Chartered Accountants

Registration No: 100186W

Satish K. Kelkar

Place: Mumbai Partner

Date: June 29,2012 Membership No:38934


Mar 31, 2011

1. We have audited the attached Balance Sheet of PAE Ltd., as at March 31,2011 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the Auditing Standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004, 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 in paragraph 3 above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books;

(iii) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

(v) On the basis of written representations received from the Directors, as on March 31, 2011 and taken on record by the Board of Directors, we report that none of the Directors of the Company are disqualified as on March 31,2011 from being appointed as a Director, in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said Financial Statements together with the significant accounting policies and notes thereon, give the information required by the Companies Act, 1956, in the manner so required and present 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 31,2011;

(b) in the case of the profit and loss account, of the profit for the year ended on that date and

(c) in the case of the cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

Referred to in paragraph 3 of our report of even date on the Accounts for the year ended March 31, 2011 of PAE Limited.

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

(b) A substantial portion of the fixed assets have been physically verified by the management during the year and the company has also instituted a program for periodic verification of assets which is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year were not substantial. According to the information and explanation given to us, we are of the opinion that the disposal of the fixed assets has not affected the going concern status of the company.

(ii) (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and according to the explanations given to us, the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and properly dealt with in the books of account.

(iii) (a) During the year, the Company has taken unsecured loan in the form of inter-corporate deposit from a company covered in the register maintained under Section 301 of the Companies Act, 1956, wherein balance payable at the year end is Rs.200 lacs (Previous year Nil). Maximum balance during the year was Rs.200.36 lacs (Previous year Nil.)

(b) Based on the information and explanations given to us, we are of the opinion that the rate of interest and other terms and conditions of loan taken from such party covered in the Register maintained under Section 301 is not prima facie prejudicial to the interests of the company.

(c) The company has given unsecured inter- corporate deposit to one company covered in the register maintained under Section 301 of the Companies Act, 1956, wherein the balance receivable as at the year end is Rs. 60.51 lacs (Previous year Rs 50.38 lacs). Maximum balance during the year was Rs. 106.58 lacs (Previous year Rs.75 lacs.)

(d) In our opinion and according to the explanations given to us, the rate of interest and other terms and conditions of the aforesaid loan given are not, prima facie, prejudicial to the interests of the company.

(e) In our opinion and according to the explanations given to us, the company is regular in receiving the principal and interest as stipulated.

(iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. We have not observed any continuing failure to correct major weaknesses in internal control system. However, in the case of reconciliation of balances with debtors, further strengthening of internal control procedures at certain branches is recommended so as to be commensurate with the current size of the company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that are referred to in Section 301 have been entered in the register required to be maintained under that section.

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

(vi) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. No order has been passed by the Company Law Board, National Law Tribunal or Reserve Bank of India or any other court or any other tribunal.

(vii) In our opinion, the company has an internal audit system commensurate with the size and nature of its business.

(viii) The Central Government has not prescribed maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956.

(ix) (a) According to the records of the company, the company is regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Cess and other statutory dues applicable to it.

According to the information and explanations given to us, there are no undisputed statutory dues which are outstanding as at March 31,2011 for the period of more than six months from the date they become payable. The Excise Duty is not applicable to the company.

(b) According to the records of the company, there are no disputed Wealth Tax, Customs Duty, Service Tax or Cess. The details of dues in respect of Sales Tax which have not been deposited on account of any dispute are given

(Rs. in lacs)

Name of Nature of Period to Forum where dispute the the dues which the is pending Statute amount Commi- Appellate relates ssionerate Tribunal

Central Sales Tax 2007-08 0.23 - Sales Tax demands, and Penalty and Various interest State Sales Tax Acts

Total 0.23 -

(x) The company does not have any accumulated losses at the end of the financial year and has not incurred any cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions or banks. The company does not have any outstanding debentures.

(xii) The company has not granted loans and advances on the basis of security by way of pledge of shares and other securities.

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

(xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Order are not applicable to the company.

(xv) The company has given a guarantee for loan taken by a subsidiary company from a bank and prima facie the terms and conditions thereof are not prejudicial to the interests of the company.

(xvi) The term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

(xix) The company has not issued any secured debentures during the year.

(xx) The company has not raised any money by way of public issues during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of audit.

K.S. Aiyar & Co. Chartered Accountants Registration No: 100186W

Satish K. Kelkar Partner Membership No: 38934

Place: Mumbai Date: May 27,2011




Mar 31, 2010

1. We have audited the attached Balance Sheet of PAE Ltd. as at 31st March 2010 and also the Profitand Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on ouraudit.

2. We conducted our audit in accordance with the Auditing Standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basisforouropinion.

3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order" 2004, 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 in paragraph 3 above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) In ouropinion,properbooksofaccountas required by law have been kept by the company so far as appears from our examination of those books;

(iii) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

(v) On the basis of 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 of the Company are disqualified as on 31st 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;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said Financial Statements together with the significant accounting policies and notes thereon, give the information required by the Companies Act, 1956, in the manner so required and present a true and fair view in conformity with the accounting principles generally acceptedI in India:

(a) in the case of the balance sheet, of the state of affairs of the company as at 31st March, 2010;

(b) in the case of the profit and loss account, of the profitforthe 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.

K.S.Aiyar&Co.

Chartered Accountants

Registration No: 100186W SatishK.Kelkar Place: Mumbai Partner

Date: May 29,2010 Membership No: 38934

Referred to in paragraph 3 of our report of even date on the Accountsfortheyearended 31st March 2010 of PAE Limited.

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

(b) A substantial portion of the fixed assets have been physically verified by the management during the year and the company has also instituted a program for periodic verification of assets which is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanation given to us no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year were not substantial. According to the information and explanation given to us, we are of the opinion that the disposal of the fixed assets has not affected the going concern status of the company.

(ii) (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and according to the explanations given to us, the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and properly dealt with in the books of account.

(iii) (a) During the year the Company has not taken any loans secured or unsecured from companies, firms or other parties in the register maintained under Section 301 of the Act. Accordingly subclause iii (e), iii (f) and iii (g) of this order are not applicable.

(b) The company has given unsecured Inter Corporate Deposit to one company covered in the register maintained under Section 301 of the Companies Act, 1956, wherein the balance payable as at the year end is Rs.50.38 lacs (Previous year Nil). Maximum balance during the year Rs 75 lacs (Previous year20 lacs.)

(c) In our opinion and according to the explanations given to us, the rate of interest and other terms and conditions of the aforesaid loan given are not, prima facie prejudicial to the interest of the company.

(d) In our opinion and according to the explanations given to us, the company is regular in receiving the principal and interest as stipulated.

(iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. We have not observed any continuing failure to correct major weaknesses in internal control system.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that are referred to in Section 301 have been entered in the register required to be maintained under that section.

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

(vi) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. No order has been passed by the Company Law Board, National Law Tribunal or Reserve Bank of India oranyothercourtoranyothertribunal.

(vii) In our opinion, the company has an internal audit system commensurate with the size and nature of its business.

(viii) The Central Government has not prescribed maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956.

(ix) (a) According to the records of the company, the company is regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Cess and other statutory dues applicable to it.

According to the information and explanations given to us, there are no undisputed statutory dues which are outstanding as at 31st March 2010 for the period of more than six months from the date they become payable. The Excise Duty is not applicable to the company.

(b) According to the records of the company, there are no disputed, Wealth Tax, Customs Duty, Service Tax or Cess. The details of dues in respect of Sales Tax, which have not been deposited on account of any dispute are given below:

Name of Nature of Period to the the dues which the Statute amount relates

Central Sales Tax 1996-97 Sales Tax demands, 1999-2000 and penalty and 2000-01 Various interest 2001-02 State 2002-03

Sales Tax 2003-04

Arts 2004-05 2006-07 2007-08 2008-09

2009-10



Name of the Forum where dispute is pending Director (Rs. in lacs) Commi- Appellate ssionerate Tribunal

Central 0.84 Sales Tax 0.26 and Various 1.73 State 3.44

Sales Tax Acts 2.45 5.53 1.40 4.92 9.25 8.28 14.94

Total 52.20 0.84

(x) The company does not have any accumulated losses at the end of the financial year and has not incurred any cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions or banks. The company does not have any outstanding debentures.

(xii) The company has not granted loans and advances on the basis of security by way of pledge of shares and other securities.

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

(xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Order are not applicable to the company.

(xv) The company has given a guarantee for loan taken by a subsidiary company from a bank during the year and prima facie the terms and conditions thereof are not prejudicial to the interest of the company.

(xvi) The term loans have been applied for the purpose for which they were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short- term basis have been used for long-term investment.

(xviii) The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

(xix) The company has not issued any secured debentures during the year.

(xx) The company has not raised any money by public issues during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

K.S.Aiyar&Co. Chartered Accountants

Registration No: 100186W SatishK.Kelkar Place: Mumbai Partner Date: May 29,2010 Membership No: 38934

 
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