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Auditor Report of Taneja Aerospace & Aviation Ltd.

Mar 31, 2015

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Taneja Aerospace and Aviation Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss, 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 safe guarding 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 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 qualified audit opinion on the standalone financial statements.

Basis for Qualified Opinion

1) The Company has debited Rs. 34.74 Lakhs under advertisement and travelling expenses being reimbursement to a group company for which no evidence/supporting is provided. This has resulted in overstatement of loss for the year and understatement of amount receivable from the group company by Rs. 34.74 Lakhs.

2) The Company during the year commenced the business of trading in electrical goods (Refer Note No. 38) where in sales are only to LightO Technologies Private Limited (a related party). Further, the Company also gave Inter Corporate Deposit to the said related party which was in excess of the amount approved by the audit committee by Rs.185 Lakhs. As at March 31, 2015, the Company has to receive Rs. 256.31 Lakhs against sale of goods and Rs. 688.84 Lakhs (including interest) against Inter Corporate Deposit. We were not provided with sufficient and appropriate audit evidence about the recoverability of the above amounts. Consequently, we are unable to determine whether any adjustments to these amounts are necessary.

3) We draw attention to Note No. 36 forming part of the standalone financial statements, which refers to the fact that the shareholders of the Company at their meeting (convened on the directions of the Hon'ble High Court of Madras) held on April 15, 2015 have approved the Scheme of Arrangement between the Company and TAAL Enterprises Limited, a wholly owned subsidiary of the Company w.e.f. October 1, 2014 subject to receipt of regulatory approvals. Further, the above mentioned note also refers to the proposed Reduction in Share Capital of the Company as a consequence of the said Scheme, the terms of which were approved by the shareholders of the Company by way of special resolution passed at their Extraordinary General Meeting held on April 15, 2015. Though the said Scheme was sanctioned by the Hon'ble High Court of Judicature at Madras on June 22, 2015 (the copy of which was received on July 23, 2015) i.e. before the adoption of accounts by the Board of Director's on August 14, 2015, the effect of the said Scheme is not given in the accounts. We are unable to determine its impact, if any, on the standalone financial statements.

4) The Company needs to strengthen its policies, procedures and overall controls in order to provide proper evidences regarding recoverability of debtors, valuation of work in progress and accounting for direct and indirect taxes including statutory compliances.We are unable to determine its impact, if any, on the standalone financial statements.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph above, 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

The Company has outstanding MAT Credit Entitlement of Rs. 134.69 Lakhs as on March 31, 2015, which in the opinion of the management, based on the projected future taxable profits, will be utilized within the stipulated time period prescribed as per the provisions of Income Tax Act, 1961. Considering the uncertainties around the assumptions used for projections of future taxable profits and its consequential effect on utilization of MAT Credit Entitlement, we are unable to comment on the recoverability of MAT Credit Entitlement outstanding as at March 31, 2015 and its consequential impact on the Statement of Profit and Loss for the year ended March 31, 2015 and on the Reserves of the Company as on that date (Refer Note No. 18). 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, 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, except for the matters described in the Basis for Qualified Opinion paragraph, all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) Except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph above, in our opinion proper books of account as required by law have been kept by the Company so far as it 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) Except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards, except AS-2 "Valuation of Inventories", specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) The matters described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

(f) 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.

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

(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 has disclosed the impact of pending litigations on its financial position in its financial statements as referred to in Note No. 27 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 were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

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

b. Part of the fixed assets have been physically verified by the management during the year in line with regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such verification as compared to the book records. (ii) a. As explained to us, inventories have been physically verified during the year by the management. In our opinion, the frequency of such verification is reasonable.

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

c. The Company has maintained proper records of inventory except in the case of Work in Progress. No material discrepancies were noticed on verification between the physical stocks and the book records. In our opinion, the present operative modules of ERP are insufficient to ascertain the cost and arrive at proper valuation of Work in Progress as per the Accounting Policies and Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(iii) During the year under audit, the Company has granted fresh unsecured loans by way of Inter Corporate Deposit to five companies covered in the register maintained under section 189 of the Companies Act, 2013. The aggregate maximum amount outstanding during the year was Rs. 2022.25 Lakhs and the aggregate year-end balance of such loans amounted to Rs. 1978.64 Lakhs.

a. There are no stipulations for the repayment of principal and the interest thereon. Therefore, we are unable to comment on the regularity of receipt of the principal amount and interest thereon.

b. No principal or interest can be termed as overdue in the absence of time of repayment and thus we are unable to comment on the steps taken for recovery of principal and interest thereon.

(iv) In our opinion and according to the information and explanations given to us, internal control system is inadequate considering the size of the Company and the nature of its business with regard to purchase of inventories and for the sale of goods and services. Further, there is a continuing failure to correct major weakness in internal control systems in the areas of debtors, valuation of work in progress and accounting for direct and indirect taxes including statutory compliances (Refer paragraph 4 of Basis for Qualified Opinion above).

(v) As per the explanations given to us, the Company has not accepted any deposits from the public in accordance with the provisions of Sections 73 to 76 of the Act and the rules framed thereunder. Accordingly, the provisions stated in paragraph 3 (v) of the Order is not applicable to the Company.

(vi) The cost accounts and records were not made available to us. Hence, we are unable to comment on the maintenance of cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013.

(vii) a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company is irregular in depositing undisputed statutory dues applicable to it with the appropriate authorities during the year. Tax Deducted at Source (TDS) amounting to Rs.21.94 Lakhs and Service Tax amounting to Rs.42.31 Lakhs are in arrears as at March 31, 2015 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us, dues that have not been deposited by the Company on account of disputes are :

Name of Nature of Period to the Statute Dues which it relates

Customs Act, Customs F.Y. 2007-08 1962 Duty

Finance Act, Service F.Y. 2005-06 1994 Tax to F.Y. 2009-10

Central Excise Excise F.Y. 2012-2013 Act, 1944 Duty

Central Excise Excise F.Y. 2013-14 Act, 1944 Duty to F.Y. 2014-15

Central Excise Excise F.Y. 2008-09 Act, 1944 Duty to F.Y. 2011-12

Finance Act, Service F.Y. 2008-09 1994 Tax to F.Y. 2012-13

Sales Tax Sales Tax F.Y. 2007-08 to F.Y. 2009-10

Name of the Statute Amount Amount Forum where under paid the dispute is dispute under pending (Rs. in protest Lakhs) (Rs. in Lakhs)

Customs Act, 1962 622.67 - CESTAT

Finance Act, 1994 317 10 CESTAT

Central Excise Act, 1944 23.73 - CESTAT

Central Excise Act, 1944 57.50 - Adjudicating Authority

Central Excise Act, 1944 80.24 - CESTAT

Finance Act, 1994 124.37 - CESTAT

Sales Tax 55.00 - Adjudicating Authority

c) There are no amounts required to be transferred to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder.

(viii) The Company does not have any accumulated losses at the end of the financial year. The Company has incurred cash losses during the financial year. However it had not incurred any cash losses in the immediately preceding financial year.

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

(x) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantee given by the Company for loan taken by its subsidiary from bank is not, prima facie prejudicial to the interest of the Company. (Refer Note No. 27B on guarantee given to bank on behalf of subsidiary).

(xi) In our opinion and according to the information and explanations given to us, the Company has raised Term Loan of Rs. 800 Lakhs during the period under audit. Also, the Term Loan availed during the year has, on an overall basis, been applied for the purposes for which the said loans were obtained.

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

For Haresh Upendra & Co.

Chartered Accountants

Firm Reg. No.: 103513W

Haresh B. Shah

Partner

Pune, August 14, 2015 Membership No.: 32208


Mar 31, 2014

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

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company''s 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 continue to be applicable in respect of section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. 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 the 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 Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the 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 31st March, 2014;

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

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

EMPHASIS OF MATTER

Attention is invited to Note No. 40 to the financial statements which, refers to Hive Off of Engineering Services Division of Taneja Aerospace and Aviation Limited to its wholly owned subsidiary TAAL Tech India Private Limited w.e.f. 01st August, 2013. The terms of this Hive Off has been approved by the shareholders of Taneja Aerospace and Aviation Limited through Postal Ballot. Our opinion is not qualified in respect of this matter.

We draw attention to Note No. 41 Interest Free Advances amounting to Rs. 645.50 Lakhs to a Company for Purchase of Land. The Board of Director''s has passed a resolution in its meeting dated 28th May, 2014 to make the Company as its wholly owned subsidiary. Our opinion is not qualified in respect of this matter. Further, we draw attention to the fact that the Company needs to strengthen its policies & procedures in order to provide proper evidence along with complete accounting records regarding recoverability of debtors, valuation of work in progress and consumption of materials including booking of purchases. 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 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 it appears from our examination of those books.

(c) The Balance Sheet, 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, Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards, except AS-2 "Valuation of Inventories", notified under the Act (which continue to be applicable in respect of section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of the written representations received from the directors as on 31st March, 2014 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 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 to the Independent Auditors'' Report (Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section 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. According to the information and explanations given to us, the physical verification of the fixed assets was undertaken by the Management during the year and no material discrepancies were noticed on such verification as compared to the book records.

c. According to the information and explanations given to us, the Company Hived Off with effect from 1st August, 2013, ''Engineering Services Division'' to its wholly owned subsidiary on a ''Going Concern Basis''. Other than that, the Company has not disposed off substantial part of fixed assets during the year, which would affect the going concern of other business activities of the Company.

(ii) a. As explained to us, inventories have 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 generally reasonable and adequate in relation to the size of the Company and nature of its business.

c. The Company has maintained records of inventory by way of manual bin cards, except in the case of work in progress. No material discrepancies were noticed on physical verification as compared to quantity as per manual records. Financial Accounts are yet to be integrated with Inventory Records (ERP). ERP is insufficient to ascertain the cost and arrive at Valuation as per Accounting Policies and Accounting Standards referred to into subsection (3C) of section 211 of the Act.

(iii) a. During the year under audit, the Company has granted fresh unsecured loans by way of Inter Corporate Deposit aggregating to Rs. 904.20 Lakhs (including Rs. 766.44 Lakhs which was debited as Difference between Assets and Liabilities transferred by way of Hive Off of Engineering Services Division of the Company) to two bodies corporate covered in the register maintained under section 301 of the Companies Act, 1956. In respect of the advance granted to one of the companies, the maximum amount outstanding during the year was Rs. 35 Lakhs and the balance of such loan as at 31st March, 2014 is Rs. 34.36 Lakhs. In respect of the advance granted to the other company, the maximum amount outstanding during the year was Rs. 757.87 Lakhs and the year end balance of such loan amounted to Rs. 690.16 Lakhs.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions on which the Inter Corporate Deposits indicated in paragraph (iii) (a) above were granted are not, prima facie, prejudicial to the interest of the Company.

c. There are no stipulations for the repayment of principal and the interest thereon. Therefore, we are unable to comment on the regularity of receipt of the principal amount and interest thereon.

d. No principal or interest can be termed as overdue in the absence of time of repayment and thus the question of taking reasonable steps for recovery of principal amount and interest thereon does not arise.

e. During the year, the Company has taken unsecured loans aggregating to Rs. 656.42 Lakhs from one of the Companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs. 1,101.41 Lakhs and the year end balance of such loan amounted to Rs. 843.51 Lakhs.

f. As explained to us, the loan (indicated in paragraph (iii) (e) above) is repayable on demand any time on or after April 01, 2014. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of loan taken by the Company, are prima facie, not prejudicial to the interest of the Company.

g. As the loan is repayable on demand and interest is credited to the account of the lender, we are unable to comment on the regularity of repayment of principal amount and the interest thereon.

(iv) In our opinion and according to the information and explanations given to us, internal control system is inadequate considering the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and the sale of goods and services and the same needs to be strengthened.

(v) a) According to the information and explanations given to us and to the best of our knowledge and belief, we are of the opinion that, the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to explanations given to us, transactions (other than unsecured loans given/ taken dealt with in paragraph (iii) above) made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rupees Five Lakhs have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) As per explanations given to us, the Company has not accepted any deposits from public to which the provisions of section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 would apply. Therefore, the provisions of clause (vi) of para 4 of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

(vii) Internal Audit is conducted by Group Internal Audit Department. In our opinion, the overall scope and coverage

of internal audit needs to be strengthened considering the size of the Company and the nature of its business.

(viii) As per the order of the Ministry of Corporate Affairs dated 6th November, 2012, the cost records of the Company are liable for Cost Audit from 1st April 2013. As explained by the Company, it has maintained cost records and the compliance certificate for the Financial Year 2013-14 is being obtained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) a) According to the information and explanations given to us, the Company is irregular in depositing undisputed statutory dues applicable to it with the appropriate authorities during the year. Tax Deducted at Source (TDS) amounting to Rs. 6.42 Lakhs and Central Sales Tax amounting to Rs. 0.11 Lakhs are in arrears as at 31st March, 2014 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us, no disputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Custom Duty, Excise Duty, Service Tax, Cess and other material statutory dues, were in arrears, as at 31st March 2014, except :

Name of Nature of Amount Period to Statute Dues (Rs.in which it Lakhs) relates

Customs Act, Custom 622.67 F.Y. 1962 Duty 2007-08

Finance Act, Service 317.00 F.Y. 1994 Tax 2005-06 to F.Y. 2009-10

Central Excise Excise 23.73 FY Act, 1944 Duty 2012-13

Name of the statue Forum where the dispute is pending

Customs Act, CESTAT 1962

Finance Act, CESTAT 1994

Central Excise Act CESTAT 1944

(x) The Company does not have any accumulated losses as at 31st March, 2014. The Company has not incurred any cash losses during the period covered by our audit and in the immediately preceding financial year.

(xi) According to the records of the company examined by us and the information and explanations given to us, the Company has not defaulted in the repayment of dues to financial institutions or banks.

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

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/society. Therefore, the provisions of clause (xiii) of para 4 of the Companies

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

(xv) In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. Hence, the provisions of clause (xv) of para 4 of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

(xvi) As per the information and explanations given to us, the Company has raised Term Loan of Rs. 1,654 Lakhs during the period under audit. Also, the Term Loan availed during the year has, on an overall basis, been applied for the purposes for which the said loans were obtained.

(xvii) According to information and explanations given to us, and on an overall examination of the Balance Sheet and the Cash Flow Statement of the Company, we report that no funds raised on short-term basis has been used for long- term investment.

(xviii) According to information and explanations given to us, during the period covered by our audit report, the company has not made preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

(xix) In our opinion and according to the information and explanations given to us, the Company has not issued any secured debentures during the period of our audit. Therefore, clause (xix) of para 4 of the Companies (Auditor''s Report) Order, 2003 is not applicable to the Company.

(xx) The company has not raised any funds by way of public issue during the year. Therefore, the requirement of disclosure by the Management on the end use of money raised by the public issue and verification of the same is not applicable.

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

For Haresh Upendra & Co. Chartered Accountants Firm Reg. No.: 103513W

Haresh B. Shah Partner Pune, May 28, 2014 Membership No.: 32208


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Taneja Aerospace and Aviation Limited ("the company"), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The company''s 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 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 the 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 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 the 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 the 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 profit of the company for the year ended on that date, and

(c) in the case of the Cash Flow Statement, of the cash flows of the company 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 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 it appears from our examination of those books.

(c) The Balance Sheet, 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, Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act.

(e) On the basis of the written representations received from the directors as on March 31, 2013 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 3 of our report of even date)

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

b. According to the information and explanations given to us, the physical verification of the fixed assets was undertaken by the management during the year and no material discrepancies were noticed on such verification as compared to the book records.

c. According to the information and explanations given to us, the company has not disposed off substantial part of fixed assets during the year, which would affect the going concern of the company.

(ii) a. As explained to us, inventories have 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 generally reasonable and adequate in relation to the size of the company and nature of its business.

c. The company is maintaining proper records of inventory by way of manual bin cards, except in the case of work in progress. No material discrepancies were noticed on physical verification as compared to quantity as per manual records. The company is in the process of integrating its inventory with financial accounts.

(iii) a. During the year under audit, the company has not granted any fresh loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Out of the advance granted in earlier years by way of Inter Corporate Deposit, the maximum amount outstanding during the year was Rs. 29 lakhs and the balance of such loan as at March 31, 2013 is Rs. nil (Previous Year Rs. 29 lakhs).

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions on which the Inter Corporate Deposit indicated in paragraph (iii) (a) above was granted is not, prima facie, prejudicial to the interest of the company.

c. During the year, the company has taken unsecured loans aggregating to Rs. 1,645 lakhs from one of the companies covered in the register maintained under Section 301 of the Companies Act, 1956 (Previous year Rs. 1,674 lakhs). At the year end, the aggregate amount outstanding was Rs. 1,050 lakhs (Previous Year Rs. 1,340 lakhs). The maximum balance outstanding during the year was

Rs. 2,250 lakhs (Previous Year Rs. 2,300 lakhs).

d. As explained to us, the loan (indicated in paragraph (iii) (c) above) is repayable on demand any time on or after April 01, 2013. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of loan taken by the company, are prima facie, not prejudicial to the interest of the company.

e. As the loan is repayable on demand, we are unable to comment on the regularity of repayment of principal amount and the interest thereon.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for purchase of fixed assets and for the sale of goods and services. However, the internal control procedure with regard to inventory control and reconciliation of Trade Receivables'' balances need to be strengthened considering the increasing sales volume of business and transactions.

(v) a) According to the information and explanations given to us and to the best of our knowledge and belief, we are of the opinion that, the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered. b) In our opinion and according to explanations given to us, transactions (other than secured/unsecured loans given/taken dealt with in paragraph (iii) above) made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rupees Five Lakhs have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) As per explanations given to us, the company has not accepted any deposits from public to which the provisions of section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 would apply. Therefore, the provisions of clause 4 (vi) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

(vii) Internal audit is conducted by a Group Internal Audit Department headed by senior chartered accountant. In our opinion, the company has an internal audit system commensurate with the size and nature of its business. However in our opinion, the scope and coverage of internal audit needs to be strengthened especially as mentioned in clause (iv) above.

(viii) As per MCA order dated November 6, 2012, the company cost records are liable for cost audit from April 01, 2013.

(ix) a) According to the information and explanations given to us, the company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Education Cess, Higher Education Cess and any other material statutory dues with the appropriate authorities during the year.

(x) The company has no accumulated losses as at March 31, 2013. The company has not incurred any cash losses during the period covered by our audit and in the immediately preceding financial year.

(xi) According to the records of the company examined by us and the information and explanations given to us, the company has not defaulted in repayment of dues to any financial institution or bank.

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

(xiii) In our opinion and according to the information and explanations given to us, the company is not a chit fund or a nidhi/ mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003 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 or trading in shares, securities, 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.

(xv) In our opinion and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from bank or financial institutions. Hence, the provisions of clause 4 (xv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

(xvi) As per the information and explanations given to us, the company has raised the Term Loan of Rs. 1,500 Lakhs during the period under audit. Also, Term Loan taken during year has been, on an overall basis, applied for the purpose for which the said loans were obtained.

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

(xviii) According to the information and explanations given to us, during the period covered by our audit report, the company has not made preferential allotment of equity shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

(xix) In our opinion and according to the information and explanations given to us, the company has not issued any secured debentures during the period of our audit. Therefore, clause 4 (xix) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the company.

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

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit. For Haresh Upendra & Co.

Chartered Accountants

Firm Reg. No.: 103513W

Haresh B. Shah Partner

Pune,

August 05, 2013 Membership No.: 32208


Mar 31, 2012

1. We have audited the attached Balance Sheet of TANEJA AEROSPACE AND AVIATION LIMITED ("the Company") as at March 31, 2012, and the related Profit and Loss Account and Cash Flow Statement of the Company for the financial 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 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 (Auditor's Report) Order, 2003 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 ofthe said Order to the extent applicable.

4. Further to our comments in the Annexure referred to in paragraph 3 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 Cash Flow Statement dealt with by this report are in agreement with the books of account;

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

(e) 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 is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 ofthe Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the schedules thereto and 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 the Balance Sheet, of the state of affairs ofthe Company as at March 31, 2012;

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

iii. In the case of 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)

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

b. According to the information and explanations given to us, the physical verification of the fixed assets was undertaken by the management during the year and no material discrepancies were noticed on such verification as compared to the book records.

c. According to the information and explanations given to us, the company has not disposed off substantial part of fixed assets during the year, which would affect the going concern of the company.

(ii) a. As explained to us, inventories have 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 generally reasonable and adequate in relation to the size ofthe Company and nature of its business.

c. The Company is maintaining proper records of inventory by way of manual bin cards, except in the case of work in progress. No material discrepancies were noticed on physical verification as compared to quantity as per manual records. Company is in the process of integrating its inventory with financial accounts.

(iii) a. During the year under audit, the Company has not granted any fresh loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Out ofthe advances granted in earlier years by way of Inter Corporate Deposit, the maximum amount outstanding during the year was Rs. 508 lakhs and the balance of such loan as at March 31, 2012 is Rs. 29 lakhs (Previous Year Rs.494 lakhs).

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions on which the Inter Corporate Deposit indicated in paragraph (iii) (a) above was granted is not, prima facie, prejudicial to the interest of the company.

c. The above referred Inter Corporate Deposit along with interest thereon upto March 31, 2011 has been completely recovered during the year. The amount outstanding as on March 31, 2012 represents the interest component for the year due on March 31, 2012 and has been subsequently received in full.

d. During the year, the Company has taken unsecured loans aggregating to Rs. 1,674 lakhs from one of the companies covered in the register maintained under section 301 of the Companies Act, 1956 (Previous Year Rs.1,344 lakhs). At the year end, the aggregate amount outstanding was Rs.1,340 lakhs (Previous Year Rs.1,125 lakhs). The maximum balance outstanding during the year was Rs.2,300 lakhs (Previous Year Rs.1,692 lakhs).

e. As explained to us, the loan (indicated in paragraph (iii) (d) above) is repayable on demand any time on or after April 01, 2012. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of loan taken by the company, are prima facie, not prejudicial to the interest of the company.

f. The Company is regular in paying the interest and principal is repayable on demand any time on or after April 01, 2012.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for purchase of fixed assets and for the sale of goods and services. However, the internal control procedure with regard to inventory control and reconciliation of vendors balances need to be strengthened considering the increasing sales volume of business and transaction.

(v) a) According to the information and explanations given to us and to the best of our knowledge and belief, we are of the opinion that, the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to explanations given to us, transactions (other than secured/unsecured loans given/taken dealt with in paragraph (iii) above) made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rupees Five Lakhs have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) As per explanations given to us, the Company has not accepted any deposits from public to which the provisions of section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 would apply. Therefore, the provisions of clause 4 (vi) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

(vii) The company has appointed firms of Chartered Accountants as their internal auditors. In our opinion, the scope and coverage of internal audit needs to be strengthened especially as mentioned in clause (iv) above.

(viii) The Central Government has not prescribed the maintenance of cost records u/s 209(1) (d) of the Companies Act, 1956 and hence the provisions of clause 4 (viii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

(ix) a) According to the information and explanations given to us, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Education Cess, Higher education Cess and any other material statutory dues with the appropriate authorities during the year.

b) According to the information and explanations given to us, no disputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Custom Duty, Excise Duty, Educational cess, Educational cess and other material statutory dues, were in arrears, as at March 31, 2012, except:

Name of Nature Amount Period Forum Statue of Dues (Rs. in Which it Where the Lakhs) relates disputes is pending

Central Excise 4.95 F.Y. Office of Excise Duty 2010 -11 Superi Act, 1944 ntendent of Central Excise, Hosur Division

Customs Custom 622.67 F.Y CESTAT Act, 1962 Duty 2007-08

Finance Service 317.70 F.Y CESTAT Act, 1994 Tax 2005-06 to 2009-10

(x) The Company has no accumulated losses as at March 31, 2012. The Company has not incurred any cash losses during the period covered by our audit and in the immediately preceding financial year.

(xi) According to the records of the company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank.

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

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 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 or trading in shares, securities, 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.

(xv) In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. Hence, the provisions of clause 4 (xv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

(xvi) As per the information and explanations given to us, the Company has not taken any Term Loan during the period under audit. Also, Term Loan taken during earlier years have been, on an overall basis, applied for the purpose for which the said loans were obtained.

(xvii) According to information and explanations given to us, and on an overall examination ofthe Balance Sheet and the Cash Flow of the Company, we report that no funds (except inter corporate deposit from an associate company) raised on short-term basis has been used for long-term investment.

(xviii) According to information and explanations given to us, during the period covered by our audit report, the company has not made preferential allotment of equity shares to parties and companies covered in the Register maintained under section 301 ofthe Companies Act, 1956.

(xix) In our opinion and according to the information and explanations given to us, the Company has not issued any secured debentures during the period of our audit. Therefore, clause 4 (xix) of the Companies (Auditor's Report) Order, 2003 is not applicable to the company.

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

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

For Haresh Upendra & Co

Chartered Accountants

Firm Reg. No.: 103513W

Haresh B. Shah

Partner

Pune, July 24, 2012 Membership No.: 32208


Mar 31, 2011

1. We have audited the attached Balance Sheet of TANEJA AEROSPACE AND AVIATION LIMITED ("the Company") as at 31st March 2011, and the related Profit and Loss Account and Cash Flow Statement of the Company for the financial year ended as 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 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 (Auditor's Report) Order, 2003 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 to the extent applicable.

4. Further to our comments in the Annexure referred to in paragraph 3 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 Cash Flow Statement dealt with by this report are in agreement with the books of account;

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

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 given to us, the said accounts, read together with the schedules thereto and 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 the 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 Profit for the year ended as on that date; and

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

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

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

b. According to the information and explanations given to us, the physical verification of the fixed assets was undertaken by the management and the discrepancies noticed, as informed to us were dealt with in the accounts by making additional provision for impairment out of the Reserve for Business Restructuring and this is sufficient to cover such discrepancies.

c. According to the information and explanations given to us, the company has not disposed off substantial part of fixed assets during the period under audit, which would affect the going concern of the company.

(ii) a. The Company has arrived at closing stock based on physical verification undertaken by the management under supervision of an independent Chartered Accountants firm.

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

c. The Company is maintaining records of inventory by way of manual bin cards which needs to be integrated with financial accounts. No material discrepancies were noticed on physical verification as compared to quantity in such bin cards.

(iii) a. During the year under audit, the Company has not granted any fresh loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Out of advances granted in earlier years by way of Inter Corporate Deposit, the maximum amount outstanding during the year was Rs. 494 lakhs and the balance of such loan as at 31st March, 2011 is Rs. 494 lacs (Previous Year Rs. 449 lacs).

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions on which the Inter Corporate Deposit indicated in paragraph (iii) (a) above was granted is not, prima facie, prejudicial to the interest of the company.

c. There are no stipulations for the repayment of principal and the interest thereon. Upto 31st March, 2011, neither the original principal amount nor the accumulated interest thereon has been received.

d. No loan or interest can be termed as overdue in the absence of time of repayment and thus the question of taking reasonable steps for recovery of principal amount and interest there on does not arise.

e. During the year, the Company has taken unsecured loans aggregating to Rs. 1344 lacs from one of the companies covered in the register maintained under section 301 of the Companies Act, 1956 (Previous year Rs. 1149 lakhs). At the year end, the aggregate amount outstanding was Rs. 1125 lakhs (Previous year Rs. 705 lakhs). The maximum balance outstanding during the year was Rs. 1692 lakhs (Previous year Rs. 1490 lakhs).

f. As explained to us, the loan (indicated in paragraph (iii) (e) above) is repayable on demand. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of advance taken by the company, are prima facie, not prejudicial to the interest of the company.

g. As the advance is repayable on demand, we are unable to comment on the regularity of repayment of principal amount and the interest thereon.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, for purchase of fixed assets and for the sale of goods and services. However, the internal control procedure with regard to (a) review and reconciliation of book balances of customers / vendors, and (b) procedure for purchase of raw material, stores & components and consumables, needs to be strengthened considering the increasing volume of business and transactions.

(v) a) According to the information and explanations given to us and to the best of our knowledge and belief, we are of the opinion that, the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered. b) In our opinion and according to explanations given to us, transactions (other than secured/unsecured loans given/taken dealt with in paragraph (iii) above) made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rupees Five Lakhs have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) As per explanations given to us, the Company has not accepted any deposits from public to which the provisions of section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 would apply. Therefore, the provisions of clause 4 (vi) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

(vii) The company has appointed firms of Chartered Accountants as their internal auditors. In our opinion, the extent and areas of internal audit needs to be further strengthened to bring it in line with the size and structure of the organization and complexities of its operations.

(viii) The Central Government has not prescribed the maintenance of cost records u/s 209(1) (d) of the Companies Act, 1956 and hence the provisions of clause 4 (viii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

(ix) a) According to the information and explanations given to us, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and any other material statutory dues with the appropriate authorities during the year.

b) According to the information and explanations given to us, no disputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Custom Duty, Excise Duty, cess and other material statutory dues, were in arrears, as at 31 March 2011, for a period of more than six months from the date they became payable, except:

Name Nature Amount Period to Forum where of of Dues (Rs. In which it the dispute Statute lacs) relates is pending

Central Excise Duty 4.95 F.Y. 2010-11 Office of Excise Superintendent Laws of Central Excise, Hosur Division

Customs Custom Duty 622.67 F.Y. 2007-08 CESTAT Act,1962

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

(xi) According to the records of the company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank.

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

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/ mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 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 or trading in shares, securities, 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.

(xv) In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. Hence, the provisions of clause 4 (xv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

(xvi) As per the information and explanations given to us, the Company has not taken any Term Loan during the period under audit. Also, Term Loan taken during earlier years have been, on an overall basis, applied for the purpose for which the said loans were obtained.

(xvii) According to information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that no funds (except inter corporate deposit from an associate company) raised on short-term basis has been used for long-term investment.

(xviii) According to information and explanations given to us, during the period covered by our audit report, the company has not made preferential allotment of equity shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

(xix) In our opinion and according to the information and explanations given to us, the Company has not issued any secured debentures during the period of our audit. Therefore, clause 4 (xix) of the Companies (Auditor's Report) Order, 2003 is not applicable to the company.

(xx) The company has not raised any funds by way of preferential/ public issue during the year.

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

For Haresh Upendra & Co, Chartered Accountants, Firm Reg. No.: 103513W

Haresh B. Shah Partner Membership No. : 32208 Pune June 29,2011


Jun 30, 2009

1. We have examined the attached Balance Sheet of Taneja Aerospace and Aviation Limited ("the company") as at June 30, 2009 and also the Profit and Loss account and Cash Flow Statement of the Company for the period April 01,2008 to June 30,2009. 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 accounting 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 also 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 or audit provides a reasonable for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable.

4. Further to our comment in the Annexure referred to above, we report that:

o4.1 As detailed in the Note No. 17 of Schedule 15, the Company has transferred Rs. 20,00,00,000/- from Revaluation Reserve to Profit & Loss Account . This amount has been utilised for prior year write offs / provisions amounting to Rs. 15,20,94,875/- and current period adjustments of Rs. 4,26,03,010/- and the balance is carried over.

Above treatment is not in accordance with generally accepted accounting principles and have effect of overstatement of profit for the period by Rs. 20,00,00,000/- (Rupees twenty crores)

4.2 The difference between the actual sales tax liability and discounted value is being treated as revenue expenditure in the year in which it is paid. This accounting practice is not in accordance with generally accepted accounting principles. Further, during the period Company has not accounted the difference between the actual liability and the discounted value of liability as revenue expenditure. Consequently, the profit for the period is further overstated by Rs. 36,92,497/- (Refer Note No. 18).

5. Subject to our comments in paragraph 4 above and our comments in the annexed report,

(a) we have obtained all the information and explanation, 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, Profit and Loss account and Cash Flow Statement dealt with by our report are in agreement with the books of account.

(d) in our opinion, the Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with the report comply with 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 June 30, 2009 and taken on record by the Board of Directors, we reportthat none of the Directors is disqualified as on SO"1 June, 2009 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 explanation given to us, the said accounts, read with the schedules thereto and the notes thereon give 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 June 30,2009.

ii. in the case of Profit and Loss account, of the Profit for the period ended on that date; and

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

ANNEXURE TO THE AUDITORS REPORT

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

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

b. According to the information and explanation given to us, the fixed assets were physically verified by the management in accordance with the programme of verification, which in our opinion is reasonable having regard to size of the Company and the nature of its assets. The discrepancies noticed on physical verification were not material and have been dealt with the books of account. The Company has made estimated provision of Rs. 100 lacs for impairment of Fixed Assets. (Ref. Note No. 17)

c. According to the information and explanations given to us, the company has not disposed off major part of fixed asset during the period under audit, which would affect the going concern of the company.

(ii) a. The company has not produced any physical verification report of inventory for the period under audit, however physical inventory arrived at by the management as on June 30,2009 is used as the basis.

b. The company has valued its inventory of raw material, stores and work in progress at cost without Comparing the same with realizable value. The company has written off inventory based on managements estimates as referred to inNoteNo.17.

(iii) In respect of unsecured loans granted to companies covered in register maintained under section 301 of the Companies Act, 1956 and according to the information and explanation given to us-

a. During the year, the Company has not granted any advances to company/companies covered in the register maintained under section 301 of the Companies Act, 1956. Out of advances granted in earlier years, the amount outstanding as on June 30, 2009 is Rs. 430 lacs.

Further, company has paid additional amount of Rs 670 lacs (previous year Rs 300 lacs) as Share Application Money to one of the companies covered in the register maintained under section 301 of the Companies Act, 1956. Equity shares against the same have been allotted to company on October 27, 2009 (date after the reporting period) and consequently it became a subsidiary of the company from that date.

b. As explained to us, the advance is repayable on demand. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions on which advance have been granted to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the company.

c. As the advance is repayable on demand, we are unable to comment on regularity of receipt of principal and interest amount.

d. No loan or interest can be termed as overdue in absence of time of repayment and thus the question of taking reasonable step for recovery of principal amount and interest there on does not arise.

e. During the year, the Company has taken advances aggregating to Rs.3160 lacs from one of the companies covered in the register maintained under section 301 of the Companies Act, 1956. At the year end, the aggregate amount outstanding was Rs.995 lacs. The maximum balance outstanding during the yearisRs.1511 lacs

f. As explained to us, the advance is repayable on demand. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of advance taken by the company; are prima facie not prejudicial to the interest of the company;

g. As the advance is repayable on demand, we are unable to comment on the regularity of repayment of principal and interest amount.

(iv) In our opinion and according to the information and explanations given to us, there are weaknesses in internal control in stores, purchase procedure and in accounting of revenue of the company. The Company needs to take immediate steps to strengthen the internal control system.

(v) a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) In our opinion and according to explanations given to us, transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the companies act, 1956 and exceeding the value of Rupees five lakhs have been made at prices which are reasonable having regard to prevailing market prices at the relevant time subject to our comments contained in clause (iii) (b).

(vi) As per explanation given to us, the Company has not accepted any deposits from public to which the provisions of section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 would apply. Therefore, the provisions of clause 4 (vi) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

(vii) The company has appointed an external firm of Chartered Accountants as internal auditor from October 01, 2008. Scope and area of checking in relations to internal control and systems needs to be expanded to bring the internal audit in line with size and complexities of operations of the company.

(viii) The Central Government has not prescribed the maintenance of the cost record u/s 209(1) (d) of the Companies Act, 1956 and hence the provisions of clause 4 (viii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

(ix) a) According to the information and explanations given to us, the Company has been generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, income-tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues with the appropriate authorities during the year,

b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty, cess and other material statutory dues, were in arrears, as at June 30, 2009 for a period of more than six months from the date they became payable, except

Name of Nature of Dues Amount Period to Statute (Rs. In lacs) which it relates The Income Tax deducted 9.74 Apr-06to Tax Act,1961 but not paid June-07

c) According to the explanation and information given to us, there are no dues of income tax/sales tax/wealth tax/service tax/custom duty/excise duty/cess which have not been deposited on account of any dispute.

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

(xi) According to the records of the company examined by us and the information and explanation given to us, the company has not defaulted in repayment of dues of any financial institutions or bank. The company is paying the interest on the Bank Loans that have been computed and provided in the accounts based on restructuring scheme as approved by banks subject to continuance of compliance of conditions of scheme.

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

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditors Report) Order, 2003 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 Companies (Auditors Report) Order, 2003 are not applicable to the company.

(xv) In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institution. Hence, the provisions of clause 4 (xv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

(xvi) As per the information and explanations given to us, during the period Company has taken over a Term Loan on an assignment basis amounting to Rs 12,00,00,000/- sanctioned by a bank to one of its subsidiary companies for implementation of Projects of the company. The loan is secured by deposit kept with the bank by a third party. Approval from the bank for assignment of loan is awaited. The term loan was applied for the purposes for which it was obtained.

(xvii) According to information and explanation 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) According to information and explanation given to us, during the period covered by our audit report, the company has not made preferential allotment of equity shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

(xix) In our opinion and according to the information and explanations given to us, the Company has not issued any secured debentures during the period of our audit. Therefore, clause 4 (xix) of the Companies (Auditors Report) Order, 2003 is not applicable to the company.

(xx) The company has disclosed the end use of the funds raised through Preferential issue by way of notes to accounts.

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

For Haresh Upendra & Co, Chartered Accountants, Haresh B. Shah Partner Membership No.; 32208

Pune, December 05,2009

 
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