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Auditor Report of Titagarh Wagons Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of Titagarh Wagons Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, 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

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 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 of 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 the 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, issued by the Institute of Chartered Accountants of India, as 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 controls 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 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 audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31, 2015, its profit, and its cash flows for the year ended on that date.

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 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 Cash Flow Statement dealt with by this Report are in agreement with the books of account;

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

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

f) With respect to the other matters to be included in the Auditor's Report in accordance with 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 - Refer Note 5(b)(i) and Note 30(A) 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 are no amounts which were required to be transferred, during the year to the Investor Education and Protection Fund by the Company.

Annexure to the Auditor's Report

Referred to in our report of even date to the members of Titagarh Wagons Limited as at and for the year ended March 31, 2015

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verifying the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. However, in the case of bulky material, like scrap where the weighment is not practically possible and it require volumetric measurement, we have relied on the report of independent technical expert about the quantity of such stock valued at Rs. 1,112.99 lacs.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us, 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, the provisions of clause 3(iii)(a) and (b) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations thereof, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) The Company has not accepted any deposit from the public.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 148(1) of the Companies Act, 2013, related to the manufacture of wagons, coaches and engineering products,and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (a) Undisputed statutory dues including provident fund, employees 'state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues as applicable to the Company have generally been regularly deposited with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, value added tax and cess on account of any dispute, are as follows :

Name of the Nature of dues Amount statute (Rs. in lacs)

The lncome Tax Disallowance under various 570.97 sections Act,1961

The West Bengal Short payment of sales tax 5.24 Sales Tax Act, 1944

The Value Added Additional Demand of Sales 210.96 TaxAct,2003 tax under varioussections, disallowanceofinput tax credit, levy of purchase tax etc.

The Value Added Additional Demand of Sales tax under 102.33 TaxAct,2003 varioussections,disallowanceofinput

tax credit, levy of purchase tax etc.

The Central Sales Non submission of C Forms 155.07 Tax Act, 1956

The Central Sales Additional demand of sales tax under 326.89 Tax Act, 1956 various sections and non-submission of Form

The West Bengal Interest on deferment of payment of tax 42.40 Sales TaxAct,1944 for purchase of fixed capital assets

The Central Excise Incorrect availment of cenvat credits, 10,134.24 Act,1944 short payment of duty including interest etc.

228.78



885.57



The Customs Act, Non-fulfilment of Export Obligation 1190.54 1962

Foreign Trade Terminal excise duty for sale of wagons 693.20 Development and under EPCG scheme, earlier refunded Regulation Act, 1992

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

The lncome Tax 2002-2003 DeputyCommissioner/ Act,1961 to2010-2011 Commissioner of lncome Tax

The West Bengal 2004-2005 West Bengal Taxation Sales Tax Act, Tribunal 1944

The Value Added 2005-06,2007-08, WestBengalAppellate& TaxAct,2003 2008-09,2010-11 Revisional Board

The Value Added 2011-12 Additional Commissioner TaxAct,2003 Commercial Taxes

The Central Sales 2005-06to2010-11 Appellate&RevisionalBoard Tax Act, 1956

The Central Sales 2011-12 Additional Commissioner Tax Act, 1956 Commercial Taxes

The West Bengal 2004-05 Additional Commissioner Sales TaxAct,1944 Commercial Taxes

The Central Excise November2006 Commissioner of Central Act,1944 toMarch2014 Excise andServiceTax(LTU)

1996-97,2006-07 Commissioner of Central to2012-13 Excise (Appeal)

1995-96,2003-04, CESTAT, Kolkata 2006-07 to 2008-09

The Customs Act, 2006-2008 CESTAT,Kolkata 1962

Foreign Trade 2008-10 GFT,Kolkata Development and Regulation Act, 1992

(d) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company, during the year in accordance with the relevant provisions of the Companies Act, 1956 (1 of1956) and rules made thereunder.

(viii) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(ix) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a bank. The Company did not have any outstanding dues in respect of a financial institution or debenture holders during the year.

(x) According to the information and explanations given to us, the Company has given guarantees (including put option) for loans taken by subsidiary companies (refer Note 30 to the financial statements) which is in the same line of business, from a bank, the terms and conditions whereof, in our opinion, are not prima-facie prejudicial to the interest of the Company . According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from financial institutions.

(xi) The Company did not have any term loans outstanding during the year.

(xii) We report that during the year under audit, as informed by the management, there was a fraud committed on the Company by external parties amounting to Rs8.52 lacs. The Company has subsequently recovered the entire amount and accordingly there is no financial impact on the Company.

For S. R. Batliboi & Co. LLP Chartered Accountants ICAI Firm Registration No.:301003E

per Kamal Agarwal Place: Kolkata Partner Dated : April 18, 2015 Membership No. 58652




Mar 31, 2014

We have audited the accompanying financial statements of Titagarh Wagons Limited ("the Company"), which comprise the Balance Sheet as at March 31,2014, and the Statement ofProfit and Loss and Cash Flow Statement for theyear then ended, and a summaryofsignificant accounting policies and other explanatory information.

Management''s Responsibilityforthe Financial Statements

Management is responsible forthe preparation ofthesefinancial statements that give a true and fairview ofthefinancial position,financial performance and cash flows oftheCompany in accordance with accounting principles generallyaccepted in India, including theAccounting Standards notified under the Companies Act, 1956, read with General Circular 8/2014dated 4th April 2014 issued by the MinistryofCorporate Affairs. 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.

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 ofChartered Accountants of India. Those Standards require that we complywith 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 ofthe risks ofmaterial misstatement ofthe 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 ofthefinancial 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 ofthe entity''s internal control. An audit also includes evaluating theappropriateness ofaccounting policies used and the reasonableness ofthe accounting estimates made by management, as well as evaluating the overall presentation ofthe 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 ofour information and according to the explanations given to us, thefinancial statements give the information required by the Companies Act, 1956 ("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 ofthe BalanceSheet, ofthe state ofaffairs ofthe Company as at31st March, 2014;

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

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

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) ofSection 227 ofthe Act, we give in theAnnexure a statement on the matters specified in paragraphs 4 and 5 oftheOrder.

2. As required by Section 227(3) ofthe Act, we report that:

a) We have obtained all the information and explanations which to the best ofour knowledge and belief were necessary for the purpose ofour 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 BalanceSheet, Statementof Profitand Loss, and Cash FlowStatementdealt with by this Report are in agreement with the books ofaccount;

d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956, read with General Circular 8/2014dated 4th April 2014 issued by the MinistryofCorporateAffairs;

e) On the basis ofwritten representations received from thedirectors as on31st March 2014, and taken on record bythe Board ofDirectors, none ofthe directors is disqualified as on 31st March 2014, from being appointed as a director in terms ofclause (g) ofsub-section (1) ofSection 274 of the Companies Act, 1956. Referred toinour report of even date to the members of Titagarh Wagons Limited as at and for the year ended March 31,2014

(i) (a) TheCompany has maintained proper records showing full particulars, including quantitative details and situation offixed assets.

(b) All fixed assets have not been physicallyverified by the management during theyear but there is a regular programmeofverifying thefixed assets over a period ofthreeyears which, in our opinion, is reasonable having regard to the sizeofthe Companyand the nature ofits assets. No material discrepancies were noticed on such verification.

(c) There was no disposal ofa substantial part offixed assets during theyear.

(ii) (a) The management has conducted physical verification ofinventory at reasonable intervals during theyear.

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 ofthe Companies Act, 1956. Accordingly,the provisions ofclause 4(iii)(a) to (d) ofthe Order are not applicable to the Company and hence not commented upon.

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 ofthe Companies Act, 1956. Accordingly,the provisions ofclause 4 (iii)(e) to (g) ofthe Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some ofthe items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations thereof, there is an adequate internal control system commensurate with thesize oftheCompany and the nature ofits business, for the purchase ofinventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system ofthe Company in respect ofthese areas.

(v) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 ofthe Companies Act, 1956. Accordingly, the provisions ofclause 4(v)(b) ofthe Order are not applicable to theCompany and hence not commented upon.

(vi) The Company has not accepted any deposit from the public within the purview of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance ofcost records under Section 209(1)(d) oftheCompanies Act, 1956, related to the manufactureofwagons, coaches and engineering products and are ofthe opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination ofthe same.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees''state insurance, income-tax, sales- tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respectofprovident fund, investor education and protection fund, employees''state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records ofthe Company, the dues outstanding ofincome-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account ofany dispute, areas follows :

Name of the Nature of Dues Amount Statute (Rs in Lacs)

The Income Tax Disallowanceunder 593.82 Act, 1961 various sections

The WestBengal Short payment of sales 5.24 Sales Tax Act, 1944 tax

The Central Sales Short payment of sales 148.42 Tax Act, 1956 tax, non submission of C forms.

The Central Sales Non submission of C forms 29.61 Tax Act, 1956

The Value Added Additional demand of sales tax 109.36 Tax Act, 2003 under various sections, disallowance of input tax credit, levy of purchase tax etc

The Value Added Input Tax credit 116.65 Tax Act, 2003 disallowed and interest levied



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

The Income Tax Act, 1961 2002-2003 Deputy to Commissioner/ 2010-2011 Commissionerof Income Tax

The West Bengal Sales TaxAct, 1944 2004- 2005 West Bengal Taxation Tribunal

The Central Sales Tax Act, 1956 2005- 2006 West Bengal to Appellate& 2009-2010 Revisional Board

The Central Sales Tax Act, 1956 2010-11 Additional Commissioner Commercial Taxes

TheValueAdded Tax Act, 2003 2005-2006, West Bengal

2007-2008and Appellate& 2008-2009 Revisional Board

The Value Added Tax Act, 2003 2010-11 Senior Joint Commissioner of Commercial Tax

Name of the Nature of Dues Amount Statute (Rs in Lacs)

The West Bengal Intereston 42.40 Sales Tax Act,1944 deferment of payment of tax for purchase of fixed capital assests

The Central Excise Incorrect availment of 10885.53 Act, 1944 cenvat credits, short payment ofduty including interest etc

The Customs Act, Non-fulfilment of 1341.92 1962 Export Obligation

Foreign Trade Terminal excise duty 693.20 Development and for sale of wagons Regulation Act, under EPCG scheme, 1992 earlier refunded

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

The West Bengal Sales TaxAct,1944 2004-2005 Additional Commissioner, Commercial Taxes

The Central Excise Act, 1944 Various Various Appellate Authorities

The Customs Act, 1962 2006-2008 CESTAT, Kolkata

Foreign Trade Development and Regulation Act, 1992 2008-2010 DGFT, Kolkata

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment ofdues to a bank. There are no dues to financial institution and debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances onthebasisof security by way of pledge ofshares, debentures 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) ofthe Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions ofclause 4(xiv) oftheOrder are not applicableto the Company.

(xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by a Subsidiary Company from banks, the terms and conditions whereof, in our opinion, are not prima-facie prejudicial to the interest oftheCompany. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from financial institutions.

(xvi) The Company did not have any term loans outstanding during the year.

(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) TheCompany has not made any preferential allotment ofshares during theyear to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) TheCompany has not raised any money through public issue during theyear.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S. R. BATLIBOI & CO. LLP

Firm Registration Number: 301003E Chartered Accountants

per Bhaswar Sarkar

Place: Kolkata Partner

Date : May 29, 2014 Membership No.: 55596


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Titagarh Wagons 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 principles generally accepted in India, including 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.

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 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 31 st March, 2013;

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

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

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;

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

Annexure to the Auditor''s Report

Referred to in our report of even date to the members of Titagarh Wagons Limited as at and for the year ended March 31,2013

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verifying the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) There was no disposal of a substantial part of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii)(a) to (d) of the Order are not applicable to the Company and hence not commented upon. (b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii)(e) to (g) of the Order are not applicable to the Company and hence not commented upon. (iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations thereof, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas. (v) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies

Act, 1956. Accordingly, the provisions of Clause 4(v)(b) of the Order are not applicable to the Company and hence not commented upon. (vi) The Company has not accepted any deposit from the public within the purview of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under. (vii) In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business. (viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956, related to the manufacture of wagons, coaches and engineering products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same. (ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees''state insurance, income-tax, sales- tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though therehas been slight delay in a few cases.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees''state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows :

Name of the Nature of Dues Amount Statute (Rs in Lacs)

The Income Tax Disallowance under 646.18 Act, 1961 Various sections

The West Bengal Short payment of 5.24 Sales Tax Act, 1944 sales tax

The Central Sales Short payment of sales tax, 29.50 Tax Act, 1956 non submission of forms and other documents

Non submission of forms and 123.39 others documents

The Value Added Additional demand of sales tax 42.00 Tax Act, 2003 under various sections, disallowance of input tax credit, levy of purchase tax etc

Disallowance of Input Tax Credit and 87.75 levy of purchase tax due to non submission of relevant documents

The Central Excise Incorrect availment of cenvat credits, 10,176.04 Act, 1944 short payment of duty including interest Etc.

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

The Income Tax 2002-2003 " Deputy Commissioner/ to 2008-2009 Commissioner oflncomeTax

The Income Tax 2004-2005 " West Bengal Taxation Tribunal

The Income Tax 2005-2006 " Joint Commissioner of and Commercial Taxes 2007-2008

The Income Tax 2008-2009 " Senior Joint Commissioner and

2009-10 of Commercial Taxes

2005-2006 " Additional/Joint and Commissioner 2007-2008

The Income Tax 2007-08 " Senior Joint and Commissioner of 2009-10 Commercial Taxes

The Income Tax 1991-1992, 1996-1997, Various Appellate 2003-2004 to Authorities 2009-2012

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a bank. There are no dues to financial institution and debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced 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, 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, the Company is not dealing 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) According to the information and explanations given to us, the Company has given guarantee for loans taken by a Subsidiary Company from banks, the terms and conditions whereof, in our opinion, are not prima-facie prejudicial to the interest of the Company. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from financial institutions.

(xvi) The Company did not have any term loans outstanding during the year.

(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 during the year to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

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

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S.R.BATLIBOI&CO.LLP

Firm Registration Number: 301003E

Chartered Accountants

per RKAGRAWAL

Place :Kolkata Partner

Date: May 13, 2013 Membership No, 16667


Mar 31, 2012

1. We have audited the attached Balance Sheet of Titagarh Wagons Limited ('the Company') 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 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 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

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

v. On the basis of the 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 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 accounts, 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 :-

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 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.

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verifying the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of clauses 4(iii)(a) to (d) of the Order are not applicable to the Company.

(e) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of clauses 4 (f) and (g) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations thereof, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas and we have also not observed any continuing failure to correct major weakness in the internal control system of the Company.

(v) In our opinion, and as informed to us, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956.

(vi) The Company has not accepted any deposits from the public.

(vii) The Company has an internal audit system, the scope and coverage of which, in our opinion, requires to be enlarged to be commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956, related to the manufacture of wagons, coaches and engineering products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been slight delay in afew cases.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, wealth- tax, service tax, sales-tax, customs duty, excise duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows :

Name of Nature Amount Period to Forum where the statue of Dues (Rs. in Lacs) which the dispute is amount relates pending

The Income Disallowance 646.18 2002-2003, Deputy Tax Act, under various 2004-2005, Commissioner/ 1961 sections 2006-2007, Commissioner of 2008-2009 Income Tax

The West Deferment of 3.60 2004-2005 Additional Bengal Sales sales tax Commissioner Tax Act, liability Commercial 1944 Taxes

Short 5.24 2004-2005 West Bengal payment of Taxation Tribunal sales tax

The Central Short 29.81 2005-2006 Joint Sales Tax payment of and Commissioner Act, sales tax,non 2007-2008 of Commercial 1956 submission of Taxes forms and other documents

Non submission 262.01 2008-2009 Senior Joint of forms and Commissioner of others Commercial documents Taxes

The Value Additional 42.00 2005-2006 Additional/Joint Added demand of and Commissioner Tax Act, sales tax 2007-2008 2003 under various sections, disallowance of input tax credit, levy of purchase tax etc.

Disallowance 216.16 2008-2009 Senior Joint of IT Cand levy Commissioner of of purchase Commercial tax due to non Taxes submission of relevant documents

The Central Incorrect 7,301.71 1991-1992, Various Appellate Excise Act, availment of 1996-1997, Authorities 1944 cenvat credits, 2003-2004 to short payment 2009-2011 of duty including interest etc.

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a bank. There are no dues to financial institution and debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced 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, 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, the Company is not dealing 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) 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.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(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 made preferential allotment of shares during the year to a party and a company covered in the register maintained under Section 301 of the Companies Act, 1956. In our opinion, the price at which these shares have been issued, is not prejudicial to the interest of the Company.

(xix) The Company did not have any outstanding debentures during the year.

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

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S. R. BATLIBOI & CO.

Firm Registration Number: 301003E

Chartered Accountants

per R. K. AGRAWAL

Place : Kolkata Partner

Date : April 28, 2012 Membership No.: 16667


Mar 31, 2011

1. We have audited the attached Balance Sheet of Titagarh Wagons Limited (the Company) 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. Without qualifying our report, attention is drawn to Note No 23 on Schedule 22 regarding Investments made and loans and advances given by the Company to a subsidiary and a joint venture company to the extent of Rs. 15,552.72 Lacs (Rs. 14,145.38 Lacs as at March 31, 2010) for the purpose of acquiring controlling stake including certain financial assets like leased wagons of another company which was registered with the Board for Industrial and Financial Reconstruction (BIFR) and which have been considered good of recovery by the management inspite of accumulated losses, since the said company has been de-registered by BIFR from its purview and has started its operations and also started making profits.

5. Further to our comments in the Annexure referred to above, we report that:

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

ii. In our opinion, proper books of 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 the 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 is 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 accounts read with our observation in para 4 above whose impact, if any, on the Companys profit is currently unascertainable, 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;

a) in the case of Balance Sheet, of the state of affairs of the Company as at March 31, 2011;

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

c) 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 our report of even date to the members of Titagarh Wagons Limited as at and for the year ended March 31, 2011]

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verifying the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such physical verification.

(iii) (a) 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 301 of the Companies Act, 1956. Therefore the provisions of clauses (iii) (b) to (d) of the Order are not applicable.

(b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence the provisions of clauses (iii) (f) & (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations thereof, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas and we have also not observed any continuing failure to correct major weakness in the internal control system of the company.

(v) According to the information and explanations provided by the management, we are of the opinion that there are no particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under the above section. Hence the provisions of clause (v) (b) of the Order are not applicable.

(vi) The Company has not accepted any deposits from the public.

(vii) The Company has an internal audit system, the scope and coverage of which, in our opinion, requires to be enlarged to be commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases and significant delay in case of custom duty of Rs. 535.68 Lacs (including interest of Rs.153.37 Lacs) for liability arisen due to non-fulfillment of export obligation against duty free imports.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, wealth-tax, service tax, sales- tax, customs duty, excise duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:

Name of Nature Amount Period to Forum where the statute of dues (Rs. in lacs) which the dispute is amount relates pending

The Income Disallowance 53.68 2003-2004 to Deputy Tax Act, under various 2005-2006 Commissioner/ 1961 sections Commissioner of Income Tax

The West Deferment of 55.32 2004-2005 Senior Joint Bengal Sales sales tax Commissioner Tax Act, liability of Commercial 1944 Taxes

The West Short 5.24 2004-2005 Deputy Bengal Sales payment of Commissioner, Tax Act, sales tax Commercial 1944 Taxes

The Central Short 303.64 2005-2006 to Additional / Joint Sales Tax payment of 2007-2008 Commissioner Act , 1956 sales tax, non of Commercial submission Taxes of forms and other documents

The Value Additional 608.57 2005-2006 to Additional / Joint Added Tax demand of 2007-2008 Commissioner, Act, 2003 sales tax Commercial under various Taxes sections, disallowance of input tax credit, levy of purchase tax

The Central Incorrect 2133.41 1991-1992. Various Appellate Excise Act, availment of 1996-1997, Authorities 1944 cenvat credits, 2003-2004 to short payment 2009-2010 of duty including interest

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a bank. There are no dues to financial institution and debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced 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, 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.

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

(xv) As indicated in Note No. 24 on Schedule 22, the Company has given a guarantee by way of put option for loans taken by a related party from a bank, the terms and conditions whereof, considering its strategic nature, are stated to be not prejudicial to the interest of the Company.

(xvi) The Company did not have any term loans outstanding during the year.

(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 during the year to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

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

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S.R. Batliboi & Co.

Firm Registration No. 301003E

Chartered Accountants

per R. K. Agrawal Place: Kolkata Partner

Date: May 12, 2011 Membership No.: 16667


Mar 31, 2010

1. We have audited the attached Balance Sheet of Titagarh Wagons Limited (the Company) as at March 31, 2010 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 auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. (a) Without qualifying our opinion, we draw attention to note no. 26 on Schedule 22 regarding investments made and loans and advances aggregating to Rs. 14,145.38 lacs given by the Company to a subsidiary and a joint venture company for the purpose of acquiring controlling stake in certain financial assets like leased wagons, debts / loans, etc. of a sick company, rehabilitation scheme of which is under implementation. Pending revival of the said sick company, these investments and loans and advances have been considered good of recovery by the management.

(b) Attention is drawn to Note No. 20 (a) on Schedule 22, regarding non provision of Rs. 329.03 lacs towards diminution in the value of certain investments in a company based on its latest audited financial statements as at June 30, 2009. In view of the management, the present diminution is considered as temporary in nature since the investment is strategic in nature and also because the current realizable value of the assets held by the aforesaid company is likely to be significantly higher than the book value of investment and no provision towards such diminution is considered necessary.

(c) As given in Note No. 20 (b), debts amounting to Rs. 746.57 lacs recoverable from a customer have not been realized since last year. The Company has taken reasonable steps in the matter and is hopeful to recover these dues. Accordingly, these dues have been considered good of recovery. For the reasons mentioned above, Terminal Excise duty claim of Rs. 195.34 lacs from the Director General of Foreign Trade have also been considered as good of recovery.

5. Further to our comments in the Annexure referred to above, we report that:

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

ii. In our opinion, proper books of 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 the written representations received from the directors, as on March 31, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 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 accounts read with para 4 above whose impact on the Companys profit, if any, is presently not ascertainable, 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;

a) in the case of Balance Sheet, of the state of affairs of the Company as at March 31, 2010;

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

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

Annexure referred to in paragraph 3 of our report of even date Re: Titagarh Wagons Limited ("the Company")

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verifying the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) 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 301 of the Companies Act, 1956. Therefore the provisions of clauses (iii) (b), (c) & (d) of the Order, are not applicable to the Company.

(b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence the provisions of clauses (iii) (f) & (g) of the Order, are not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations thereof, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) According to the information and explanations provided by the management, we are of the opinion that there are no particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956, which need to be entered into the register maintained under section 301. Hence the provisions of clause (v) (b) of the Order are not applicable to the Company.

(vi) The Company has not accepted any deposits from the public.

(vii) The Company has appointed a firm of Chartered Accountants to carry out the internal audit for the year ended March 31, 2010, the report whereof has been received, but the internal audit scope and coverage needs to be further strengthened commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess, etc have generally been regularly deposited with the appropriate authorities though there has been delays in a few cases of provident fund and income tax and significant delay in case of custom duty of Rs. 573.67 lacs (including interest of Rs.166.90 lacs) for liability arisen due to non-fulfillment of export obligation against duty free imports as included in Note No.21 on schedule 22.

(b) According to the information and explanations given to us, except as given below no undisputed dues in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other statutory dues which were outstanding, at the year end for a period of six months from the date they become payable:

Name of Nature of the Amount Period to Due Date Date of the statute dues (Rs in which the Payment lacs) amount relates

Central Custom duty 230.16 2006-07 September Not Yet Paid Excise and (including 06, 2009 Customs interest ) 289.52 2009-10 June 7, April 21, 2010 Act, 1944 2009

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:

Name of the Nature of Amount Period to which Forum where statute dues (Rs in lacs) the amount dispute is relats pending

Income Tax Disallowances 53.68 2003-2002, Assistant Act 1961 under various 2004-05, Commissioner of Income Tax sections

West Bengal Deferment of 55.32 2004-05 Additional Commissioner, Sales Tax Act Sales Tax Commercial Taxes 1944 Liability

West Bengal Disallowances 5.24 2004-05 Deputy Sales Tax Act under various Commissioner, 1944 sections Commercial Taxes

Central Sales Disallowances 101.63 2004-05, Deputy 2005-06 Commissioner, Tax Act, 1956 under various sections Commercial Taxes

Value Added Disallowances 352.64 2005-06 Additional Taxes Act, under various Commissioner, 2003 sections Commercial Taxes

Central ExciseDisallowance 1576.28 2002-03, Commissioner of and Customs of Modvat 2004-05, Central Excise Act, 1944 Credit 2006-07, (Appeals) 2007-08

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution and bank.

(xii) According to the information and explanations given to us and based on the documents and records produced 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, 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, the Company is not dealing 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) 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.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(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 during the year to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) We have verified that the end use of money raised by public issues is as disclosed in the note no. 18 on schedule 22 to the financial statements.

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

For S.R. BATLIBOI & CO. Firm Registration No. 301003E Chartered Accountants

per R. K. Agrawal Partner Membership No.: 16667 Place: Kolkata Date: May 17, 2010



 
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