Auditor Report of HBL Engineering Ltd.

Mar 31, 2025

We have audited the accompanying standalone ind
AS financial statements of HBL Engineering Limited
(formerly known as HBL Power Systems Limited)
Hyderabad, ("the Company") which comprise the
Balance Sheet as at March 31, 2025, the Statement
of Profit and Loss (including Other Comprehensive
income), Statement of Changes in Equity and
Statement of Cash Flows for the year then ended
and notes to the financial statements including
material accounting policies and other explanatory
information. (hereinafter referred to as "the financial
statements").

in our opinion and to the best of our information
and according to the explanations given to us, the
aforesaid financial statements give the information
required by the Companies Act, 2013 ("the Act'')
in the manner so req uired 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 31,2025 and its profit, total
comprehensive income, changes in equity and its
cash flows for the year ended on that date.

Basis for opinion

We conducted our audit in accordance with the
Standards on Auditing (SAs) specified under
section 143 (10) of the Companies Act, 2013. Our
responsibilities under those Standards are further
described in the Auditor''s Responsibilities for the
Audit of the Financial Statements section of our report.

We are independent of the company in accordance
with the Code of Ethics issued by the institute of
Chartered Accountants of india together with the
ethical requirements that are relevant to our audit of
the financial statements under the provisions of the
Companies Act, 2013 and the Rules thereunder, and
we have fulfilled our other ethical responsibilities in
accordance with these requirements and the Code of
Ethics. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide
a basis for our opinion on the standalone financial
statements.

Key audit matters

Key audit matters are those matters that in our
professional judgment were of most significant in
our audit of the financial statements of the current
period. These matters were addressed in the context
of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. We have
determined that there are no key audit matters to
communicate in our report.

Information other than the standalone financial
statements and auditor''s report thereon

The Company''s Board of Directors is responsible
for the other information. The other information
comprises the information included in Annual Report
but does not include the financial statements and
our auditor''s report thereon. The annual report is
expected to be made available to us after the date of
this auditor''s report.

Our opinion on the standalone financial statements
does not cover the other information and we do not
express any form of assurance conclusion thereon.

In connection with our audit of the standalone
financial statements, our responsibility is to read the
other information identified above when it becomes
available and, in doing so, consider whether the
other information is materially inconsistent with the
standalone financial statements or our knowledge
obtained in the audit, or otherwise appears to be
materially misstated.

When we read the annual report, if we conclude
that there is a material misstatement therein, we
are required to communicate the matter to those
charged with governance and take necessary actions,
as applicable under the relevant laws and regulations.

Responsibilities of management and those
charged with governance 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, changes in equity and cash flows of
the company in accordance with the accounting
principles generally accepted in India, including
the Accounting Standards (Ind AS} specified under
Section 133 of the Act.

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
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.

In preparing the financial statements, the Board of
Directors is responsible for assessing the Company''s
ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and
using the going concern basis of accounting unless
the Board of Directors either intends to liquidate the
Company or to cease operations, or has no realistic
alternative but to do so.

The Board of Directors is also responsible for
overseeing the Company''s financial reporting process.

Auditor''s responsibilities for the audit of the
standalone financial statements

Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due to
fraud or error, and to issue an auditor''s report that
includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit
conducted in accordance with SAs will always detect
a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.

As part of an audit in accordance with SAs, we exercise
professional judgment and maintain professional
skepticism throughout the audit. We also:

• Identify and assess the risks of material
misstatement of the financial statements, whether
due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from
fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of
internal control.

• Obtain an understanding of internal control
relevant to the audit in order to design
audit procedures that are appropriate in the
circumstances. Under section 143(3}(i} of the

Companies Act, 2013, we are also responsible for
expressing our opinion on whether the company
has adequate internal financial controls system
in place and the operating effectiveness of such
controls.

• Evaluate the appropriateness of accounting
policies used and the reasonableness of accounting
estimates and related disclosures made by
management.

• Conclude on the appropriateness of management''s
use of the going concern basis of accounting and,
based on the audit evidence obtained, whether
a material uncertainty exists related to events or
conditions that may cast significant doubt on the
Company''s ability to continue as a going concern.
If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor''s
report to the related disclosures in the financial
statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of
our auditor''s report. However, future events or
conditions may cause the Company to cease to
continue as a going concern.

• Evaluate the overall presentation, structure and
content of the financial statements, including the
disclosures, and whether the financial statements
represent the underlying transactions and events
in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the
standalone financial statements that, individually or
in aggregate, makes it probable that the economic
decisions of a reasonably knowledgeable user of the
standalone financial statements may be influenced.
We consider quantitative materiality and qualitative
factors in (i) planning the scope of our audit work
and in evaluating the results of our work; and (ii)
evaluating the effect of any identified misstatements
in the standalone financial statements.

We communicate with those charged with governance
regarding, among other matters, the planned scope
and timing of the audit and significant audit findings,
including any significant deficiencies in internal
control that we identify during our audit.

We also provide those charged with governance with
a statement that we have complied with relevant
ethical requirements regarding independence, and to
communicate with them all relationships and other
matters that may reasonably be thought to bear on
our independence, and where applicable, related
safeguards.

From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the financial
statements of the current period and are therefore the
key audit matters. We describe these matters in our
auditor''s report unless law or regulation precludes
public disclosure about the matter or when, in
extremely rare circumstances, we determine that a
matter should not be communicated in our report
because the adverse consequences of doing so
would reasonably be expected to outweigh the public
interest benefits of such communication.

Report on other legal and regulatory requirements

(1) As required by the Companies (Auditor''s Report)
Order, 2020 ("the Order") issued by the Central
Government of India in terms of sub-section (11)
of section 143 of the Act, we give in the "Annexure
A" a statement on the matters specified in
paragraphs 3 and 4 of the Order, to the extent
applicable.

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

(a) We have sought and obtained all the
information and explanations which to
the best of our knowledge and belief were
necessary for the purposes of our audit.

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

(c) The Balance Sheet, the Statement of Profit
and Loss, Statement of Changes in Equity
and the Cash Flow Statement dealt with by
this Report are in agreement with the books
of account.

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

(e) On the basis of the written representations
received from the Directors as on March
31, 2025, taken on record by the Board of
Directors, none of the Directors is disqualified
as on March 31, 2025 from being appointed
as a Director in terms of Section 164(2) of
the Act.

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

(g) 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 42.2 to the standalone
financial statements.

(ii) The company did not have any long¬
term contracts including derivative
contracts for which there were any
material foreseeable losses.

(iii) There has been no delay in transferring
amounts, required to be transferred, to
the investor Education and Protection
Fund by the company.

(iv) (a) The respective Managements of

the Company and its subsidiaries
which are companies incorporated
in india, whose financial statements
have been audited under the Act,

have represented to us that, to the
best of their knowledge and belief,
other than as disclosed in the notes
to accounts, no funds (which are
material either individually or in the
aggregate) have been advanced
or loaned or invested (either from
borrowed funds or share premium
or any other sources or kind of
funds) by the Company or any
of such subsidiaries to or in any
other person or entity, including
foreign entity ("intermediaries"),
with the understanding, whether
recorded in writing or otherwise,
that the intermediary shall, directly
or indirectly lend or invest in other
persons or entities identified in
any manner whatsoever by or
on behalf of the Company or any
of such subsidiaries ("Ultimate
Beneficiaries") or provide any
guarantee, security or the like on
behalf of the Ultimate Beneficiaries.

(b) The respective Managements of
the Company and its subsidiaries
which are companies incorporated
in india, whose financial statements
have been audited under the Act,
have represented to us that, to the
best of their knowledge and belief,
no funds (which are material either
individually or in the aggregate)
have been received by the Company
or any of such subsidiaries from any
person or entity, including foreign
entity ("Funding Parties"), with the
understanding, whether recorded
in writing or otherwise, that the
Company or any of such subsidiaries
shall, directly or indirectly, lend or
invest in other persons or entities
identified in any manner whatsoever
by or on behalf of the Funding Party
("Ultimate Beneficiaries") or provide

any guarantee, security or the like on
behalf of the Ultimate Beneficiaries,

(c) Based on the audit procedures
that have been considered
reasonable and appropriate in the
circumstances performed by us on
the Company and its subsidiaries
which are companies incorporated
in India whose financial statements
have been audited under the Act,
nothing has come to our notice that
has caused us to believe that the
representations under sub-clause
(i) and (ii) of Rule 11(e), as provided
under (a) and (b) above, contain any
material misstatement,

(v) (a) The dividend declared and paid by
the Company during the year is in
accordance with Section 123 of the
Act, as applicable,

(b) As stated in Note 42,3 to the
standalone financial statements, the
Board of Directors of the Company
have proposed dividend for the year
which is subject to the approval of
the members at the ensuing Annual
General Meeting, The amount of
dividend proposed is in accordance

with section 123 of the Act, as
applicable,

(vi) Based on our examination, which
included test checks, we observed that
the company has used accounting
software for maintaining its books of
account which has a feature of recording
an audit trail (edit log) facility and the
same has operated throughout the year
for all relevant transactions recorded in
the software except that the process of
binding the MAC address for the user''s
login is currently pending, Further,
during the course of our audit, we did
not come across any instances where
the audit trail feature was tampered with
and the audit trail has been preserved
by the Company as per the statutory
requirements for record retention,

(h) With respect to the other matters to be
included in the Auditor''s Report in accordance
with the requirements of section 197(16) of
the Act, as amended, in our opinion and to the
best of our information and according to the
explanations given to us, the remuneration
paid by the Company to its directors during
the year is in accordance with the provisions
of section 197 of the Act,

For L N R Associates

Chartered Accountants
FRN 05381S

Raghuram Vedula Place: Hyderabad

Partner Date: May 24, 2025

M,No, 242883

UDIN: 25242883BMIRNE3619

---

Mar 31, 2024

We have audited the accompanying standalone Ind AS financial statements of HBL Power Systems Limited, Hyderabad, ("the Company") which comprise the Balance Sheet as at March 31, 2024, the Statement of Profit and Loss, Statement of Changes in Equity and Statement of Cash Flows for the year then ended and notes to the financial statements including material accounting policies and other explanatory information. (hereinafter referred to as "the financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 ("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 31,2024 and its profit, changes in equity and its cash flows for the year ended on that date.

Basis for opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143 (10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.

Key audit matters

Key audit matters are those matters that in our professional judgment were of most significant in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined that there are no key audit matters to communicate in our report.

Information other than the standalone financial statements and auditor''s report thereon

The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in Annual Report but does not include the financial statements and our auditor’s report thereon. The annual report is expected to be made available to us after the date of this auditor’s report.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take necessary actions, as applicable under the relevant laws and regulations.

Responsibilities of management and those charged with governance 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, changes in equity and cash flows of the company in accordance with the accounting principles generally accepted in India, including the Accounting Standards (Ind AS) specified under Section 133 of the Act.

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 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.

In preparing the financial statements, the Board of Directors is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company''s financial reporting process.

Auditor''s responsibilities for the audit of the standalone financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a

material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)

(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences

of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

(1) As required by the Companies (Auditor''s Report) Order, 2020 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

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

(c) The Balance Sheet, the Statement of Profit and Loss, Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

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

(e) On the basis of the written representations received from the Directors as on March 31, 2024, taken on record by the Board of Directors, none of the Directors is disqualified as on March 31,2024 from being appointed as a Director in terms of Section 164(2) of the Act.

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

(g) 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 43.2 to the standalone financial statements.

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

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

(iv) (a) The respective Managements of the Company and

its subsidiaries which are companies incorporated in India, whose financial statements have been audited under the Act, have represented to us that, to the best of their knowledge and belief, other than as disclosed in the notes to accounts, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company or any of such subsidiaries to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company or any of such subsidiaries ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b) The respective Managements of the Company and its subsidiaries which are companies incorporated in India, whose financial statements have been audited under the Act, have represented to us that, to the best of their knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company or any of such subsidiaries from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company or any of such subsidiaries shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances performed by us on the Company and its subsidiaries which are companies incorporated in India whose financial statements have been audited under the Act, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

(v) (a) The dividend declared and paid by the Company

during the year is in accordance with Section 123 of the Act, as applicable.

(b) As stated in Note 43.3 to the standalone financial statements, the Board of Directors of the Company have proposed dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act, as applicable.

(vi) Based on our examination, which included test checks, we observed that the company has used accounting software for maintaining its books of account which has a feature of recording an audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the

software except that the process of binding the MAC address for the user''s login is currently pending. Further, during the course of our audit, we did not come across any instances where the audit trail feature was tampered with.

(h) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended, in our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

For L N R Associates

Chartered Accountants FRN 05381S

Raghuram Vedula Place: Hyderabad

Partner Date: May 27, 2024

M.No. 242883

UDIN: 24242883BKGWEZ2547

---

Mar 31, 2023

HBL Power Systems Limited,

Hyderabad

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

KEY AUDIT MATTERS

Key audit matters are those matters that in our professional judgment were of most significant in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined that there are no key audit matters to communicate in our report.

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR''S REPORT THEREON

The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in management report and chairman''s statement but does not include the financial statements and our auditor''s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE 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

OPINION

We have audited the accompanying standalone Ind AS financial statements of HBL Power Systems Limited Hyderabad, ("the Company") which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss, Statement of Changes in Equity and Statement of Cash Flows for the year then ended and notes to the financial statements including a summary of significant accounting policies and other explanatory information. (hereinafter referred to as "the financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 ("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 31,2023 and its profit, changes in equity and its cash flows for the year ended on that date.

BASIS FOR OPINION

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143 (10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.

statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards (Ind AS) specified under Section 133 of the Act.

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 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.

In preparing the financial statements, the Board of Directors is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company''s financial reporting process.

AUDITOR''S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,

intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

(1) As required by the Companies (Auditor''s Report) Order, 2020 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

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

(c) The Balance Sheet, the Statement of Profit and Loss, Statement of Changes in Equity and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

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

(e) On the basis of the written representations received from the Directors as on March 31,2023, taken on record by the Board of Directors, none of the Directors is disqualified as on March 31,2023 from being appointed as a Director in terms of Section 164(2) of the Act.

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

(g) 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 39.2 to the standalone financial statements.

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

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

(iv) (a) The respective managements of the Company and its subsidiaries which are companies incorporated in India, whose financial statements have been audited under the Act, have represented to us that, to the best of their knowledge and belief, other than as disclosed in the notes to accounts, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company or any of such subsidiaries to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company or any of such subsidiaries ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

(b) The respective managements of the Company and its subsidiaries which are companies incorporated in India, whose financial statements have been audited under the Act, have represented to us that, to the best of their knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company or any of such subsidiaries from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company or any of such subsidiaries shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances performed by us on the Company and its subsidiaries which are companies incorporated in India whose financial statements have been audited under the Act, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as

provided under (a) and (b) above, contain any material misstatement.

(v) (a) The dividend declared and paid by the Company during the year is in accordance with Section 123 of the Act, as applicable.

(b) As stated in Note 39.3 to the standalone financial statements, the Board of Directors of the Company have proposed dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act, as applicable.

(vi) As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable to the Company with effect from April 1,2023, reporting on audit trail in pursuance of Rule 11(g) of the Companies (Audit and Auditors) Rule, 2014 is considered inapplicable for the current year.

(h) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended, in our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

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Mar 31, 2017

To the Members of

HBL Power Systems Limited, Hyderabad

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of HBL Power Systems Limited, Hyderabad ("the company"), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss (including other comprehensive income), the Statement of Cash Flows and the Statement of changes in Equity for the year ended on that date and a summary of the significant accounting policies and other explanatory information (herein after referred to as "standalone Ind AS financial statements").

Management''s Responsibility for the Standalone Ind AS Financial Statements

The company’s Board of Directors is responsible for the matters stated in sub-section 5 of Section 134 of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards ("Ind AS") prescribed under Section 133 of the Act, read with relevant rules issued there under.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS 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 Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing specified under sub-section 10 of Section 143 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 standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS 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 standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the company’s Directors, as well as evaluating the overall presentation of the standalone Ind AS 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 Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 including the Ind AS, of the financial position of the company as at March 31, 2017, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Report on Other Legal and Regulatory Requirements

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

2. As required by sub-section 3 of Section 143 of the Act, we report that:

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

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

(c) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Statement of Cash Flows and the Statement of changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act, read with relevant rules issued there under;

(e) On the basis of the written representations received from the Directors as on March 31, 2017 and taken on record by the Board of Directors, none of the Directors are disqualified as on March 31, 2017 from being appointed as a Director in terms of sub-section 2 of Section 164 of the Act;

(f) With respect to the adequacy of the internal financial controls over financial reporting of the company and the operating effectiveness of such controls, refer to our separate report in "Annexure B" and

(g) 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 as amended, in our opinion and to the best of our information and according to the explanations given to us:

1. The company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 38.2 to the standalone Ind AS financial statements;

2. The company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

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

4. The company has provided requisite disclosures in the standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016. Based on audit procedures and relying on the management representation, we report that the disclosures are in accordance with books of account maintained by the company and as produced to us by the Management - Refer Note 44 to the standalone Ind AS financial statements.

(Referred to in Paragraph 1 of ''Report on Other Legal and Regulatory Requirements'' in our report of even date)

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

(b) The management has carried out physical verification of assets in accordance with a designed programme. In our opinion the periodicity of the physical verification is reasonable. No material discrepancies were noticed on such verification.

(c) According to the information and explanations furnished to us and on the basis of our examination of the records of the company and read together with Note no. 5.2 of the Financial Statements, the details of title deeds of immovable properties not held in the name of the company, for the reasons stated therein the said note, are as follows:

Rs, in lakhs

Fixed Asset	No. of Cases	Gross Block as at 31-03-2017	Net Block as at 31-03-2017
Freehold Land	8	508.83	508.83
Non-Factory Buildings	3	260.62	204.60
Total	11	769.45	713.43

(ii) The Inventories within the factory premises/stores and at branches have been physically verified by the management during the year and also at the year end. For materials lying with ancillary parties confirmations have been obtained in some cases. In our opinion, the frequency of verification is reasonable. The discrepancies noticed, upon verification, between physical stocks and book records were not material and such differences have been properly dealt with in the books of account.

Name of the Statute	Nature of the dues and Period to which it relates	Amount in Rs, lakhs	Forum where the Dispute is pending as at March 31, 2017
Excise Act	Duty, Interest and Penalty for the period from 1994- 95 to 1998-99.	94.85	Departmental Appeal before High Court, Mumbai
Excise Act	Duty, Interest and Penalty for the period 2010-11, Feb-Sept 2012, Oct 12 - May 2013, Dec-08 to Mar 14.	411.32	Appeal Before CESTAT, Bengaluru.
Excise Act	Dispute relating to irregular a ailment of benefit for the period Feb-Dec 2014, 2012-15.	9.64	Appeal before Commissioner Appeals, Hyderabad
Excise Act	Irregular A ailment of CENVAT Credit for 2014-15	116.78	Appeal before Commissioner Appeals, Visakhapatnam
Customs Act	Dispute relating to alleged evasion of duty by claiming wrong classification and exemption and equal amount levied as penalty.	470.37	Appeal before Tribunal, Chennai.
Customs Act	Dispute relating to alleged evasion of duty by claiming wrong classification and exemption and equal amount levied as penalty.	2.38	Appeal before Tribunal, Hyderabad.

(iii) As at the year end, there are no outstanding loans granted by the company to parties covered in the Register maintained under Section 189 of the Act. As there are no outstanding loans as at March 31, 2017, Paragraph 3 (iii)

(a) to (c) of the Order are considered inapplicable.

(iv) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of Section 185 and 186 of the Act, with respect to the loans, investments, guarantees and security.

(v) The company has not accepted any deposits to which provisions of Sections 73 to 76 and other relevant provisions of the Act are applicable.

(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 of the Act 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.

(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 regular in depositing the undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues with the appropriate authorities.

(b) According to the information and explanations given to us, the following demands have not been deposited on account of disputes.

(viii) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of loans or borrowings to a financial institution, Bank or Government. The company had not issued any Debentures.

Name of the Statute	Nature of the dues and Period to which it relates	Amount in Rs, lakhs	Forum where the Dispute is pending as at March 31, 2017
Service Tax Act	Dispute with regard to Penalty levied on excess Input availed between April 2008 and December 2010.	7.66	Pending before CESTAT, Hyderabad
CST Act	Dispute in Taxable Turnover relating to 3rd party exports for the year 2005-06, 2007-08.	45.07	Case pending before TVATAT, Hyderabad.
KVAT Act	Dispute with regard to Penalty for stock difference & Turnover during the year 2010-11, 2011-12.	34.01	Remanded back to Intelligence Officer for modification of order.
TN VAT Act	Dispute regarding Input VAT availed and penalty on Capital Goods which were sold during February 2011.	30.69	Appeal filed before Appellate Deputy Commissioner(C), Chennai
AP VAT Act	Dispute relating to disallowance of input credit on purchase of LPG for the year 2014-15	62.33	Appeal filed before Appellate Deputy Commissioner, Visakhapatnam
CST, VAT and Entry tax Acts	Dispute relating to interest demand for alleged non- payment of assessed tax	9.42	Appeal pending before Joint Commissioner of Commercial Taxes, , Appeals, Patna
KVAT Act	Dispute relating to tax demanded on alleged wrong Invoice raised for 201 1-12, 2016-17	1.29	Appeal filed before Appellate Deputy Commissioner Appeals, CT, Ernakulum.
CST Act	Dispute relating to tax demanded for alleged non- submission of forms for the year 2010-11, 2011-12	2.32	Appeal pending before Commissioner Appeals, Luck now

(ix) The company had not raised any money by way of Initial Public Offer or further Public Offer (including Debt Instruments). Based on review of the records of the term loan drawn and utilization thereof on an overall basis, the term loans have been applied for the purposes for which the loans were raised

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

(xi) According to the information and explanations given to us and based on our examination of the records of the company, the company has paid / provided for Managerial Remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us, the company is not a Nidhi company. Accordingly Paragraph 3 (xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the records of the company, the transactions with related parties are in compliance with Section 177 and 188 of the Act, where applicable and details of such transactions have been disclosed in the Financial Statements as required by the applicable Accounting Standards.

(xiv) According to the information and explanations given to us and based on our examination of the records of the company, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanations given to us and based on our examination of the records of the company, the company has not entered into Non-Cash transactions with Directors or persons connected with them. Accordingly Paragraph 3(xv) of the Order is not applicable.

(xvi) The company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

(Referred to in Paragraph 2(f) of ''Report on Other Legal and Regulatory Requirements'' in our report of even date)

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

We have audited the internal financial controls over financial reporting of HBL Power Systems Limited ("the company") as of March 31, 2017 in conjunction with our audit of the standalone financial statements of the company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors'' Responsibility

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

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

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

Meaning of Internal Financial Controls over Financial Reporting

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

Inherent Limitations of Internal Financial Controls over Financial Reporting

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

Qualified Opinion

According to the information and explanations given to us and based on our audit we are of the opinion that, the company has, in all material respects, maintained adequate internal financial controls over financial reporting as of March 31, 2017, based on the internal control over financial reporting criteria established by the company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India, and except for the possible effects of the material weaknesses in the operating effectiveness described below on the achievement of the objectives of the control criteria, the company’s internal financial controls over financial reporting were operating effectively as of March 31,

2017.

a) The company’s internal financial controls implemented through Information Technology Controls and General IT Controls have further scope for improvement, absence of which may lead to a failure of the company’s control procedures to prevent or detect a misstatement of an account balance or disclosure.

b) Control Documents evidencing the operating effectiveness of controls have further scope for improvement, absence of which may result in non-identification of deviations from the approved delegation of authority & responsibility, company''s controls & procedures. In as much, they effect the assessment of risks associated and determination of the effect of the deviations of the control being tested and the evidence to be obtained, as well as forming an opinion on the operating effectiveness of the controls.

A ''material weakness’ is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company''s annual or interim financial statements will not be prevented or detected on a timely basis.

We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2017 financial statements of the company, and these material weaknesses do not affect our opinion on the standalone financial statements of the company.

For Rao & Kumar

Chartered Accountants

Firm’s Registration Number 03089S

Anirban Pal

Place : Hyderabad Partner

Date : May 26, 2017 Membership Number 214919

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Mar 31, 2015

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

Management's Responsibility for the Standalone Financial Statements

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

Auditor's' Responsibility

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

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

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reason- able 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 assess- ments, the auditor considers internal financial control relevant to the Company's preparation of the financial state- ments 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 control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the account- ing estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial state- ments.

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

Reference is drawn to Note No.31. Some of the year end balances appearing under the heads referred to therein are subject to confirmation / reconciliation and consequential adjustments. In the absence of (a) Confirmation of Bal- ances; (b) Cause wise analysis of such balances and (c) details of counter claims, if any, from the customers, we are not in a position to ascertain the quantum and its consequential overall impact on the 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 effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid standalone financial state- ments give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015, and its profit and its cash flows for the year ended on that date.

Emphasis of Matters

1) We draw attention to Note 8.1 to Financial Statements which states that interest on delayed payments to parties, registered as MSME under the MSMED Act, 2006, is not provided for, as in the absence of any claim from the said parties, they are reckoned as 'not due' by the company.

2) We draw attention to Note 15.3 to Financial Statements in respect of repudiation, by the Insurers, of a claim made by the company, in respect of which the company had initiated legal action for recovery, the outcome of which is uncertain at this stage.

Our opinion is not qualified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 14 of the Act, we give in the Annexure a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

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

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as 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) 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 except for the disclosure to be made in pursuance of Accounting Standard AS-27, for the reasons detailed in Note No. 34.8.

(e) On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 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 state- ments – Refer Note No. 29 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. As on the date of the Balance Sheet, there was a delay in transferring Un-claimed / Un-paid Dividend amount. The amount of Rs. 2.15 lakhs relating to Financial Year 2006-07 which is required to be trans- ferred, to the Investor Education and Protection Fund in November 2014 was actually transferred by the Company in April 2015.

Annexure referred to in Paragraph 1 of 'Report on Other Legal and Regulatory Requirements in our report of even date :

(i) (a) The Company has maintained year wise details of fixed assets acquired showing the relevant particulars including original cost at the time of acquisition. Based on such record of year wise additions the Company has compiled and built up the Fixed Assets Register showing original costs incurred, identification details etc., location-wise.

(b) The management has carried out physical verification of assets in accordance with a designed programme. During the course of such physical verification certain discrepancies / differences, unserviceable items, scrapped items and non traceable items were noticed and have been properly dealt with in the books of account.

(ii) (a) The Inventories within the factory premises/stores and at branches have been physically verified by the management during the year and also at the year end. For materials lying with ancillary parties confirmations have been obtained in some cases. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory. The discrepancies noticed, upon verification, between physical stocks and book records were not material and such differences have been properly dealt with in the books of account.

(iii) (a) The company has, in the previous years, granted unsecured loans to one of its subsidiaries, the details of which, as on 31-3-2015, are as under:

Name of the Subsidiary Company Balance on Balance on Maximum amount 31.03.2015 31.03.2014 outstanding at any time during the year

(Rs. in Lakhs) (Rs. in Lakhs) (Rs. in Lakhs)

SCIL Infracon (P) Ltd. (SIPL) 424.37 628.77 628.77

(b) As on date an amount of Rs. 424.37 lakhs, representing Loan is overdue. We have been informed Interest on the above loan had been waived with effect from 1-4-2013. We are informed that reasonable steps are being taken by the Management to recover the overdue amounts.

(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 inventory and fixed assets and for the sale of goods and services. However, there is scope for further improving the internal control procedures in the areas relating to review of Vendors / Customers' Balances and Projects in progress. During the course of our audit, no major weaknesses in internal control have been noticed.

(v) The company has not accepted any deposits.

(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 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.

(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 regular in depositing the undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues with the appropriate authorities. Except for Service Tax of Rs.0.68 lakhs no such undisputed amounts payable were in arrears, as at 31.03.15 for a period more than six months from the date they became payable.

(b) According to the information and explanations given to us, the following demands have not been deposited on account of disputes.

Name of Nature of the dues and Period to Amount Forum where the the Statute which it relates in Rs. the Dispute is lakhs as at 31.03.2015

Excise Duty, Interest and Act Penalty on Intermediate goods emerged out of job works and used in the 94.85 Departmental Appeal manufacture of exempted finished goods for before High Court, the period from 1994-95 to 1998-99 Mumbai

Excise Act Penalty levied on Cenvat Credit disallowed for 5.00 Appeal Before the year 2010-11. CESTAT, Bengaluru.

Excise Act Duty, Interest and Penalty for non- maintenance of Pending before separate CENVAT Account with respect to Input Services 186.28 Commissioner, during April 2006 to March 2009. Hyderabad.

Excise Act Appeal against Depar- tmental Order on Refund alleged Appeal Before to be wrongly granted in 2012-13. 24.37 CESTAT, Bengaluru

Excise Act Duty on Job Work Charges Feb-Sept 2012. 20.31 Appeal Before CESTAT, Bengaluru

Excise Act Duty on Job Work Charges Oct 12 - May 2013 27.03 Appeal Before CESTAT, Bengaluru

Excise Act Dispute relating to alleged Irregular availment of Cenvat Credit for the period Dec-08 to Mar 14 and equal 375.92 Appeal being filed amount levied as penalty

Customs Act Dispute relating to alleged evasion of duty by claiming wrong classification and exemption and equal 488.70 Appeal being filed amount levied as penalty.

Service Dispute with regard to Penalty levied on excess Input Pending before Tax Act availed between April 2008 and December 2010. 8.51 Commissione Appeals, Vizag.

CST Act Dispute in Taxable Turnover relating to 3rd party Case pending before exports for the year 2005-06. 35.49 APSTAT.

KVAT Act Dispute with regard to Penalty for stock difference 12.04 Appeal filed before during the year 2010-11. Dy. Commissioner (Appeals), Ernakulam.

TN VAT Act Dispute regarding Input VAT availed and penalty on Appeal filed before Capital Goods which were sold during February 2011. 46.05 Appellate Deputy Commissioner(C), Chennai

AP VAT Act Dispute regarding Input availed on LPG - during 64.47 Appeal filed before 2009-10 Appellate Deputy Commissioner, Hyderabad

AP VAT Act Dispute regarding Input availed on 65.19 Appeal filed before LPG- during 2010-11 Appellate Deputy Commissioner, Hyderabad

AP VAT Act Dispute regarding Input availed on 80.18 Appeal filed LPG- during 2011-12 before Appellate Deputy Commissioner, Hyderabad

AP VAT Act Dispute relating to disallowance of input credit on 107.76 Appeal filed before purchavee of LPG for the year 2012-13 Appellate Deputy Commissioner, Hyderabad

CST Act Dispute in Taxable Turnover relating to 3rd party 36.42 Case pending before exports for the year 2007-08. TSSTAT, Hyderabad

CST, VAT Dispute relating to interest demand for alleged 18.85 Appeal pending and Entry non-payment of assessed tax before Joint tax Acts Commissioner of Commercial Taxes, Appeals, Patna

KVAT Act Dispute relating to tax demanded on alleged undis- closed 29.49 Appeal pending turnover for the year 2011-12 before Deputy Commissioner, Appeals, Ernakulam.

CST Act Dispute relating to tax demanded for alleged 0.56 Appeal pending non-submission of forms for the year 2010-11 before Commissioner Appeals, Lucknow.

Income For Asst. Year 2009-10, disallo- wance made and demand 65.08 Appeal before Tax Act raised Commissioner of Income Tax (Appeals) Pending Dispute total tax was paid.

(c) As on the date of the balance sheet there has been delay in transfer of the amount of Rs. 2.15 lakhs which is required to be transferred to Investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under.

(viii) The company has no accumulated losses and it has not incurred cash losses during the financial year covered by our audit and 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 in repayment of term loan installment and interest dues to financial institutions and Banks. The company had not issued any Debentures.

(x) The Company has not given any guarantee for the loans taken by others from banks or financial institutions.

(xi) Based on review of the records of the term loan drawn and utilization thereof on an overall basis, the loan funds have been applied for the purpose for which the loans were obtained. However, un-applied funds are kept in Fixed Deposit.

(xii) Based upon the audit procedures performed for the purpose of reporting 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 M/s. Satyanarayana & Co. For M/s. Rao & Kumar

Chartered Accountants Chartered Accountants

Firm's Registration Number 03680S Firm's Registration Number 03089S



Ch. Seshagiri Rao S.S.Bharadwaj

Place :Hyderabad Partner Partner

Date :29th May 2015. M.No. 18523 M.No. 26113

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Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

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

Auditors'' Responsibility

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

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

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

Basis for Qualified Opinion

1) Reference is drawn to Note No.30. Some of the year end balances appearing under the heads referred to therein are subject to confirmation/reconciliation and consequential adjustment, the impact of which is not quantifiable by us.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Emphasis of Matters

1) We draw attention to Note 8.1 to Financial Statements which states that interest on delayed payments to parties, registered as MSME under the MSMED Act, 2006, is not provided for, as in the absence of any claim from the said parties, they are reckoned as ''not due'' by the company.

2) We draw attention to Note 15.2 to Financial Statements in respect of repudiation, by the Insurers, of a claim made by the company, in respect of which the company proposes to initiate legal action for recovery, the outcome of which is uncertain at this stage.

Our opinion is not qualified in respect of the above matters.

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. The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the accounting standards notified under the Companies Act, 1956 ("the act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013, except for the disclosure to be made in pursuance of Accounting Standard AS-27, for the reasons detailed in Note No. 31.9.

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

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

Annexure referred to in Paragraph 1 of ''Report on Other Legal and Regulatory Requirements'' in our report of even date :

(i) (a) The Company has maintained year wise details of fixed assets acquired showing the relevant particulars including original cost at the time of acquisition. Based on such record of year wise additions the Company has compiled and built up the Fixed Assets Register showing original costs incurred, identification details etc., location-wise.

(b) The management has carried out physical verification of assets in accordance with a designed programme. During the course of such physical verification certain discrepancies / differences, unserviceable items, scrapped items and non traceable items were noticed and have been properly dealt with in the books of account.

(c) During the year under review, the company had not disposed off any substantial part of its fixed assets affecting the Going Concern.

(ii) (a) The Inventories within the factory premises/stores and at branches have been physically verified by the management during the year and also at the year end. For materials lying with ancillary parties confirmations have been obtained in some cases. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory. The discrepancies noticed, upon verification, between physical stocks and book records were not material and such differences have been properly dealt with in the books of account.

(iii) (a) The company has, in the previous years, granted unsecured loans to one of its subsidiaries, the details of which, as on 31-3-2014, are as under:

Balance on Balance on Maximum amount Sl No. Name of the Subsi -diary 31.03.2014 31.03.2013 outstanding at any time Company
(1) SCIL Infracon (P) Ltd. (SIPL) 628.77 728.80 728.80

(b) According to the information and explanation given to us, the rate of interest and other terms and conditions on which the Company granted the above loans, are not prima facie prejudicial to the interest of the Company.

(c) We are informed that, the period for repayment of the Loan to SIPL together with interest, is extended up to 31-3-2015. As on date an amount of Rs. 628.77 lakhs, representing Loan together with interest, is still due. However no interest has been charged on the above loan for the current year.

(d) In view of the explanations given as above, we are of the opinion that there were no overdue Principal and interest amounts as on 31-03-14.

(e) The Company has taken unsecured loans from its Holding Company and from three of its Director, the details of which are as under:

Balance on Balance on Maximum amount at any Sl No. Borrowed from 31.03.2014 31.03.2013 time during the year (Rs. in Lakhs) (Rs. in Lakhs) (Rs. in Lakhs)

(1) a) Holding Company Interest free unsecured Loan 13,800.00 12,000.00 13,800.00

(2) Holding Company - Interest bearing Unsecured Loan 245.00 Nil 245.00

(3) From 3 Directors 321.00 276.00 321.00

(f) In respect of the above loans the rate of interest (wherever applicable) and other terms and conditions are not prima facie prejudicial to the interest of the Company.

(g) The Company is regular in repayment of principal and interest thereon as per the terms and conditions.

(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 inventory and fixed assets and for the sale of goods and services. However, there is scope for further improving the internal control procedures in the areas relating to review of Vendors / Customers'' Balances. During the course of our audit, no major weaknesses in internal control have been noticed.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made at mutually agreed prices having regard to the explanation that (a) certain items purchased / sold are of special nature for which suitable alternatives do not exist to compare with prevailing market prices and (b) certain transactions are based on commercial considerations.

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

(vii) The Company has engaged the services of external agencies to carry out the internal audit function of the transactions of the Company and the scope and coverage of which is found to be adequate and commensurate with the size of the Company and nature of its business. We also suggest that ''Systems Audit'' of the Company''s Accounting Package be carried out.

(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. We have not, however, made a detailed examination of the same.

ix) (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 regular in depositing the undisputed statutory dues including Provident Fund, Investor Education Protection Fund, Employee''s State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and other material statutory duties applicable to it with appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable under the respective statutes in respect of Provident fund, Investor Education Protection Fund, Employees'' State Insurance, Income Tax, Wealth Tax, Service Tax, Sales Tax, Custom Duty and Excise Duty were in arrears, as at 31.03.14 for a period more than six months from the date they became payable.

(c) According to the information and explanations given to us, the following demands have not been deposited on account of disputes.

Name of the Nature of the dues and Period Amount Forum where the Statute to which it relates Rs.lakhs Dispute is pending

Excise Act Duty, Interest and Penalty on Intermediate 94.85 Departmental Appeal before goods emerged out of job works and used in High Court, Mumbai the manufacture of exempted finished goods for the period from 1994-95 to 1998-99

Excise Act Penalty levied on Cenvat Credit disallowed for 5.00 Appeal Before the year 2010-11 Bengaluru.

Excise Act Duty, Interest and Penalty for non-maintenance 186.28 Pending before Commissioner, of separate CENVAT Account with respect to Input Hyderabad. Services during April 2006 to March 2009.

Excise Act Appeal against Departmental Order on Refund 24.37 Appeal Before CESTAT, alleged to be wrongly granted in 2012-13. Bengaluru

Excise Act Duty on Job Work Charges Feb-Sept 2012. 20.31 Appeal Before CESTAT, Bengaluru

Excise Act Duty on Job Work Charges Oct 12 - May 2013 27.03 Commissioner Appeals, Hyderabad

Service Tax Act Dispute with regard to Penalty levied on excess 2.17 Pending before Commissioner Input availed during April- December 2011. Appeals, Vizag.

Service Tax Act Dispute with regard to Penalty levied on excess 8.51 Pending before Commissioner Input availed between April 2008 and December Appeals, Vizag. 2010.

Sales Tax Act Dispute with regard to Rate of Tax for the year 4.84 Pending before Appellate Dy. 2002-03. Commissioner, Hyderabad.

Sales Tax Act Dispute in Taxable Turnover relating to 3rd party 35.49 Case pending before APSTAT. exports for the year 2005-06.

Sales Tax Act Dispute with regard to Penalty for stock difference 12.04 Appeal filed before Dy. during the year 2010-11. Commissioner (Appeals), Ernakulam.

Sales Tax Act Dispute regarding Input VAT availed and penalty 46.05 Appeal filed before Appellate on Capital Goods which were sold during February Deputy Commissioner(C), 2011. Chennai

Sales Tax Act Dispute regarding Input availed on LPG - during 64.47 Appeal filed before Appellate 2009- 10 Deputy Commissioner, Hyderabad

Sales Tax Act Dispute regarding Input availed on LPG- during 65.19 Appeal filed before Appellate 2010- 11 Deputy Commissioner, Hyderabad

Sales Tax Act Dispute regarding Input availed on LPG- during 80.18 Appeal filed before Appellate 2011- 12 Deputy Commis -sioner, Hyderabad

Sales Tax Act Dispute regarding tax demanded on replacements 9.15 Deputy Commissio -ner Appeals, during 2009-10 Guwahati

Income Tax For Asst. Year 2009-10, disallowance made and 65.08 Appeal before Commissioner demand raised of Income Tax (Appeals). Pending Dispute total tax was paid.

(x) The company has no accumulated losses and it has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of term loan installment and interest dues to financial institutions and Banks.

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

(xiii) The company is not a chit fund or 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) The Company is not dealing in or trading in shares, securities, debentures or other investments. Therefore, the provisions of Clause 4(xiv) of the Companies (Auditor''s report) order, 2003 are not applicable to the Company.

(xv) The Company has not given any guarantee for the loans taken by others from banks or financial institutions.

(xvi) Based on review of the records of the term loan drawn and utilization thereof on an overall basis, the loan funds have been applied for the purpose for which the loans were obtained. However, during the year the Company had not taken any fresh Term Loans.

(xvii) Based on review of the records on an overall basis, funds raised on Short Term Basis have not been used for Long Term Investment.

(xviii) During the year under review, the company has not made any preferential allotment of shares.

(xix) The company has not issued any debentures.

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

(xxi) Based upon the audit procedures performed for the purpose of reporting 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 M/s. Satyanarayana & Co. For M/s. Rao & Kumar

Chartered Accountants Chartered Accountants

Firm''s Registration Number 03680S Firm''s Registration Number 03089S

Ch. Seshagiri Rao S.S.Bharadwaj

Partner Partner

M.No. 18523 M.No. 26113

Place : Hyderabad

Date : 26th May 2014.

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Mar 31, 2011

1. We have audited the attached Balance Sheet of M/s. HBL Power Systems Limited, Hyderabad as at March 31, 2011, the Profit and Loss account, and also the cash flow statement for the period 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 from material misstatements. 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 (CARO) 2003, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956 and on the basis of such checks as we considered necessary and according to the information and explanations given to us, we set out in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Our comments on the financial statements for the year are as under:

a) Reference is invited to Note: 7 of Schedule 20(B) regarding balances appearing under debtors, creditors, advance received / paid which are subject to confirmation / reconciliation and consequential adjustments, the impact of which on these financial statements is not quantifiable by us.

b) Reference is invited to Note 12 of Schedule 20(B) Managerial remuneration: Based on the approval of the members in the AGM held on 27.09.2010, a remuneration of Rs. 25.80 lakhs was paid to the Chairman & Managing Director for the year 2010-11. Due to inadequacy of the profits computed under section 349 read with section 198 of the Companies Act, 1956 and in accordance with the Provisions of Schedule XIII of the Act, the remuneration so paid is subject to the approval / ratification by the members by way of special resolution.

c) Reference is in vited to Note 13 of Schedule 20(B) regarding disclosure made under section 22 of the MSMED Act, 2006 which is as compiled by the management and relied upon by us. Further, the company has neither paid nor provided the applicable interest on such dues from the date the Act came into force and the amount of which is not ascertained. According to the Company there is no accrued liability, which requires provision.

d) Reference is invited to Note 14(1) of Schedule 20(B) regarding non compliance with the disclosure requirements required under AS 27 relating to Company's interests in Assets & Liabilities and Income & Expenses in the Joint Venture Company.

5. Further to our Comments in the annexure referred to in paragraph 3 and subject to our comments given in paragraph 4 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 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 such 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 in subsection 3(c) of Section 211 of the Companies Act 1956, to the extent applicable except the non-compliance with AS-27 referred to above.

e) On the basis of the 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 sections 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 Accounting Policies and Notes forming part of the accounts and further read with our comments given in the annexure referred to in paragraph 3 and subject to comments given in paragraph 4 above, the cumulative impact of which is not quantifiable, 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 affairs of the Company as at March 31, 2011;

ii) In the case of the Profit & Loss Account, of the Profit of the Company 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 referred to in Paragraph 3 of our report of even date :

(i) (a) The Company has maintained year wise details of fixed assets acquired by the divisions showing the relevant particulars including original cost at the time of acquisition and there have been instances of shifting and inter divisional transfer of certain assets after acquisition. However the Company is yet to maintain and update the division wise asset register showing the relevant particulars including the original cost, deprecation provided and the written down value of each asset duly reconciled with financial records and also the identification particulars to facilitate physical verification.

(b) According to the information and explanation given to us physical verification of fixed assets except at branches was carried out during the year by the management and the process of reconciliation including identification of differences / discrepancies is reported to be in progress. In the absence of reconciliation, identification of the differences / discrepancies and quantification thereof, we are not in a position to comment on the amount involved and its impact on the financial statements as on 31.03.2011

(c) The Company has not disposed off fixed assets having, affect on going concern.

(ii) (a) The Inventories within the factory premises/stores and at branches have been physically verified by the management during the year and also at the year end. For materials lying with ancillary parties confirmations have been obtained in some cases. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and book records were not material and such differences have been properly dealt with and physical inventories have been considered and valued for the purpose of financial statements.

(iii) (a) During the year the company has granted unsecured loans to two of its subsidiaries and to an associate company, the amount involved being Rs. 3282.86 lakhs and Rs. 1300.00 lakhs respectively.

(b) According to the information and explanation given to us, the rate of interest and other terms and conditions on which the Company granted the above loans, are not prima facie prejudicial to the interest of the Company.

(c) The above referred loans and interest thereon have not fallen due as on 31.03.2011.

(d) As the above referred loans have not fallen due on 31.03.2011, the question of taking steps for recovery of over dues does not arise.

(e) During the year, the Company has taken unsecured loans from its Holding Company (Rs. 420 lakhs), its Subsidiary Company (Rs. 3000 lakhs) and from a Director of the Company (Rs. 1000 lakhs) and returned the above loans except a balance of Rs. 120 lakhs due to its holding as on 31.03.2011.

(f) In respect of the above loans taken the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

(g) The Company is regular in repayment of principal and interest thereon as per the terms and conditions.

(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 inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weaknesses have been noticed in the internal control in respect of these areas. However, the internal control procedures with regard to (a) review of customers and vendors balances including obtaining balance confirmations to identify the differences and (b) capitalization of assets procured including linking of various components of an identifiable asset and linking of additions the assets already in existence needs to be strengthened.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section, to the extent applicable.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made at mutually agreed prices having regard to the explanation that certain items purchased / sold are of special nature for which suitable alternatives do not exist to compare with prevailing market prices.

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

(vii) The company has appointed three firms of chartered accountants to carry out the internal audit function of the transactions of the company and the scope and coverage of which is generally found to be adequate. We suggest that 'systems audit' of the Company's accounting package be carried out and also suggest that proper internal audit system be introduced to cover increasing number of activities and transactions at branches. Further, in our opinion, the scope and coverage of internal audit in the areas of review and reconciliation of vendors/customers accounts and accounting of different components of fixed assets needs to be strengthened to be 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 and we 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) 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 regular in depositing the undisputed statutory dues including Provident Fund, Investor Education Protection Fund, Employee's State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and other material statutory duties applicable to it with appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable under the respective statutes in respect of Provident fund, Investor Education Protection Fund, Employees' State Insurance, Income Tax, Wealth Tax, Service Tax, Sales Tax, Custom Duty and Excise Duty were in arrears, as at 31.03.11 for a period more than six months from the date they became payable except sales tax of Rs. 45.25 lakhs.

(c) There were no dues payable on account of Cess under Section 441A of the Companies Act, 1956, since the date from which the aforesaid section comes into force has not yet been notified by the Central Government.

(d) According to the information and explanations given to us, the following demands have not been deposited on account of disputes:

Name of the Nature of the dues Amount Forum where the Statute in Rs. Dispute is pending lakhs

Excise Act Duty on Intermediate goods 94.85 Departmental Appeal emerged out of job works before High Court, and used in the manufacture Mumbai of exempted finished goods.

Customs Act Classification of goods 4.71 CESAT- Bangalore

Classification of goods 31.96 Dy. Commissioner, Chennai

Sales Tax Differential Tax 4.84 Addl. Commissioner Act of Commercial Taxes, Hyderabad.

(x) The company has no accumulated losses and it has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions and Banks.

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

(xiii) The company is not a chit fund or 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) The Company is not dealing in or trading in shares, securities, debentures or other investments. Therefore, the provisions of Clause 4(xiv) of the Companies (Auditor's report) order, 2003 are not applicable to the Company.

(xv) The Company provided security by way of marking a lien on its own deposits with the banks to the extent of ? 470 lakhs to cover the margin money against a loan facility sanctioned to M/s. Sankya Infotech Ltd., an associate company. In our opinion, the terms and conditions are prima facie not prejudicial to the interest of the Company.

(xvi) Based on our review of the records, sources and application of funds and term loan drawn and utilization thereof on an overall basis, the loan funds to the extent utilized were prima-facie applied for acquiring fixed assets and unutilized amount of Rs. 49.43 crores was kept in current account with the banks. Our review revealed that out of the term loans drawn, a sum of Rs. 69.88 crores was transferred to working capital loan accounts and a sum of Rs. 20.60 crores was utilized for payment of interest on certain old term loans. Thus, in our opinion, Rs. 90.48 crores was utilized for the purposes which were outside the scope of term loans.

(xvii)During the accounting period covered by our report, the Company raised term loans to the extent of Rs. 146.10 crores (Net of Rs. 90.48 crores referred to above and increase in unutilized funds of Rs. 28.30 crores kept in current accounts on 31.03.2011) and also generated internal accruals of Rs. 37.89 crores considered as long term sources, aggregating to Rs. 183.99 crores. The Company utilized Rs. 241.56 crores for fixed assets and long term investments and also repaid term loan instalments of Rs. 45.20 crores, aggregating to Rs. 286.56 crores.

We are of the opinion that the Company has applied Rs. 102.77 crores being the difference between sources and utilization out of short term funds of the Company.

(xviii)During the year under review, the company has not made any preferential allotment of shares to any parties and companies covered in the register maintained under section 301 of the Act.

(xix) The company has not issued any debentures.

(xx) During the year 2009-10 the company has made preferential allotment of shares to the parties not covered in the register maintained under section 301 of the Act and raised funds amounting to Rs. 3469.51 Lakhs and the Company disclosed the utilization of the funds raised vide Note 1(ii) of Schedule 20(B) and the same has been verified.

(xxi) Based upon the audit procedures performed for the purpose of reporting 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 Satyanarayana & Co., Chartered Accountants (Firm Registration No.: S3680)

Ch Seshagiri Rao Partner Membership No. 18523 Place: Hyderabad Date: 30-05-2011

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Mar 31, 2010

1. We have audited the attached Balance Sheet of M/s. HBL Power Systems Limited, Hyderabad as at March 31, 2010, the Profit and Loss account, and also the cash flow statement for the period 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 from material misstatements. 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. Attention is invited to Note: 14 of Schedule 20 (B) regarding changes in the Accounting policies with retrospective effect and the resultant impact on the accounts disclosed in the notes referred to.

4. As required by the Companies (Auditors Report) Order (CARO) 2003, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956 and on the basis of such checks as we considered necessary and according to the information and explanations given to us, we set out in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

5. Our comments on the financial statements for the year are as under:

a) Reference is invited to Note: 9 of Schedule 20(B) regarding balances appearing under Debtors, Creditors, advance received / paid which are subject to confirmation / reconciliation and consequential adjustments, the impact of which on these Financial Statements is not quantifiable by us.

b) Reference is invited to Note 12 of Schedule 20(B); In terms of approval received from Central Government u/sec.314(B) of the Companies Act, 1956, the company has to recover Rs.24.47 lakhs being the excess remuneration paid for the period from 1.10.2007 to 20.08.2009 to relative of Directors which has not been recovered and kept in abeyance for the reasons stated in the Note referred to.

c) Reference is invited to Note 13 of Schedule 20(B) regarding disclosure made under section 22 of the MSMED Act, 2006 which is as compiled by the management and relied upon by us. Further, the company has neither paid nor provided the applicable interest on such dues from the date the Act came into force and the amount of which is not ascertained.

d) Reference is invited to Note 15(I) of Schedule 20(B) regarding Joint Venture Companies and non compliance with the disclosure requirements as required under A.S.27 relating to Companys interests in Assets & Liabilities and Income & Expenses in the Joint Venture Companies.

6. Further to our Comments in the annexure referred to in paragraph 4 and subject to our comments given in paragraph 5 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 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 such 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 in sub section 3(c) of Section 211 of the Companies Act 1956, to the extent applicable except the non-compliance with AS-27 referred to above.

e) On the basis of the written representations received from the directors as on 31st March, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of sections 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 Accounting Policies and Notes forming part of the accounts and further read with our comments given in the annexure referred to in Paragraph 4 and subject to comments given in Paragraph 5 above, the impact of which is not quantifiable, 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 affairs of the Company as at March 31, 2010;

ii) In the case of the Profit & Loss Account, of the Profit of the Company 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 referred to in Paragraph 4 of our report of even date : (i) (a) The Company has maintained yearwise details of Fixed Assets acquired location wise showing relevant particulars including original costs capitalized at the time of initial acquisition. Subsequent to acquisition, there have been shifting and interdivisional transfers of Assets. However, the Company has not maintained or updated the assets register as requried showing location wise details recording the shifting / transfers, Asset wise depreciation and its written down value and other relevant particulars / identification details to facilitate physical verification.

(b) The Fixed assets have not been physically verified by the management. In the absence of physical verification, we are not in a position to comment on the discrepancies, if any, between physical and book balances and the impact thereof.

(c) The Company has not disposed off of fixed assets having, affect on going concern.

(ii) (a) The Inventories within the factory premises/stores have been physically verified by the management during the year and also at the year end. For material, lying with ancilliary parties confirmations have been obtained in some cases. In our opinion, the frequency of verification is reasonable.

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

(c) In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and book records were not material and such differences have been properly dealt with and physical inventories have been considered and valued for the purpose of financial statements.

(iii) (a) The company has not granted any advances in the nature of Loan, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(b) The Company gave an unsecured loan of Rs.500 Lakhs to a Company (not covered within the scope of Section 301 of the Companies Act, 1956) by way of Inter Corporate Deposit, the rate of interest and other terms and conditions of which are not prima facie, prejudicial to the interest of the Company.

(c) The above referred Inter Corporate Deposit and interest thereon has not fallen due as on 31.03.10.

(d) As the above referred Inter Corporate Deposit has not fallen due on 31.03.10, the clause relating to steps taken for recovery of the principal and interest on over dues of more than one lakh is not applicable to the company.

(e) The Company has not taken any loans from Companies, Firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(f) As the Company has not taken any loans from such parties the clause relating to rate of interest and other terms and conditions is not applicable to the Company.

(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 inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness have been noticed in the internal control in respect of these areas. However, the internal control procedures with regard to (a) capitalisation of Assets including linking the additions to the assets already in existence, (b) review and reconciliation of book balances of customers / vendors and (c) compliance with Input VAT / Service Tax procedures, needs to be strengthened considering the increasing volume of business and transactions.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section, to the extent applicable.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made at mutually agreed prices having regard to the explanation that certain items purchased / sold are of special nature for which suitable alternatives do not exist to compare with prevailing market prices.

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

(vii) The company has during the year appointed three firms of Chartered Accountants to carry out the Internal audit function of the transactions of the Company. In our opinion, the scope and coverage of Internal audit in the areas of review and reconciliation of vendors/customers accounts and accounting of different components of Fixed Assets needs to be strengthened to be 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 and we 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) 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 regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and other material statutory duties applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident fund, Investor Education Protection Fund, Employees State Insurance, Income Tax, Wealth Tax, Service Tax, Sales Tax, Custom Duty and Excise Duty were in arrears, as at 31.03.10 for a period more than six months from the date they became payable except sales tax of Rs.83.19 lakhs.

(c) There were no dues on account of Cess under Section 441A of the Companies Act, 1956, since the date from which the aforesaid section comes into force has not yet been notified by the Central Government.

(d) According to the information and explanations given to us, the following demands have not been deposited on account of disputes.

Name of the Statute Nature of the dues Amount Forum where the Dispute Rs. in Lakhs is pending

Excise Act 1944 Claim for duty on Intermediate 94.85 Departmental Appeal goods emerged out of jobworks before High Court, and used in the manufacture of Mumbai exempted Finished Goods.

Customs Act Classification of goods 4.71 CESAT – Bangalore

Classification of goods 31.96 Dy. Commissioner, Chennai

(x) The company has no accumulated losses and it has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions and Banks.

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

(xiii) The company is not a chit fund or 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) The Company is not dealing in or trading in shares, securities, debentures or other investments. Therefore, the provisions of Clause 4(xiv) of the Companies (Auditors report) order, 2003 are not applicable to the Company.

(xv) The company has given guarantee for loan sanctioned to a Joint Venture Company by Bank amounting to Rs.927.13 lakhs, the terms and conditions of which are prima facie, not prejudicial to the interest of the company. The company also gave a corporate guarantee for USD 11,86,808 (equivalent to Rs.532.88 lakhs) to a foreign company towards Trade advances paid to the said Joint Venture Company.

(xvi) According to the explanations and information given by the Company and on the basis of the records examined by us and on the basis of review of utilisation of funds pertaining to term loans on an over all basis, the term loans raised by the company to the extent utilised were prima facie 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 are of the opinion that funds raised on short term basis have not been used for long term investment.

(xviii) During the year under review, the company has not made any preferential allotment of shares to any parties and companies covered in the register maintained under section 301 of the Act.

(xix) The company has not issued any debentures.

(xx) During the year the company has raised funds by way of preferential allotment amounting to Rs.3469.51 Lakhs including a premium of Rs.3367.47 Lakhs and the Company disclosed the utilization of the funds raised and the same has been verified.

(xxi) Based upon the audit procedures performed for the purpose of reporting 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 Satyanarayana & Co.,

Chartered Accountants

(Firm Registration No.: S-3680)

Ch Seshagiri Rao

Place : Hyderabad Partner

Date : 29th May, 2010 Membership No. 18523