Action Construction Equipment

We have audited the attached Balance Sheet of Action Construction
 Equipment Limited as at 31st March, 2009, the Profit and Loss Account
 and Cash Flow Statement of the Company for the year ended on that date
 annexed thereto. These financial statements are the responsibility of
 the Companys management. Our responsibility is to express an opinion
 on these Financial Statements based on our audit.
 
 We have conducted our audit in accordance with Auditing Standards
 generally accepted in India. These Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements.  An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 As required by the statement on the Companies (Auditors Report) order,
 2003 issued by the Central Government of India in terms of sub-section
 (4A) of Section 227 of the Companies Act, 1956, we enclose in the
 Annexure, a statement on the matters specified in paragraphs 4 and 5 of
 the said Order.
 
 Further to our comments in the Annexure referred to above, we report
 that:
 
 a.  We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 b.  In our opinion, proper books of account as required by law have
 been kept by the Company so far as appears from our examination of
 those books;
 
 c.  The Balance Sheet and Profit & Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 d.  In our opinion, the Balance Sheet, Profit and Loss Account and the
 Cash Flow Statement dealt with by this report comply with the
 Accounting Standards referred to in sub-section (3C) of Section 211 of
 the Companies Act, 1956;
 
 e.  On the basis of written declaration received from the Directors, as
 on 31st March, 2009, and taken on record by the Board of Directors we
 report that none of the Directors is disqualified as on 31st March,
 2009, from being appointed as a director in terms of clause (g) of
 sub-section(l) of section 274 of the Companies Act, 1956;
 
 f.  In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements read
 together with the significant accounting policies and notes thereon
 give the information required by the Companies Act, 1956, in the manner
 so required and give a true and fair view in conformity with the
 accounting principles generally accepted in India;
 
 i.  in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2009,
 
 ii.  in the case of the Profit & Loss Account, of the profit for the
 year ended on that date and,
 
 iii.  In the case of the Cash Flow Statement, of the cash flow of the
 company for the year ended on that date.
 
 ANNEXURE TO THE AUDITOR REPORT
 
 The Annexure referred to in the Auditors Report to the Members of
 Action Construction Equipment Limited for the year ended March 31,
 2009.
 
 We report that:
 
 (I) (a) The company has generally maintained proper records showing
 full particulars including quantitative details and situation of fixed
 assets.
 
 (b) According to the information and explanations given to us, there is
 a regular programme of verification of fixed assets which, in our
 opinion, is reasonable having regard to the size of the company and the
 nature of its assets. The management dv. ring the year has physically
 verified fixed assets and no material discrepancies were noticed on
 such verification.
 
 There was sale of Plant & Machineries worth Rs.  289.44 lac and
 Vehicles worth Rs. 33.71 lac during the year. Though, if we compare
 with total value of fixed assets, it is not substantial.
 
 (II) According to the information and explanations given to us, the
 inventory of stores and spares were physically verified by the
 Management.
 
 In our opinion and according to the information and explanations given
 to us, the procedures of physical verification of inventory followed by
 the Management are reasonable and adequate in relation to the size of
 the Company and nature of its business.
 
 According to the information and explanations given to us, no material
 discrepancies have been noticed on physical verification of stock of
 stores and spares as compared to the books and records.
 
 (III) The Company has neither granted nor taken any loans secured or
 unsecured, to or from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 
 (IV) In our opinion ,and according to information and explanations
 given to us, there is adequate internal control procedure commensurate
 with the size of the company and the nature of its business for the
 purchase of inventory and fixed assets and for the sale of goods.
 During the course of our audit no major weakness has been noticed in
 the internal controls.
 
 (V) On the basis of our examination of the books of accounts, the
 transactions in respect of any party during the financial year that
 needs to be entered in the register pursuant to the section 301 of the
 Companies Act, 1956 have so been entered.
 
 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, in respect of any
 party, during the year have been made at the prices which are
 reasonable having regard to prevailing market prices at the relevant
 time.
 
 (VI) The company has not accepted any deposits from the public during
 the year and consequently, the directive issued by the Reserve Bank of
 India and the provisions of section 58A and 58AA of the Companies Act,
 1956, and the rules framed there under are not applicable.
 
 (VII) In our opinion, the companys internal audit system is
 commensurate with its size and nature of its activities. However, it
 requires further strengthening due to increase in the activities of the
 company in recent past.
 
 (VIII) According to the records of the company, the company is
 generally regular in depositing undisputed statutory dues including
 Provident fund, Income tax, Wealth Tax, Fringe Benefit tax, Sales tax,
 Custom duty, Excise duty, Cess, Service tax and any other statutory
 dues with the appropriate authorities. According to the information and
 explanations given to us, no undisputed amounts payable in respect of
 Provident fund, Income tax, Wealth Tax, Sales tax, Custom duty, Excise
 duty, Cess, Service tax and any other statutory dues were outstanding
 at the year end for a period of more than six months from the date they
 become payable.
 
 (IX) The company has no accumulated losses at the end of the financial
 year and it has not incurred any cash losses in the current and
 immediately preceding financial year.
 
 (X) Based on our audit procedure and on the information and
 explanations given by the management, we are of the opinon that the
 company has not defaulted in repayment of dues to any financial
 Institution and Bank.
 
 (XI) In our opinion, the company has not granted loans and advances on
 the basis of security by way of pledge of shares and other securities;
 hence this point of order is not applicable.
 
 (XII) The provisons of any special statute applicable to a chit fund,
 ridhi, mutual benefit fund or a society are not applicable to this
 company.
 
 (XIII) According to the information and explanations given to us, the
 company is not dealing or trading in shares, securities, debenture and
 other investments.
 
 (XIV) The company has not issued corporate guarantee in favour of Binks
 and financial institutions.
 
 (XV) According to the information & explanations given to us the term
 loans have been applied for the purpose for which obtained.
 
 (XVI) The company has not made any preferential allotment of shares to
 parties or companies covered in the register maintained under section
 301 of the Companies Act, 1956.
 
 (XVII) The company has not issued any debentures during the year, he
 ace this point of order is not applicable.
 
 (XVHI)The Cost Records are not required to be maintained by the
 Company.
 
 (XIX) Management has disclosed the end use of money raised by the
 public issue, (to the extent utilized) and the same has been verified
 by us (Note no B -1 of Schedule 16 of Balance Sheet).
 
 (XX) According to the information and explanations given to us, no
 fraud on or by the company has been noticed or reported during the
 year.
 
 
                                              For Rajan Chhabra & Co.  
                                              Chartered A\ccountants
 
                                                     (Rajan Chhabra) 
 Place: Faridabad                                        Proprietor
 Dated: 28th May, 2 309                        Membership No.088276