1.  We have audited the attached Balance Sheet of AIA ENGINEERING
 LIMITED as at 31st March, 2011, and also the Profit and Loss Account
 and the Cash Flow Statement for the year ended on that date annexed
 thereto. These Financial Statements are the responsibility of the
 Company''s management. Our responsibility is to express an opinion on
 these Financial Statements based on our audit.
 
 2.  We conducted our audit in accordance with the auditing standards
 generally accepted in India. Those standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 Financial Statements are free of material misstatement.  An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the Financial Statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall Financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 as
 amended by the Companies (Auditor''s report) Order, 2004 (hereinafter
 referred to as ‘the Order'') issued by the Central Government of India
 in terms of sub-section (4A) of Section 227 of the Companies Act, 1956,
 we enclose in the Annexure, a statement on the matters specified in
 paragraphs 4 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that;
 
 i. We have obtained all the information and explanations which to the
 best of our knowledge and belief were necessary for the purpose of our
 audit;
 
 ii. In our opinion, proper books of accounts as required by law have
 been kept by the Company so far as appears from our examination of
 those books;
 
 iii. The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this Report are in agreement with the books of account;
 
 iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with this Report comply with the Accounting
 Standards referred to in Sub-section (3C) of Section 211 of the
 Companies Act, 1956;
 
 v.  Without qualifying our opinion, we draw attention to:
 
 Note 9 of Schedule 16 regarding derivatives contracts entered into by
 the Company to hedge Foreign Currency Risk, the notional Marked - to –
 Market loss on these unexpired contracts as on 31st March, 2011
 amounting to Rs. 128.22 Millions has not been considered in the Financial
 Statements.
 
 vi. On the basis of written representations received from the
 Directors, as on 31st March, 2011 and taken on record by the Board of
 Directors, we report that none of the Directors is disqualified as on
 31st March, 2011 from being appointed as a Director in terms of Clause
 (g) of Sub-Section (1) of Section 274 of the Companies Act, 1956;
 
 vii. In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts give the information
 required by the Companies Act, 1956, in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India;
 
 (a) In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011.
 
 (b) In the case of the Profit and Loss Account, of the profit for the
 year ended on that date.
 
 (c) In the case of the Cash Flow statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 (Referred to in paragraph 3 of our report of even date)
 
 (i) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) Majority of the assets have been physically verified by the
 management during the year and there is a regular programme of
 verification which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. No material
 discrepancies were noticed on such verification.
 
 (c) During the year, the Company has not disposed off any substantial
 part of the Fixed Assets and hence in our opinion going concern is not
 affected.
 
 (ii) (a) The inventory has been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 (b) The procedures of physical verification of inventories followed by
 the management are reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 (c) On the basis of our examination of the records of the Company, we
 are of the opinion that the Company is maintaining proper records of
 inventory. The discrepancies noticed on verification between the
 physical stocks and the book records were not material.
 
 (iii) (a) During the year, the Company has granted unsecured loan to
 one Company covered in the register maintained under Section 301 of the
 Companies Act, 1956. The maximum amount involved in the transactions
 during the year was Rs. 64.90 Millions and the year end balance of loan
 granted to this Company was Rs. 63.00 Millions.
 
 (b) As per the information and explanations given and records produced
 before us, the rate of interest and other terms and conditions of loans
 given by the company are not prima facie prejudicial to the interest of
 the company.
 
 (c) As per information and explanations given and records produced
 before us, the receipt of interest is as per terms and conditions.
 There is no schedule for recovery of principal amount and the same
 shall be received on demand.
 
 (d) As per the information and explanations given and records produced
 before us, there is no overdue amount, hence this clause is not
 applicable.
 
 (e) The Company has not taken any Loans, secured or unsecured, from
 Companies, firms or other parties covered in the Register maintained
 u/s 301 of the Companies Act, 1956. Consequently, Clause (iii) (f) and
 (iii) (g) of Paragraph 4 of the Order are not applicable.
 
 (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 with regard to purchase of inventory, fixed assets and with
 regard to the sale of goods. During the course of our audit, no major
 weaknesses have been noticed in the internal controls.
 
 (v) (a) Based on the audit procedures applied by us and according to
 the information and explanations provided by the management, we are of
 the opinion that the transactions that need to be entered into the
 register maintained under Section 301 have been so entered.
 
 (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 have
 been made at prices which are reasonable having regard to the
 prevailing market prices at the relevant time.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposit from the public
 and hence the provisions of Section 58A and 58AA or any other relevant
 provisions of the Companies Act, 1956 and the Companies (Acceptance of
 Deposits) Rules, 1975 with regard to the deposits accepted from the
 public are not applicable to the Company.
 
 (vii) The Company has appointed a firm of Chartered Accountants as its
 Internal Auditor for the year under audit. The Internal Audit for the
 year is therefore carried out by the said firm. In our opinion, the
 Company has an internal audit system commensurate with the size and
 nature of its business.
 
 (viii) The Central Government has not prescribed maintenance of cost
 records under section 209(1)(d) of the Companies Act, 1956.  Therefore
 the provisions of this Clause of the Order are not applicable to the
 Company.
 
 (ix) (a) According to the records of the Company, the Company is
 generally regular in depositing with appropriate authorities undisputed
 statutory dues including Provident Fund, Employees State Insurance,
 Income-Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Cess and
 other Statutory Duties applicable to it. There are no undisputed
 Statutory Dues as referred to above as at 31st March 2011 outstanding
 for a period of more than six months from due date they become payable.
 
 (b) According to the information and explanations given to us, details
 of dues of Income Tax, Excise Duty, Service Tax and Sales Tax which
 have not been deposited on account of any dispute are given below:
 
 Name of the 
 statute        Nature of dues  Amt. under  Periods to  Forum where the
                                dispute not  which the  dispute is 
                                                        pending
                                yet 
                                deposited      amount
                               (Rs. Millions)   relates
 
 Income Tax 
 Act 1961       Income Tax 
                including           0.88       2003-04  CIT (Appeals)
                interest as 
                applicable          4.58       2005-06  ITAT
 
                                  110.07       2006-07  CIT (Appeals)
 
 The Central 
 Excise Act 
 1944           Excise Duty 
                including 
                interest            8.28       2003-04  CESTAT
                and penalty as 
                applicable          0.14       2005-06  Commissioner 
                                                       (Appeals)
 
                                    0.06       2006-07  Commissioner 
                                                        (Appeals)
 
                                    0.75       2007-08  CESTAT
 
 Service 
 Tax Act       Service Tax 
               including interest  10.66       1997-98  Asstt. 
                                                        Commissioner
               and penalty as
               applicable                    to 2002-03
 
                                  125.49        2006-07 CESTAT
                                              & 2007-08
 
                                    0.10        2007-08 CESTAT
 
                                    2.04        2008-09 CESTAT
 
                                    0.09        2009-10  Asstt. 
                                                         Commissioner
 
 Sales Tax    Sales Tax / 
              Central Sales Tax     5.43        2003-04  Deputy 
                                                         Commissioner of
                                                         Commercial Tax
                                                        (Appeals)
                                    1.98        2004-05
 
 (x) The Company does not have any accumulated losses at the end of the
 Financial year. The Company has not incurred cash losses during the
 Financial year covered by our audit and the immediately preceding
 Financial year.
 
 (xi) Based on our audit procedures and on the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to the banks.
 
 (xii) In our opinion and according to the explanations given to us, the
 Company has not granted any loans against security by way of pledge of
 Shares, Debentures and other Securities. Therefore the provisions of
 this Clause of the Order are not applicable to the Company.
 
 (xiii) The Company is not a chit fund/ nidhi /mutual benefit
 fund/society. Therefore, the provisions of this clause of the Order are
 not applicable to the Company.
 
 (xiv) The Company is not dealing in or trading in shares, securities,
 debentures and other investments. Therefore, the provisions of this
 Clause of the Order are not applicable to the Company.
 
 (xv) In our opinion the Company has provided Guarantees for Non-fund
 based limits taken by others from Banks. According to the information
 and explanations given to us, we are of the opinion that the terms and
 conditions thereof are not prejudicial to the interest of the Company.
 
 (xvi) According to the information and explanations given to us, the
 Company did not have any Term Loan outstanding during the year under
 audit.
 
 (xvii) Based on 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 no funds raised on short-term basis have been used for
 long-term investment by the Company.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties covered in register under Section 301 of the Companies Act,
 1956.
 
 (xix) During the period covered by our audit report, the Company has
 not issued any debentures. Accordingly, the provision of clause
 
 (xix) of the Companies (Auditors'' Report) Order, 2003 are not
 applicable to the Company.
 
 (xx) We have verified the end use of money raised by Qualified
 Institutions Placement (QIP) and has been disclosed in the Note No 1 to
 Notes forming part of accounts.
 
 (xxi) Based on the audit procedures performed and representation
 obtained from management we report that, no case of fraud on or by the
 Company has been noticed or reported for the year under audit.
 
                                                For TALATI & TALATI
 
                                              Chartered Accountants
 
                                            (Firm Regn. No. 110758W)
 
                                                      (Anand Sharma)
 
 Place :AHMEDABAD                                           Partner
 
 Date :30th May, 2011                         Membership No. 129033