1.  We have audited the attached Balance Sheet of AIA ENGINEERING
 LIMITED as at 31st March, 2012, and also the Statement of Profit and
 Loss and the Cash Flow Statement for the year ended on that date
 annexed thereto. These Financial Statements are the responsibility of
 the Company''s management. Our responsibility is to express an opinion
 on these Financial Statements based on our audit.
 
 2.  We conducted our audit in accordance with 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 in paragraph 3
 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, Statement of Profit and Loss and Cash Flow
 Statement dealt with by this Report are in agreement with the books of
 account;
 
 iv. In our opinion, the Balance Sheet, Statement of Profit and Loss 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 No.33 regarding derivatives contracts entered into by the Company
 to hedge Foreign Currency Risk, the notional Mark - to – Market loss on
 these unexpired contracts as on 31st March, 2012 amounting to Rs.829.86
 Lacs has not been considered in the Financial Statements.
 
 Further the Company has hitherto been accounting for export benefits on
 receipts basis i.e. as and when utilised/sold.  During the year the
 Company changed its method of accounting from receipts to accrual, as a
 consequence of this, current year export incentive income and profit is
 higher by Rs.3,233.34 Lacs.
 
 vi. On the basis of written representations received from the
 Directors, as on 31st March, 2012 and taken on record by the Board of
 Directors, we report that none of the Directors is disqualified as on
 31st March, 2012 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, 2012.
 
 (b) In the case of the Statement of Profit and Loss, 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 Fixed 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.691.80 Lacs and the year end balance of loan
 granted to this Company was Rs.691.80 Lacs.
 
 (b) As per the information and explanations given and records produced
 before us, the rate of interest and other terms and conditions of loan
 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
 under Section 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 of
 the Companies Act, 1956 and exceeding the value of Rs. 5 Lacs in respect
 of each party during the year 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) We have broadly reviewed the Cost Records maintained by the
 Company pursuant to Companies (Cost Accounting Records) Rules, 2011
 prescribed by the Central Government under Section 209(1)(d) of the
 Companies Act, 1956 and are of the opinion that prima facie the
 prescribed Cost Records are maintained. We have, however, not made a
 detailed examination of the Cost Records with a view to determine
 whether they are accurate or complete.
 
 (ix) (a) According to the records of the Company, the Company is
 generally regular in depositing with appropriate authorities undisputed
 statutory dues including Provident Fund, Investor Education and
 Protection 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, 2012 outstanding for a period of more than six
 months from due date they become payable.
 
 Further, since the Central Government has till date not prescribed the
 amount of Cess payable under section 441A of the Companies Act, 1956,
 we are not in a position to comment upon the regularity or otherwise of
 the Company in depositing the same.
 
 (b) According to the information and explanations given to us, 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
                                                dispute not yet
                                                deposited As on
                                                31st March, 2012
                                               (Rs. Lacs)
 
 Income Tax Act, 1961   Income Tax including            6.74
                        interest as applicable         24.58
                                                        4.52
                                                      832.82
                                                      883.10
                                                      132.73
 
 The Central Excise 
 Act, 1944              Excise Duty including          63.04
                        interest and penalty as
                        applicable
                                                      130.70
 
                                                       82.82
 
                                                       23.56
 
                                                        6.34
 
 Finance Act, 1994      Service Tax including 
 (Service Tax)          interest and penalty          106.61
                        as applicable
                                                    1,254.94
 
                                                        2.08
 
                                                       19.29
 
                                                        4.87
 
 Central Sales Tax 
 Act, 1956 and Sales    Sales Tax / Central
 Tax Act, of            Sales Tax                      49.00
 various States
                                                       19.76
 
 
 
 
 Name of the statute      Periods to      Forum where the
                          which the       dispute is pending
                          amount
                          relates
                         (F.Y.)
 
 Income Tax Act,1961      1998-99           Dy. Comm.
 
                          2000-01           Dy. Comm.
 
                          2005-06           ITAT
 
                          2006-07           CIT (Appeal)
 
                          2007-08           CIT (Appeal)
 
                          2008-09           Dy. Comm.
 
 The Central Excise       2001-2003         High Court
 Act,1944
                          2002-2005         CESTAT
 
                          2003-2004         CESTAT
 
                          2005-2009         Comm. (Appeal)
 
                          2006-2010         Comm. (Appeal)
 
 Finance Act,1994         1997-98           Commissioner (Appeal)
 (Service Tax)            to                returned to Asstt.
                          2002-03           Commissioner
 
                          2006-07           CESTAT
                          & 2007-08
 
                          2005-07           CESTAT
 
                          2008-09           CESTAT
 
                          2009-10           Asstt. Comm.
 
 Central Sales Tax Act,   2003-04           Deputy Commissioner of
 1956 and Sales Tax                         Commercial Tax (Appeal)
 Act,of Various States
                          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 has not raised any Term Loan 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, provisions of this clause of
 the Order are not applicable to the Company.
 
 (xx) The Company has not raised any monies by way of Public / QIP /
 Right Issues during the year.
 
 (xxi) Based on the audit procedures performed and representation
 obtained from management we report that, no case of material 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, 2012                         Membership No. 129033