1.  We have audited the attached balance sheet of M/s. Easun Reyrolle
 Limited, as at 31st March 2011, and also the profit and loss account
 and Cash Flow statement for the year ended on diat 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 die auditing standards
 generally accepted in India.  Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whedier the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by the management, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003, as
 amended by the Companies (Auditor''s Report) (Amendment) Order, 2004
 issued by the Central Government of India in terms of Section (4A) of
 Section 227 of the Companies Act, 1956 (Act) and on the basis of such
 checks as we considered appropriate and according to the information
 and explanations given to us we set out in die annexure a statement on
 the matters specified in paragraph 4 and 5 of the said order.
 
 4.  Further to our comments in the annexure referred to in paragraph 3
 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, 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 read together with notes thereon and dealt with by this
 Report have been prepared in all material respects, in compliance with
 the Accounting Standards, referred to in Sec. 211(3C) of the Companies
 Act, 1956 to the extent;
 
 e) On the basis of explanations and information given to us and 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;
 
 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
 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:
 
 (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 the date.
 
 Annexure to the Auditors'' report referred to in paragraph 3 of our
 report of even date
 
 i.  The Company has maintained proper records showing full particulars,
 including quantitative details and situation of Fixed Assets. These
 Fixed Assets have been physically verified by the Management on a
 regular programme, which however, in our opinion needs to be
 strengthened further having regard to the size of die Company and
 nature of Assets. No significant discrepancies were noticed on such
 verification. Fixed Assets disposed off during the year were not
 substantial.
 
 ii.  a) The stock of Finished Goods, stores and spare parts and raw
 materials except stock lying with third parties, for which confirmation
 have been sought for, have been physically verified at the year end by
 the Management.
 
 b) The procedures of physical verification of inventories for the year
 under review followed by the Management are reasonable and adequate in
 relation to the size of the Company and the nature of its business.
 
 c) The Company is maintaining proper records of inventory. No material
 discrepancies have been noticed on physical verification of stock as
 compared to the book records.
 
 iii. a) During the year except a sum of Rs. 15,21,23,000 granted as
 loan carrying interest at 10 % p.a., which has been returned with
 interest subsequent to close of the year, other loans granted to wholly
 owned subsidiary are interest free. Further the Company has not granted
 any loans, secured/unsecured to companies, firms or other parties
 covered in the register maintained under Section 301 of the Companies
 Act, 1956, the terms of advance given are not prima facie prejudicial
 to the interests of the company. In the absence of any specific terms
 as regards the term of advance and repayment of the advances given, we
 are unable to comment on the same. The details of the same are given in
 Note no 15 in the notes forming part of accounts.  
 
 b) The Company has not taken loans, secured or unsecured, from
 companies, firms or other parties listed in the register required to be
 maintained under Section 301 of the Companies Act, 1956.
 
 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 and Services. During the course of audit we
 have not observed any continuing failure to correct major weaknesses in
 internal controls.  
 
 v.  a) Based on audit procedures applied by us and according to the
 information and explanations provided by the Management, the
 transactions that needed to be entered in the register maintained under
 Section 301 of the Companies Act, 1956 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 die register maintained under Section 301 of
 the Companies Act, 1956, have been made at 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 and
 consequendy, the provisions of Section 58A, 58AA or any other relevant
 provisions of the Companies Act, 1956 are not attracted.
 
 vii.  The company has an Internal Audit System, which in our opinion is
 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 for any of
 the products of the Company.
 
 ix.  a) According to the records of the company, the company has been
 regular in depositing the undisputed statutory dues relating to
 Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax,
 Service Tax, Investor Education and Protection Fund, Customs Duty and
 Excise duty during the year with the appropriate authorities.
 
 b) According to the information and explanations given to us, there are
 no undisputed amounts payable in respect of Income Tax, Sales Tax,
 Wealth Tax, Service Tax, Excise Duty, Cess and Customs Duty which are
 outstanding as at 31st March, 2011 for a period of more than six months
 from the date they became payable.
 
 c) According to the records of the company and the information and
 explanations given to us, the following dues have been disputed and
 paid on protest. The Company has preferred appeal with the appropriate
 authorities for refund.
 
                         Assesment year 
                           to which       Forum where the 
                                             matter is 
 Name ot the statute                                       Amount In Rs.
                           the matter 
                            pertains          pending
 
 Income Tax Act, 1961       2001-02       CIT (Appeals)      30,02,382
 
 Income Tax Act, 1961       2003-04       CIT (Appeals)    * 47,85,258
 
 Income Tax Act, 1961       2004-05       CIT (Appeals)    * 26,12,561
 
 Income Tax Act, 1961       2005-06       CIT (Appeals)      70,28,103
 
 Income Tax Act, 1961       2006-07       CIT (Appeals)      55,41,946
 
 Income Tax Act, 1961       2008-09       CIT (Appeals)  * 3,06,33,157
 
                            2007 08
 Sales Tax              Financial Year    VAT(Appeals)    ** 32,00,000 
 
 * adjusted against refund
 
 ** covered under Bank Guarantee
 
 x.  The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the current
 financial year and in the immediately preceding financial year.
 
 xi. Based on our audit procedures and on the basis of information and
 explanations given by the Management, the Company has not defaulted in
 repayment of dues to bank, financial institutions and debenture
 holders.
 
 xii. Based on our examination of documents and records, 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, nidhi, mutual benefit fund or a
 society. Accordingly Clause 4(xiii) of the order is not applicable.
 
 xiv. According to the information and explanations given by the
 management, the Company is not dealing in or trading in shares,
 securities, debentures and other investments except for investment in
 Mutual Funds. The Company has maintained proper records and timely
 entries have been made and the investments are held in the name of die
 Company subject to endorsement of lien wherever offered as securities
 for loans.
 
 xv. The Company has not given any guarantee for loans taken by others
 from banks or financial institutions.
 
 xvi. In our opinion, according to explanations and information given to
 us and on overall examination the Term Loans and ECB Loans obtained by
 the company have been applied towards commitments to projects, capital
 expenses and to wholly owned subsidiary.
 
 xvii. According to the information and explanations given to us and on
 an overall examination of the financial statements of the Company, we
 report that funds raised on short term basis have not been used for
 long term investment.
 
 xviii. According to information and explanation given to us the Company
 has not made any preferential allotment of shares to parties and
 companies covered in the Register maintained under Section 301 of the
 Act. According to information and explanation given to us the Company
 has not made any preferential allotment of shares (other than 20 lakhs
 share warrants at Rs. 133.76 per warrant to the promoters) to parties
 and companies covered in the Register maintained under Section 301 of
 the Act.
 
 xix.  According to the information and explanations given to us, the
 Company has not issued any Secured Debentures during the year.
 
 xx The company has not raised any money by public issue during the
 current year.
 
 xxi Based on information and explanations furnished by the management,
 which have been relied upon by us, there were no frauds on or by the
 Company noticed or reported during the year.
 
 
 For R. SUBRAMANIAN & CO.,                       For BRAHMAYYA & CO.,
 
 Chartered Accountants.                         Chartered Accountants
 
 Firm Regn No: 004137S                          Firm Regn No: 000511S
 
 R. SUBRAMANIAN                                        N. SRI KRISHNA
 
 Partner                                                      Partner
 
 Membership No.8460                               Membership No.26575
 
 Place: Chennai 
 
 Date: 2nd June 2011