1.  We have audited the attached Balance Sheet of Emco Limited as at
 31st March 2012, 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 have 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 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, 2003 (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
 
 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, 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 Balance Sheet, the Statement Profit and Loss
 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 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 are 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;
 
 f.  In our opinion, and to the best of our information and according to
 the explanations provided to us, they said financial statements read
 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:
 
 i.  in the case of Balance Sheet, of the state of affairs of the
 Company as at 31st March 2012;
 
 ii.  in the case of Statement of Profit and Loss, of the profit for the
 year ended on that date; and
 
 iii. in case of the Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 Annexure referred to the Auditors'' Report
 
 (Referred to in paragraph 3 of our report of even date)
 
 1.  The Company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 As explained to us, the fixed assets have been physically verified by
 the management as per a phased programme of verification.  In our
 opinion, the frequency of verification is reasonable having regard to
 the size of the Company and the nature of its fixed assets. The
 discrepancies noticed on such verification were not material and have
 been properly dealt with in the books of account.
 
 In our opinion, the Company has not disposed off a substantial part of
 fixed assets during the year and going concern status of the Company is
 not affected.
 
 2.  The management has conducted physical verification of inventories
 at reasonable intervals. In respect of stocks lying with the third
 parties, confirmation for most of the stocks has been received.
 
 In our opinion and according to 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 the nature of its business.
 
 The Company is maintaining proper records of inventories. The
 discrepancies noticed on verification between physical inventories and
 the book records were not material in relation to the operations of the
 Company and the same have been properly dealt with in the books of
 account.
 
 3.  In respect of the loans, secured or unsecured, granted or taken by
 the Company to / from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956:
 
 a.  According to the information and explanations provided to us and as
 per the records examined by us, as at 31st March 2012, Company has
 granted unsecured loans to two of its wholly owned subsidiaries covered
 in the register maintained under section 301 of the Companies Act,
 1956. The maximum balance outstanding at any time during the year was Rs.
 15,243.60 lakhs and the year-end balance is Rs. 11,964.54 lakhs.
 
 b.  In our opinion and according to the information and explanations
 given to us, the rate of interest, other terms and conditions of such
 loan are prima facie not prejudicial to the interest of the Company.
 
 c.  As per information and explanations provided to us, 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, the requirements of Clauses
 (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable.
 
 4.  In our opinion and according to the information and explanations
 provided to us, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business, for the purchase of inventories, fixed assets and for the
 sale of goods and services. During the course of our audit, no major
 weakness has been noticed in the internal controls in respect of these
 areas.
 
 5.  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 all the particulars of contracts or arrangements that need
 to be entered into the register maintained under section 301 of the
 Companies Act, 1956 have been so entered.
 
 In our opinion and according to the information and explanations
 provided to us, the transactions made in pursuance of such contracts or
 arrangements have been made at reasonable prices having regard to the
 prevailing market prices at the relevant time.
 
 6.  In our opinion and according to the information and explanations
 provided to us, the Company has not accepted any deposits from the
 public. Therefore, the provisions of Clause (vi) of paragraph 4 of the
 Order are not applicable to the Company.
 
 7.  In our opinion the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the cost records maintained by the Company
 pursuant (Cost Accounting Records) Rules, 2011 prescribed by the
 Central Government under Section 209(1) (d) and are of the opinion that
 prima facie the prescribed records have been made and maintained. We
 have however not made a detailed examination of the records with a view
 to determine whether they are accurate or complete.
 
 9.  According to the information and explanations provided to us and on
 the basis of our examination of the books of account, the Company has
 been generally regular in depositing undisputed statutory dues
 including Provident Fund, Employees'' State Insurance, Income-tax,
 Customs Duty, Wealth Tax, Service Tax, Value Added Tax, Excise Duty,
 Cess, Investor Education and Protection Fund and other material
 statutory dues during the year with the appropriate authorities. As on
 31st March 2012, there are no undisputed dues payable for a period of
 more than six months from the date they became payable.
 
 As at 31st March 2012, according to the records of the Company and the
 information and explanations given to us, disputed dues on account of
 Income Tax, Sales Tax, Service Tax, Excise Duty and other material
 statutory taxes that have not been deposited before appropriate
 authorities are as under:
 
                      (All amount in Rs. lakhs, unless otherwise stated)
 
                                      Period to which 
                                      the              Forum where the
                                                       dispute is
 
 Name of 
 Statute      Nature of Dues  Amount 
                                      amount relates   pending
 
 Sales 
 Tax Act      Levy of Sales 
              Tax on 
              Excise           18.53     1992-93       Assistant
                                                       Commissioner of
              Duty on Deemed 
              Export                                   Sales Tax
 
 Sales 
 Tax Act      Non Deduction 
              of TDS on       137.51     2006-08       The Appellate 
                                                       Deputy
              Works contract                           Commissioner
 
 Sales 
 Tax Act      Non Deduction 
              of TDS on        42.91     2007-08       West Bengal
                                                       Commercial Taxes
              Works contract                           Appellate and 
                                                       Revision Board
 
 Sales 
 Tax Act      Non submission 
              of                9.87     2007-08        Deputy Commis
                                                        sioner of
              Declaration 
              Forms                                     Commercial Tax
 
 Central 
 Excise Act   Additions made 
              in              141.32     1996-01        Supreme Court
              Assessable 
              Value
 
 Central 
 Excise Act   Additions 
              made in           4.69     2000-03        CESTAT 
                                                        Assessable
                                                        Value
 
 Central 
 Excise Act   Penalty 
              Proceeding        1.51     2002-05        CESTAT
 
 Central 
 Excise Act   Interest on 
              Differential 
              Duty             15.94     2004-09        High Court
 
 Central 
 Excise Act   Additions 
              made in           3.14     2008-09        CESTAT 
              Assessable
              Value
 
 Central 
 Excise Act   Interest on 
              Differential 
              Duty              5.73     2009-10        CESTAT
 
 Service 
 Tax          Service Tax 
              on Erection &    88.57     2004-07        Commissioner
                                                        (Appeals),
 
              Commissioning 
              and Penalty                               Central Excise
                                                        and Customs 
              thereon
 
 Service Tax  Disallowance 
              of Input         12.02     2006-09        CESTAT 
              Service Credit
 
 Service 
 Tax          Service Tax 
              on Testing        5.86     2010-11        Commissioner 
                                                        (Appeals),
              Charges                                   Central Excise
                                                        and Customs
 
 Income 
 Tax Act      Disallowance 
              of Expenses       0.73     2006-07        Commissioner of
                                                        Income Tax-
                                                        (Appeal)
 
 Income 
 Tax Act      Disallowance 
              of Expenses      47.72     2006-07        ITAT
 
 10.  The Company does not have accumulated losses at the end of the
 financial year. The Company has not incurred cash losses in current
 financial year, but had incurred cash losses in the immediately
 preceding financial year.
 
 11.  Based on our audit procedures and as per the information and
 explanations provided by the management, we are of the opinion that,
 the Company has not defaulted in repayment of dues to any financial
 institution or bank or to debenture holders as at the Balance Sheet
 date.
 
 12.  Based on our audit procedures and according to the information and
 explanations provided to us, the Company has not granted loans and
 advances on the basis of security by way of pledge of shares,
 debentures and other securities.
 
 13.  In our opinion, the Company is not a chit fund / nidhi / mutual
 benefit fund / society. Therefore, the provisions of clause 4(xiii) of
 the Order are not applicable to the Company.
 
 14.  In our opinion, the Company is not dealing in or trading in
 shares, debentures and other investments. Accordingly, the provisions
 of clause 4(xiv) of the Order are not applicable to the Company.
 
 15.  According to the information and explanations provided to us and
 the records examined by us, the Company has given guarantee for loan
 taken by its wholly owned subsidiary from bank. According to
 information and explanation given to us, we are of the opinion that
 terms and conditions of guarantee given is not prejudicial to the
 interest of the Company.
 
 16.  The Company has raised term loans during the year. According to
 the information and explanations provided to us and the records
 examined by us, we are of opinion that the term loans outstanding at
 the beginning of the year and those raised during the year have been
 applied by the Company for the purpose for which they were obtained.
 
 17.  According to the information and explanations provided to us and
 on an overall examination of the balance sheet and cash flow statement
 of the Company, we are of the opinion that there are no funds raised on
 short-term basis that have been used for long-term investment.
 
 18.  According to the information and explanations provided to us and
 on the basis of records examined by us, during the year Company has not
 made a preferential allotment of shares to parties and companies
 covered in the Register maintained under Section 301 of the Companies
 Act, 1956.
 
 19.  According to the information and explanations provided to us and
 the records examined by us, the Company has created security and charge
 in respect of debentures issued.
 
 20.  The Company has not raised any money through a public issue during
 the year.
 
 21.  Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations provided 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 P. RAJ & CO.                             For CHATURVEDI & SHAH
 
 Chartered Accountants                        Chartered Accountants
 
 Firm Registration No. 108310W        Firm Registration No. 101720W
 
 Sd/-                                                          Sd/-
 
 P. S. Shah                                         Amit Chaturvedi
 
 Partner                                                    Partner
 
 Membership No. 44611                         Membership No. 103141
 
 Mumbai, 15th May 2012                        Mumbai, 15th May 2012