1) We have audited the attached Balance Sheet of EMCO Limited as at
 31st March 2011, Profit and Loss Account and the Cash Flow statement
 for the year ended on that date annexed thereto. These financial
 statements are 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, Profit and 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 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 provided to us, the 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 2011;
 
 ii.  in the case of Profit and Loss Account, of the loss 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.
 
 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 accounts.
 
 Fixed assets disposed off during the year were not substantial and
 therefore do not affect the going concern assumption.
 
 2) The management has conducted physical verification of inventory at
 reasonable intervals. In respect of stocks lying with the third
 parties, confirmation for most of the stocks has been received.
 
 In our opinion, the procedures of physical verification of inventory
 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 inventory. 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) According to the information and explanations provided to us and as
 per the records examined by us, as at 31st March 2011, Company has
 granted interest free unsecured loans amounting to ` 684,043 lakhs to
 two of its wholly owned subsidiaries covered in the register maintained
 under section 301 of the Companies Act, 1956. The maximum balance
 outstanding during the year amounted to ` 684,043 lakhs.
 
 In our opinion, other terms and conditions of such loan are prima facie
 not prejudicial to the interest of the Company.
 
 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.
 
 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 inventory, 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.
 
 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.
 
 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 books of accounts maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under section 209 (1) (d) of the Companies
 Act, 1956 and are of the opinion that prima facie the prescribed
 accounts and 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 2011, there are no undisputed dues payable for a period of
 more than six months from the date they became payable.
 
 As at 31st March 2011, according to the records of the Company and the
 information and explanations given to us, following are the particulars
 of disputed dues on account of Income Tax, Sales Tax, Service Tax,
 Excise Duty and other material statutory dues :
 
 Name of Statute     Nature of Dues           Rs in  
                                              Lakhs
 
 Sales Tax Act       Levy of Sales Tax 
                     on Excise Duty on        18.53 
                     Deemed Export 
 
 Sales Tax Act       Non Deduction of 
                     TDS on Works             29.47
                     contract 
 
 Sales Tax Act       Non submission of 
                     Declaration              33.52 
                     Forms 
 
 Central Excise 
 Act                 Additions made in 
                     Assessable Value        234.74 
 
 
 Central Excise 
 Act                 Additions made in 
                     Assessable Value          4.69 
 
 Central Excise 
 Act                 Penalty Proceeding        1.51 
 
 Central Excise 
 Act                 Interest on Differ
                     -ential Duty             21.63 
 
 Central Excise 
 Act                 Additions made in 
                     Assessable Value          3.14 
 
 
 Service Tax         Service Tax on 
                     Erection & Commis-       88.57 
                     sioning and 
                     Penalty thereon 
 
 Service Tax         Disallowance of 
                     Input Service Credit      6.24 
 
 Income Tax Act      Penalty Proceeding 
                     under Section            41.34 
                     271(1)(c) 
 
 Income Tax Act      Non Credit of Tax 
                     Deducted at               7.62 
                     Source paid IT, 
 
 Income Tax Act      Disallowance of 
                     Expenses                 35.76 
 
 Income Tax Act      Disallowance of 
                     Expenses                  0.73 
 
 Income Tax Act      Disallowance of 
                     Expenses                 51.90 
 
 Income Tax Act      Short credit for 
                     TDS Certifcates          78.96 
 
 Income Tax Act      Non Credit of Tax 
                     Deducted at              24.85 
                     Source paid 
 
 Income Tax Act      Non Credit of Tax 
                     Deducted at             100.86 
                     Source paid 
 
    
 
 
 
 Name of Statute      Period to which        Forum where the
                      the amount relates     dispute is pending
 
 Sales Tax Act        1992-93                Assistant Commissioner
                                             of Sales Tax
 
 Sales Tax Act        2007-08                Joint Commissioner of
                                             Commercial Taxes
 
 Sales Tax Act        2006-07                Deputy Commissioner of
                                             Commercial Taxes
 
 Central Excise 
 Act Additions        1996-01                Supreme Court
 
 Central Excise 
 Act Additions        2000-03                CESTAT
 
 Central Excise 
 Act                  2002-05                CESTAT
 
 Central Excise 
 Act                  2004-09                CESTAT
 
 Central Excise 
 Act                  2008-09                CESTAT
 
 Service Tax          2004-07                Commissioner (Appeals),
                                             Central Excise
                                             and Customs
 
 Service Tax          2006-09                CESTAT
 
 Income Tax 
 Act                  2005-06                Commissioner of Income
                                             Tax-(Appeal)
 
 Income Tax 
 Act                  2005-06                Deputy Commissioner of
 
 
 Income Tax 
 Act                  2006-07                Income Tax Appellate
                                             Tribunal
 
 Income Tax 
 Act                  2006-07                Commissioner of Income
                                             Tax-(Appeal)
 
 Income Tax 
 Act                  2007-08                CIT-(Appeal)
 
 Income Tax
 Act                  2007-08                Additional commissioner
                                             of IT
 
 Income Tax 
 Act                  2007-08                Deputy Commissioner of
                                             IT, TDS Circle
 
 Income Tax 
 Act                  2008-09                Deputy Commissioner of
                                             IT, TDS Circle
 
 
 
 10) Company has incurred cash losses in the current financial year. The
 Company does not have accumulated losses at the end of the financial
 year and has not 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 and according to the information and explanations
 provided to us, the nature of activities of the Company does not
 attract the provisions of clause 4(xiii) of the Companies (Auditors''
 Report) Order, 2003.
 
 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 Companies (Auditor''s Report) Order, 2003 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. In our opinion, terms
 and conditions of guarantee given is not prejudicial to the interest of
 the Company.
 
 16) According to the information and explanations provided to us and
 the records examined by us, in our opinion, the term loans were 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, in our opinion, the funds raised on short-term basis have
 not 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, the Company has made a
 preferential allotment of shares to a party covered in the register
 maintained under section 301 of the Companies Act, 1956. In our
 opinion, the price at which shares have been issued is not prejudicial
 to the interest of the Company.
 
 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 up on the audit procedure  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.
 Chartered Accountants
 
 
 Sd/-
 P. S. Shah
 Proprietor
 Membership No. 44611
 Firm Registration No. 108310W
 
 Mumbai, 30th May, 2011