1.  We have audited the attached Balance Sheet of Escorts Limited as at
 30th September, 2010, the Profit & Loss Account and also the Cash Flow
 Statement for the year ended on that date, annexed thereto. These
 financial statements are the responsibility of the Companys
 management. Our responsibility is to express an opinion on these
 financial statements based on our audit.
 
 2.  We conducted our audit in accordance with 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 (Auditors Report) Order, 2003, as
 amended, 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 & 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 & Loss Account and 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 30th September, 2010 and taken on record by the Board
 of Directors, we report that none of the directors is disqualified as
 on 30th September, 2010 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
 Significant Accounting Policies and Notes to Accounts 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 the Balance Sheet, of the state of affairs of the
 Company as at 30th September, 2010,
 
 ii) in the case of the Profit & Loss Account, of the Profit for the
 year ended on that date and
 
 iii) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Annexure Referred
 
 To in paragraph 3 of our Report of even date on the Accounts of Escorts
 Limited, for the year ended September 30,2010.
 
 i) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) According to the information and explanations given to us, physical
 verification of fixed assets is being conducted in a phased manner by
 the management under a programme designed to cover all the fixed assets
 over a period of three years, which, in our opinion, is reasonable
 having regard to the size of the Company and the nature of its assets.
 Discrepancies noticed on such verification were not material and have
 been properly dealt with in the books of account.
 
 (c) According to the information and explanations given to us, the
 Company has not disposed off a substantial part of its fixed assets
 during the year under review.
 
 ii) (a) As explained to us, the inventories have been physically
 verified by the management at reasonable intervals during the year,
 except for materials lying with third parties for which certificates
 confirming stocks held by them have been obtained in most of the cases.
 
 (b) In our opinion and according to the 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.
 
 (c) In our opinion and according to information and explanations given
 to us, the Company has maintained proper records of its inventories.
 Discrepancies noticed on physical verification of inventories were not
 material and have been properly dealt with in the books of account.
 
 iii) (a) The Company has granted unsecured loans to a company covered
 in the register maintained under Section 301 of the Companies Act,
 1956. The maximum amount involved during the year was Rs. 1.46 crores
 and balance of the loans granted to such company was Rs. 1.46 crores as
 at 30th September, 2010.
 
 (b) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions of
 such loans are not, prima-facie, prejudicial to the interest of the
 Company.
 
 (c) The receipt of the principal amount and interest, wherever
 applicable, is as stipulated.
 
 (d) There is no overdue amount of such loans granted to the aforesaid
 companies.
 
 (e) The Company has taken loan from a company covered in the register
 maintained under Section 301 of the Companies Act, 1956The maximum
 amount involved during the year was Rs. 4.42 crores and the balance of
 loan taken from such company was Rs. 3.72 crores as at 30th September,
 2010.
 
 (f) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions of
 such loans are not, prima facie, prejudicial to the interest of the
 Company.
 
 (g) The Company has been regular in repaying the principal amount.and
 interest, as stipulated.
 
 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, for the purchase of inventory and fixed assets and for the
 sale of goods and services. During the course of our audit, we have
 neither come across nor have been informed of any continuing failure to
 correct major weaknesses in the internal control systems.
 
 v) (a) According to the information and explanations given to us, we
 are of the opinion that the transactions that need to be entered into
 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 the register
 maintained under Section 301 of the Companies Act, 1956 and exceeding
 the value of Rupees five, lakhs in respect of any party during the year
 have been made at prices which are reasonable having regard to the
 prevailing market prices at the relevant time except for items stated
 to be of a specialised nature where no comparison is possible.
 
 vi) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 58A, 58AA and other relevant provisions of the Companies Act, 1956 and
 the Companies (Ac- ceptance of Deposits) Rules, 1975 with regard to
 unpaid matured fixed deposits accepted from the public. The Com- pany
 has however, not accepted any fresh deposits during the year under
 review.
 
 vii) 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 books of account maintained by the
 Company pursuant to the Rules made by the Cen- tral Government for the
 maintenance of cost records under Section 209(1 )(d) of the Companies
 Act, 1956 in respect of the tractors and auto-ancillary products and
 are of the opinion that prima-facie the prescribed accounts 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 and
 complete.
 
 ix) (a) 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, service tax, custom duty, excise
 duty, cess and other materia! statutory dues applicable to it.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees state insurance, income-tax,
 sales-tax, wealth- tax, service tax, custom duty, excise duty & cess
 were in arrears, as at 30th September, 2010 for a period of more than
 six months from the date they became payable.  (b) According to the
 information and explanations given to us, the details of statutory dues
 of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty & cess which have not been deposited on account of dispute are
 given below:
 
 Name of the Statute              Nature of Dues          Amount
                                                       (Rs. Crores)
 
 Sales Tax Acts                     Sales Tax              2.05
 
 Sales Tax Acts                     Sales Tax              7.66
 
 Central Excise Act, 1944           Excise Duty            0.61
 
 Central Excise Act, 1944           Excise Duty           25.99
 
 Central Excise Act, 1944           Excise Duty           18.60
 
 Income Tax Act, 1961               Income Tax            14.44
 
 Haryana Local Area                 Local Area            12.90
 Development Tax Act, 2000          Development Tax
 
 
 
 Name of the Statue            Period to       Forum where dispute
                               which the              is pending
                               amount relates
 
 Sales Tax Acts                2009-2010              High Court
 
 Sales Tax Acts                1987-2010     Appellate Authority
 
 Central Excise Act, 1944      1992-2008     Appellate Authority
 
 Central Excise Act, 1944      1989-2008                  CESTAT
 
 Central Excise Act, 1944      1995-1998           Supreme Court
 
 Income Tax Act, 1961          2001-2002 High Court/CIT (Appeals)
 
 Haryana Local Area
 Development Tax Act, 2000     2006-2008           Supreme Court
 
 x) The Company does not have accumulated losses as at 30th September,
 2010 and has not incurred cash losses during the financial year covered
 by our audit and in the immediately preceding financial year.
 
 xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to a
 financial institution or bank or debenture holders.
 
 xii) According to the information and explanations given 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.
 
 xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund/ society. Therefore, provisions of clause (xiii) of
 Paragraph 4 of the Order are not applicable to the Company.
 
 xiv) In our opinion and according to the information and explanations
 given to us, the Company is not dealing or trading in shares,
 securities, debentures and other investments. Accordingly, the
 provisions of clause (xiv) of Paragraph 4 of the Order are not
 applicable to the Company.
 
 xv) According to the information and explanations given to us, the
 Company has not given guarantees for loans taken by others from banks
 and financial institutions.
 
 xvi) To the best of our knowledge and belief and according to the
 information and explanations given to us, the term loans availed by the
 Company were applied for the purposes for which the loans were
 obtained.
 
 xvii) According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we report
 that the no funds raised on short-term basis have been used for long
 term investment.
 
 xviii) According to the information and explanations 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 Companies Act, 1956.
 
 xix) The Company has not issued any debentures during the year.
 Therefore, the provisions of clause (xix)) of Paragraph 4 of the Order
 are not applicable to the Company.
 
 xx) The Company has not raised any money by public issue during the
 year under review.
 
 xxi) To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the Company
 has been noticed or reported during the year.
 
                                           For S. N. Ohawan & Co.
 
                                           Chartered Accountants
                                        (Firm Regn. No. 000050N)
 
                                                  (Vijay Dhawan)
 
 Place: New Delhi                                       Partner
 
 Dated: 29th November, 2010                        M.No.: 12565