We have audited the attached Balance Sheet of HEG Limited as at 31st
 March, 2011 and also the Profit & Loss Account and the Cash Flow
 Statement of the Company 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.
 
 We have 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 the management, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 As required by the Companies (Auditors'' Report) Order, 2003 as amended
 by Companies (Auditor''s Report) (Amendment) Order, 2004 (Collectively
 the Order) issued by the Central Government of India in terms of
 Section 227 (4A) of the Companies Act, 1956 and on the basis of such
 checks as we considered appropriate and according to the information
 and explanations given to us, we enclose in the Annexure a statement on
 the matters specified in paragraphs 4 and 5 of the said Order.
 
 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 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 with the
 Accounting policies and 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 Profit for the year
 ended on that date; and
 
 iii) In the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 Annexure to Auditors'' Report
 
 (Annexure referred to in our report of even date)
 
 1.  a) The Company has maintained proper records showing full
 
 particulars including quantitative details and situation of fixed
 assets.
 
 b) Verification of the fixed assets is being conducted based on a
 programme by the management designed to cover all assets over a period
 of three years, which, in our opinion, is reasonable having regard to
 the size of the Company and nature of its business. Discrepancies
 noticed on such verification as compared to book records were not
 material and have been properly adjusted in the books of account.
 
 c) No Substantial part of the fixed assets was disposed off during the
 year.
 
 2.  a) The inventory has been physically verified during the year
 
 by the management at all its locations, except stocks lying with third
 parties and in transit which have been verified with reference to
 correspondence of third parties or subsequent receipts of goods. In our
 opinion, the frequency of such verification is reasonable.
 
 b) The procedures for the physical verification of inventory followed
 by the management are, in our opinion, reasonable and adequate in
 relation to the size of the Company and nature of its business.
 
 c) In our opinion, the Company is maintaining proper records of
 inventory. The discrepancies noticed on physical verification of
 inventory as compared to book records were not material and have been
 properly dealt with in the books of account.
 
 3.  a) The Company has not granted any loans, secured or
 
 unsecured, to companies, firms or other parties covered in the register
 maintained under section 301 of the Companies Act, 1956. Accordingly
 clauses 4 (iii) (b) to (d) of the Order are not applicable.
 
 b) The Company has not taken any loan, secured or unsecured, from
 companies, firms or other parties covered in the register maintained
 under section 301 of the Companies Act, 1956. Accordingly clauses 4
 (iii) (f) and (g) of the Order are not applicable.
 
 4.  In our opinion, and according to the information and explanations
 given to us during the course of audit, there are adequate internal
 control systems commensurate with size of the Company and the nature of
 its business with regard to purchase of inventory and fixed assets and
 for the sale of goods and services. Further, on the basis of our
 examination of the books & records of the Company, carried out in
 
 accordance with the generally accepted auditing practices in India, we
 have neither come across nor have we been informed of any instance of
 major weaknesses in the aforesaid internal control systems.
 
 5.  a) Based upon the audit procedures applied by us and
 
 according to the information and explanations given to us, we are of
 the opinion that the particulars of contracts and arrangements referred
 to in section 301 of the Act have been entered in the register required
 to be maintained under that section.
 
 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 Act and aggregating during the year to Rupees five lacs or more in
 respect of each party have been made at prices which are reasonable
 having regard to market prices for such transactions, prevailing at the
 relevant time, where such market prices are available.
 
 6.  The Company has not accepted any deposits from the public within
 the meaning of sections 58A and 58AA or any other relevant provisions
 of the Companies Act, 1956 including the Companies (Acceptance of
 Deposit) Rules, 1975.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size & nature of its business.
 
 8.  We have broadly reviewed the Cost Accounting records, maintained by
 the Company pursuant to the Rules prescribed by the Central Government
 for the maintenance of cost records under clause (d) of sub-section (1)
 of section 209 of the Act, and are of the opinion that, prima facie,
 the prescribed accounts and records have been made and maintained. We
 are, however, not required to make a detailed examination of such books
 and records.
 
 9.  a) According to the examination of records of the Company,
 
 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
 material statutory dues, as applicable, have been generally regularly
 deposited with the appropriate authorities during the year.  There are
 no such dues outstanding for more than six months from the date they
 became payable as on the date of balance sheet.
 
 b) According to the information and explanations given to us and as per
 the books and records examined by us, there
 
 are no dues of custom duty, service tax, wealth tax, and cess that have
 not been deposited on account of any dispute except the
 
 following dues of income tax, sales tax and excise duty along with the
 forum where the dispute is pending :
 
                                                            (Rs. in Lacs)
 
 Name of the 
 Statute          Nature of 
                  Dues         Year to which 
                               amount pertains  Forum             Amount
 
 Income Tax 
 Act,1961       Income Tax      2007-08        CIT (Appeals), 
                                               Bhopal             110.00
                                2003-04, 
                                2004-05        High Court, 
                                               Jabalpur           516.00
 
 Central 
 Excise Act, 
 1944           Excise Duty    1999-2003, 
                               2002-03, 
                               2004-06,        Tribunal, 
                                               New Delhi          592.00
                               2004-07, 
                               2005-06, 
                               2006-07,
                               2007-08
                               2004-05         High Court, 
                                               Jabalpur             1.42
 
 Central 
 Sales Tax 
 Act, 1956     Central Sales
               Tax            2002-03, 
                              2003-04          Tribunal, Bhopal    49.17
 
 Madhya 
 Pradesh 
 Parvesh       Entry Tax      2007-08          CIT (Appeals), 
                                               Bhopal             181.99
 Kar Adhi
 niyam, 1976                  2005-06, 
                              2006-07          CIT (Appeals), 
                                               Raipur             14.00
 
                              2002-03, 
                              2003-04, 
                              2006-07          Tribunal, Bhopal   75.87
 
                              1997-98          High Court, 
                                               Jabalpur            9.94
 
 Chattisgarh   Local Sales 
               Tax            2005-06          CIT (Appeals), 
                                               Raipur             42.63
 Commercial 
 Tax                          1992-93          Tribunal, Raipur    1.12
 
 10. There are no accumulated losses of the Company as at the end of the
 financial year. There are no cash losses during the financial year and
 in the immediately preceding financial year.
 
 11. According to the information and explanations given to us and as
 per the books and records examined by us, the Company has not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holders.
 
 12. According to the information and explanations given to us, the
 Company has not granted any loans and advances on the basis of security
 by way of pledge of shares, debentures and other securities.
 
 13. The Company does not fall within the category of Chit fund / Nidhi
 / Mutual Benefit fund / Society and hence the related reporting
 requirements of the Order are not applicable.
 
 14. According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments and hence the related reporting requirements of the
 Order are not applicable.
 
 15. The Company has given a guarantee jointly with another company to a
 financial institution for loans taken by others from that financial
 institution, the terms and conditions of which are not, prima facie,
 prejudicial to the interest of the Company.
 
 16. In our opinion, and according to the information and explanations
 given to us, the term loans raised during the year by the Company have
 been applied for the purpose for which the said loans were obtained,
 where such end use has been stipulated by the lender.
 
 17. According to the information and explanations given to us and
 
 as per the books and records examined by us, as on the date of balance
 sheet, the funds raised by the Company on short term basis have not
 been applied for long term investment.
 
 18. The Company has not made any preferential allotment of shares,
 during the year, to companies and other parties covered in the register
 maintained under section 301 of the Companies Act, 1956.
 
 19. The Company has created necessary securities and other charges for
 the debentures issued in the current financial year.
 
 20. The Company has not raised any money through public issues during
 the year.
 
 21. During the course of our examination of the books and records of
 the Company carried out in accordance with the generally accepted
 auditing practices in India, we have neither come across any instance
 of fraud on or by the Company, noticed and reported during the year,
 nor have we been informed of such case by the management.
 
 For Doogar & Associates          For S. S. Kothari Mehta & Co.  
 
 Chartered Accountants                   Chartered Accountants
 Firm Regn. No. 000561N                 Firm Regn. No. 000756N
 
 
 
 Mukesh Goyal                                  Arun K. Tulsian
 Partner                                               Partner
 Membership No. 081810                   Membership No. 089907
 
 Place: Noida (U.P.) 
 Dated: 29th April, 2011