1.  We have audited the attached Balance Sheet of HINDUSTAN DORR-OLIVER
 LIMITED (the Company), as at June 30, 2012, the Statement of Profit
 and Loss and also the Cash Flow Statement for the period 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 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 (Auditor''s Report) Order, 2003 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, Statement of Profit and Loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 d.  In our opinion, the Balance Sheet, Statement of Profit and Loss 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 June 30, 2012 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 June 30, 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.  Attention is invited to note 32 regarding investments in Subsidiary
 and loans and advances outstanding from such subsidiary aggregating to
 T 1,305.94 Million, whose accumulated losses exceeded their
 consolidated net worth and the financial statements have been prepared
 ongoing concern basis, considered good for the reasons stated therein.
 
 g.  In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts 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 June 30,2012,
 
 ii.  in the case of the Statement of Profit and Loss, of the loss for
 the period ended on that date; and
 
 iii.  in the case of the Cash Flow Statement, of the cash flows for the
 period ended on that date.
 
 
 
 ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE
 
 i. a. The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b.  A major portion of fixed assets has been physically verified by the
 management during the period pursuant to a programmer for physical
 verification of fixed assets, which in our opinion, is reasonable
 having regard to the size of the Company and the nature of its assets.
 According to the information and explanations given to us, no material
 discrepancies were noticed on such verification.
 
 c.  Fixed assets disposed of during the period were not substantial
 and therefore do not affect the going concern status of the Company.
 
 ii. a. The inventory has been physically verified during the period by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 b.  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.  The Company is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material and the same have been properly
 dealt with in the books of account.
 
 iii. a. The Company had granted interest free loan to its wholly owned
 subsidiary Company. The maximum amount involved during the year and
 yearend balance of the loan was T 1,232.43 Million.
 
 b.  In our opinion, terms and conditions of the interest free loan
 given to wholly owned subsidiary are not, prima facie, prejudicial to
 the interest of the company.
 
 c.  In our opinion and according to the information and explanations
 given to us, the loan given to the wholly owned subsidiary is not
 repayable during the period covered by our audit.
 
 d.  There is no overdue amount in excess of T1 Lakh in respect of loan
 granted to the wholly owned subsidiary.
 
 e.  According to the information and explanations given 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. Accordingly, the provisions of the
 clause 4(iii) (e), (iii)(f) and (iii)(g) of the Companies (Auditors''
 Report) Order, 2003 are not applicable to the Company.
 
 iv. In our opinion and according to the information and explanations
 given to us, there exists an adequate internal control system
 commensurate with the size of the Company and the nature of its
 business with regard to purchases of inventory, fixed assets and with
 regard to the sale of goods and services. During the course of our
 audit, we have neither observed nor have been informed of any
 continuing failure to correct major weaknesses in internal control
 system of the Company.
 
 v a. In our opinion and according to the information and explanations
 given to us, we are of the opinion that 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.
 
 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 certain transactions for which comparable
 quotations are not available and in respect of which we are unable to
 comment.
 
 vi. In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 58A, 58AAorany other relevant provisions of the Companies Act, 1956 and
 the rules framed there under with regard to the deposits accepted from
 the public in earlier years and remained unclaimed as at the year end.
 However, the Company has not accepted any deposit from the public
 during the year under audit.
 
 vii.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 viii. In our opinion and according to the information and explanations
 given to us, the management is in the process of compiling and
 maintaining the cost records of the company pursuant to the rules made
 by the Central Government under Section 209 (1) (d) of the Companies
 Act, 1956.
 
 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 any other statutory dues applicable to it.  There has
 been delay in deposit of works contract tax in some cases.
 
 b.  According to the information and explanations given to us, no
 undisputed amounts payable in respect of income- tax, sales-tax, wealth
 tax, service tax, custom duty and excise duty were in arrear as at June
 30, 2012 for a period of more than six months from the date they became
 payable.
 
 c.  According to information and explanations given to us, there are no
 dues of income-tax, sales tax, wealth tax, service tax, customs duty,
 excise duty or cess or any other statutory dues which have not been
 deposited on account of any dispute excepting those mentioned
 hereunder:
 
 
 
 S. No  Name of the 
        Statute         Nature of 
                        Dues        Amount    Period      Forum where
                                                          dispute
                                   (Rs. in 
                                    Million)  to which 
                                              the         is pending
                                              amount 
                                              relates
 
 1      Custom Act, 
        1962            Custom Duty   0.77    1992-93     The collector
                                                          of customs
                                                         (Judicial), 
                                                          Mumbai
 
 2      Central Sales 
        Tax Act, 1956   Sales Tax/
                        WCT / VAT     4.90    1999-2000 
                                              to          A.C. (Appeal)
        and Sales Tax 
        Act of                                2002-03 
                                              and
        Various States.                       2007-08
 
                                     14.33    1984-85,    D.C. (Appeal)
                                              1992-93 to  
                                              2002-03 
                                              and 
                                              2006-07
 
                                     21.50    2008-09     D.C .
                                                         (Enforcement)
 
                                     18.65    2002-03 to  J. C. (Appeal)
                                              2004-05
 
                                      3.59    1987-88 to  Tribunal
                                              1993-94
 
                                      0.42    1995-96
                                              and         Sales Tax 
                                                          Officer
                                              2008-09
 
                                     17.91    1988-89,    High Court
                                              1995-96 
                                              and 
                                              2007-08
 
 3      The Income Tax 
        Act, 1961       Income Tax   18.08    1997-98 to  ITAT
                                              2001-02
 
                                      2.57    1996-97     CIT
 
                                      3.19    2000-01 
                                              and         CIT (A)
                                              2002-03
 
 
 
 x. The Company does not have any accumulated losses at the end of the
 period. Further, the Company has incurred cash losses in the period
 covered by our audit, and has not incurred cash losses during the
 immediately preceding financial year.
 
 xi. In our opinion and according to the information and explanations
 given to us, we are of the opinion that the Company has not defaulted
 in repayment of dues to a financial institution or bank.
 
 xii. In our opinion and 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 the provisions of clause (xiii) of the
 Companies (Auditors'' Report) Order, 2003 are not applicable to the
 Company.
 
 xiv. 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 4 (xiv) of the
 Companies (Auditors'' Report) Order, 2003 are not applicable to the
 Company.
 
 xv According to the information and explanations given to us, the
 Company has given corporate guarantee for loan taken by its wholly
 owned subsidiary company from bank. The terms and conditions thereof
 are not prejudicial to the interest of the company.
 
 xvi. In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purposes for
 which they were raised.
 
 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 no funds raised on short-term basis have been used for long-term
 investment except on non- current assets aggregating to T 1,995.93
 Million.
 
 xviii. The Company has not made 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 period.
 Accordingly, the provisions of clause 4 (xix) of the Companies
 (Auditors'' Report) Order, 2003 are not applicable to the Company
 
 xx The Company has not raised money through public issue of shares.
 Accordingly, the provisions of clause 4 (xx) of the Companies
 (Auditors'' Report) Order, 2003 are not applicable to the Company.
 
 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 course of our audit.
 
                                       For CHATURVEDI & PARTNERS
 
                                           Chartered Accountants 
 
                               Firm Registration Number: 307068E
 
                                                  R N CHATURVEDI
 
 Hyderabad                                               Partner
 
 August 29, 2012                            Membership No.092087