1.  We have audited the attached Balance Sheet of Hyderabad Industries
 Limited (the Company) as at March 31, 2011 and also the Profit and
 Loss account and 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:
 
 i. 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;
 
 ii. 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;
 
 iii. The balance sheet, profit and loss account and cash flow statement
 dealt with by this report are in agreement with the books of account;
 
 iv. In our opinion, the balance sheet, profit and 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.
 
 v. On the basis of the written representations received from the
 directors, as on March 31, 2011, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2011 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956;
 
 vi. 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;
 
 a) in the case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 b) in the case of the profit and loss account, of the profit for the
 year ended on that date; and
 
 c) in the case of 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
 Re: Hyderabad Industries Limited (the Company)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The Company has a policy of carrying out the physical verification
 of fixed assets in a phased manner to cover all fixed assets over a
 period of three years. Accordingly, some of the fixed assets have been
 verified during the year. No material discrepancies were noticed on
 such verification.  The frequency of physical verification in our
 opinion is reasonable having regard to the size of the Company and the
 nature of its assets.
 
 (c) There was no substantial disposal of fixed assets during the year.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 (b) 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.
 
 (c) The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) (a) The Company has granted loan to a party covered in the
 register maintained under section 301 of the Companies Act, 1956. The
 maximum amount involved during the year was Rs.508.17 Lacs and the year
 end balance of loans granted to such parties was Rs.Nil.
 
 (b) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions for
 such loans are not prima facie prejudicial to the interest of the
 Company.
 
 (c) In respect of loans granted, repayment of the principal amount is
 as stipulated and payment of interest have been regular.
 
 (d) There is no overdue amount of loans granted to companies, firms or
 other parties listed in the register maintained under section 301 of
 the Companies Act, 1956.
 
 (e) As informed, 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.
 Therefore, the provisions of clause 4(iii) (e) to (g) of the Companies
 (Auditors Report) Order, 2003 (as amended) are not applicable to the
 Company.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system 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, no major weakness has been
 noticed in the internal control system in respect of these areas.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in section 301 of the Act that need to be
 entered into the register maintained under section 301 have been so
 entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five lakhs have been entered
 into during the financial year at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 (vi) The Company has not accepted any deposits from the public.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) To the best of our knowledge and as explained, the Central
 Government has not prescribed maintenance of cost records under clause
 (d) of sub-section (1) of section 209 of the Companies Act, 1956 for
 the products of the Company.
 
 (ix) (a) Undisputed statutory dues including provident fund, investor
 education and protection fund, or employees state insurance,
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty, cess and other material statutory dues have generally been
 regularly deposited with the appropriate authorities though there has
 been a slight delay in a few cases.
 
 Further, since the Central Governent has till date not prescribed the
 amount of cess payable under section 441 A of the Companies Act,1956,
 we are not in a position to comment upon the regularity or otherwise of
 the company in depositing the same.
 
 (b) 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,
 wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and
 other material undisputed statutory dues were outstanding, at the year
 end, for a period of more than six months from the date they became
 payable.
 
 (c) According to the records of the Company, the dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and cess on account of any dispute, are as follows:
 
 Name of the            Nature of dues                   Amount
 statute                                          (Rs. in lacs)
 
 Tamil Nadu General     Sales tax on enhanced             10.41
 Sales Tax Act, 1959    turnover due to
 & Central Sales Tax    certain disallowance 
 Act, 1956
 
 Tamil Nadu General     Sales tax Deferment               7.48
 Sales Tax Act, 1959    not allowed 
 & Central Sales 
 Tax Act, 1956
 
 Andhra Pradesh         Disallowance of Concessional      1.53
 General Sales Tax      Rate of Tax
 Act, 1957
 
 West Bengal Sales      Sales Tax Demand                265.92
 Tax Act,1994, 
 Central Sales Tax 
 Act, 1956
 
 Bihar Finance Act,     Local Sales Tax Demand          699.57
 1981
 
 Bihar Finance Act,     Demand of Entry Tax              28.57
 1981
 
 Bihar Finance Act,     Sales Tax Demand                 23.44
 1981
 
 Entry Tax of Goods     Demand of Entry Tax              96.23
 Act, 1930              including Interest
 
 Other State/Central    Local Sales Tax Demand,         250.55
 Sales Tax Acts         Freight Rebate disallowed,
                        Entry Tax on Stock 
                        Transfers & Misc. 
                        Disallowance
 
 Other States like      Sales Tax Demand                348.36
 Jharkhand, Maharastra  
 under Central Sales 
 Tax Act, 1956.
 
 Central Excise Act,    Excise Duty Demand               11.11
 1944                   due to certain
                        disallowance
 
 Central Excise         Excise Duty                    1110.32
 Act,1944               Demand including Penalty
 
 Income Tax Act,        Wealth Tax Demand                56.98
 1961
 
 
 
 
 Name of the            Period to which      Forum where
 statute                the amount relates   dispute is pending
 
 Tamil Nadu General     1990-91, 1994-95,    Honble Supreme 
 Sales Tax Act, 1959    1997-98, 2000-01,    Court of India,
 & Central Sales Tax    01-02 & 02-03        Sales Tax Appellate
 Act, 1956                                   Tribunal, Appellate
                                             Asst. Commissioner,
                                             Chennai
 
 Tamil Nadu General     2000-01,             Appellate Assistant
 Sales Tax Act, 1959    2001-02 & 2002-03    Commissioner,  
 & Central Sales Tax                         Chennai
 Act, 1956
 
 Andhra Pradesh         1985-86              Honble High 
 General Sales Tax                           Court of
 Act, 1957                                   Andhra Pradesh
 
 West Bengal Sales      2001-02, 2002-03,    Honble High
 Tax Act,1994,          2003-04 2004-05,     Court of
 Central Sales Tax      2005-06              West Bengal,
 Act, 1956                                   Kolkata, Appellate
                                             & Revisional Board
 
 Bihar Finance Act,     2000-01, 2001-02,    Joint Commissioner
 1981                   2002-03              of Commercial
                                             Taxes (Appeals),
                                             Jharkhand
 
 Bihar Finance Act,     2003-04              Assistant Commissioner
 1981                                        of Commercial Taxes
 
 Bihar Finance Act,     2002-03, 2003-04     Dy. Commissioner, 
 1981                                        Dhanbad
 
 Entry Tax of Goods     2007-08              Honble High Court
 Act, 1930                                   of Allahabad, Lucknow
 
 Other State/Central    1993-94, 1997-98,    Deputy Commissioner
 Sales Tax Acts         1999-2000, 2000-01   (Appeals),Honble
                                             High Court of 
                                             Rajasthan, 
                        2001-02, 2004-05,    M P Commercial Tax
                                             Appellate
                        2005-06, 2006-07,    Tribunal, Deputy 
                                             Commissioner
                        2007-08 Commercial   Tax (Appeals),
 
                                             Commissioner of 
                                             Commercial Taxes 
                                             Jharkhand, Assisstant
                                             Commissioner ST
                                             (Appeals) Bhubaneshwar, 
                                             Appellate Authority 
                                             Commercial Taxes 
                                             Ghaziabad,
                                             Deputy Commissioner 
                                             (Revision) Thane, 
                                             Honble Supreme Court
                                             of India, Additional
                                             Commissioner (Sales 
                                             Tax) Berhampur.
                                             Sr.Joint Commissioner
                                             Sales Tax West Bengal,
                                             Joint Commissioner
                                             (Appeals) Dhanbad,
                                             Joint Director 
                                             Enforcement Jalandhar,
                                             Excise Taxation 
                                             Officer Chandigarh,
                                             Joint Commissioner
                                             Appeals Ghaziabad.
 
 Other States like      2004-05, 2005-06,    Commissioner of 
 Jharkhand, Maharastra  2006-07 & 2007-08    Commercial Taxes,
 under Central Sales                         Jharkhand,
 Tax Act, 1956.                              Dy. Commissioner 
                                             (Revision), Thane
 
 Central Excise Act,    1988-89, 1990-91,    Commissioner of 
 1944                                        Central Excise,
                        1994-95, 1996-97     New Delhi, 
                                             Commissioner
                                             Appeals
                        & 1997-98 of         Central Excise, 
                                             West Bengal &
                                             Commissioner of
                                             Central Excise,
                                             West Bengal
 
 Central Excise         April 2004-
 Act,1944               Dec. 2008,           Commissioner of
                                             Appeals, 
                        2007-08, 2008-09,    Customs Excise &
                                             Service
                        2009-10              Tax Appellate
                                             Tribunal
 
 Income Tax Act,        1993-94 to 1997-98   Honble High 
 1961                                        Court of Andhra
                                             Pradesh, Hyderabad.
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a financial
 institution, bank or debenture holders.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced 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
 4(xiii) of the Companies (Auditors Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Companies (Auditors Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 (xvi) Based on information and explanations given to us by the
 management, term loans were applied for the purpose 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 no funds raised on short-term basis have been used for long- term
 investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties or companies covered in the register maintained under
 section 301 of the Companies Act, 1956.
 
 (xix) According to information and explanations given to us, during the
 period covered by our audit report, the Company had issued 15 unsecured
 non convertible debentures of Rs.100 lacs each. However the same were
 redeemed during the year.
 
 (xx) The Company has not raised any money through a public issue during
 the year.
 
 (xxi) 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 given 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 S.R. BATLIBOI & ASSOCIATES
                                                 CHARTERED ACCOUNTANTS
                                     Firm registration number: 101049W
 
                                               Per Vikas Kumar Pansari
                                                               Partner
                                                Membership No.: 093649
 
 Place : New Delhi 
 Dated : April 27, 2011