We have audited the attached Balance sheet of M/s. Hydro S&S Industries
 Limited as at 31 st March 2012, the Statement of profit and loss and
 also the Cash flow statement 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 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.
 
 1) As required by the Companies (Auditor''s Report) Order, 2003 issued
 by the Central Government in terms of Section 224(4A) 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 to the extent
 applicable to the company.
 
 2) Further to our comments in the Annexure referred to in the paragraph
 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 the 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
 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, as they apply to the company.
 
 e) On the basis of written representations received from the directors
 as at 31 st March, 2012 and taken on record by the Board of Directors,
 we report that none of the directors is disqualified as on 31st March
 2012 from being appointed as a director in terms of section 274 (1)(g)
 of the Companies Act, 1956.
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, they 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 31 st March, 2012;
 
 ii.  in the case of the Statement of profit and loss, of the profit of
 the company for the financial year ended on that date; and
 
 iii. in the case of the Cash flow statement, of the cash flows for the
 financial year ended on that date.
 
 ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE REPORT OF EVEN DATE:
 
 i) a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b) These fixed assets have been physically verified by the management
 at the end of the financial year, 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) In our opinion, the fixed assets disposed off during the year, do
 not constitute a substantial part of the fixed assets of the company
 and such disposal has not affected the going concern status of the
 company.
 
 ii) a) As explained to us, the inventories held by the Company were
 physically verified during the year by the management
 
 at reasonable intervals.
 
 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 the information and explanations
 given to us, the company is maintaining proper records of its
 inventories and no material discrepancies were noticed on physical
 verification.
 
 iii) a) The Company has not granted any loans, secured or unsecured to
 companies, firms or other parties covered in the register maintained
 u/s 301 of the Act.
 
 b) The company has not taken any loans, secured or unsecured from
 companies, firms or other parties covered in the register maintained
 u/s 301 of the Act.
 
 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 the purchase of inventory and fixed assets and
 for the sale of goods and services. Further on the basis of our
 examination of the books and records of the Company, there is no
 continuing failure to correct major weaknesses in the aforesaid
 internal control system of the company.
 
 v) a) The entries relating to particulars of contracts or arrangements
 referred to in section 301 of the Act have been made in the register
 required to be maintained under that section; and
 
 b) In our opinion and to the best of our knowledge and belief, wherever
 applicable the transactions made in pursuance of such contracts or
 arrangements have been made 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 during
 the year to which the directives issued by the Reserve Bank of India
 and the provisions of sections 58 A and 58 AA or any other relevant
 provisions of the Act and the rules framed there under are applicable.
 
 vii) In our opinion, the company has an internal audit system
 commensurate with its size and nature of its business.
 
 viii) As explained to us, the Central Government has not prescribed the
 maintenance of cost records under clause (d) of sub-section (1) of
 Section 209 of the Companies Act, 1956.
 
 ix) According to the records of the Company,
 
 (a) the Company is regular in depositing undisputed statutory dues
 including provident fund, investor education and protection fund,
 employee''s state insurance, income tax, sales tax, wealth tax,
 service tax, customs duty, excise duties and cess and any other
 statutory dues applicable to it, with the appropriate authorities
 during the year.
 
 b) there are no dues of income tax, sales tax, wealth tax, service tax,
 customs duty, excise duty and cess which have not been deposited on
 account of any dispute except the following pending in appeals:
 
 (i) Income tax of Rs. 16.94 lakhs before the First Appellate Authority
 
 (ii) Customs duty of Rs. 26.78 lakhs pending before the First Appellate
 Authority and
 
 (iii) Service tax pending before the appellate authorities as under:
 
 a.  First Appellate Authority     Rs. 10.16 lakhs and
 
 b.  Second Appellate Authority    Rs. 2.42 lakhs
 
 x) The Company did not have accumulated losses at the end of the
 financial year i.e. 31.03.2012. The Company did not incur cash loss in
 this financial year and in the preceding financial year ended
 31.03.2011.
 
 xi) On the basis of records produced, the Company has not defaulted in
 repayment of the dues to any financial institution or bank during the
 financial year.
 
 xii) As per the records maintained, no loans or advances have been
 granted by the Company on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 xiii) The provisions of Special statute applicable to chit, nidhi,
 mutual fund / societies are not applicable to the Company.
 
 xiv) On the basis of records maintained and in our opinion, the Company
 does not deal or trade in shares, securities, debentures and other
 investments.
 
 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) As per the information and explanations given to us, term loans
 have been applied for the purpose for which these term loans were
 obtained.
 
 xvii) In our opinion, based on the information and explanations given
 to us and on an overall examination of the books and records of the
 company, the funds raised on short term basis prima facie have not been
 used for long term investments.  No long term funds have been used to
 finance short-term assets.
 
 xviii)The company has not made any preferential allotment of shares
 during the financial year to any party.
 
 xix) The company has not issued any debentures during the financial
 year.
 
 xx) The company has not raised any money by public issues during the
 financial year.
 
 xxi) On the basis of the audit procedures carried out and information
 and explanations given by the management, we state that no fraud on or
 by the Company has been noticed or reported during the course of our
 audit.
 
                                            For M/s. P. SRINIVASAN & Co.
 
                                                  Chartered Accountants
 
 Place : Chennai                                      CA. P. SRINIVASAN
 
 Date : 4th June, 2012                                          Partner
 
                                                  Membership No. : 2090 
 
                                                           FRN. 004054S