1.  We have audited the attached Balance Sheet of Ircon International
 Limited as at 31st March, 2010, Profit & Loss Account and Cash flow
 statement for the year ended on that date, annexed thereto in which are
 incorporated the accounts of Algeria, Mozambique, Ethiopia,
 Afghanistan, Sri Lanka, Northern Region, Western, Eastern, Southern,
 Kanpur & Jammu & Kashmir Regions of the Company audited by the Branch
 Statutory Auditors duly appointed and whose reports have been
 considered by us in framing our report.
 
 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 the management, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis of our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 issued
 by the Government of India in terms of Section 227(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.
 
 4.  We draw attention to Notes to Accounts (Schedule R) & Significant
 Accounting Policies (Schedule Q)
 
 a) Nofe No. 12.b): Carrying balances at exchange rate prevalent at the
 time of settlement of dues in 1995 with Government of India and not
 translating at rates prevalent on 31.03.2010 is not in conformity with
 AS-11. As a result, other current assets is lower by Rs.80.86 million,
 provisions is lower by Rs.38.21 million and profit is lower by Rs.
 42.65 million.
 
 5.  Further to our comments in annexure referred to in para 3 above and
 subject to clause (a) of para 4, 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
 audit.
 
 b) In our opinion, the Company has kept proper books of accounts as
 required by law so far as appears from our examination of those books.
 
 c) The Balance Sheet and Profit & Loss Account dealt with by this
 report are in agreement with the books of accounts.
 
 d) In our opinion, the Balance Sheet, Profit and Loss account and Cash
 Flow Statement dealt with by this Report comply with accounting
 standards referred to in sub-section (3c) of section 211 of the
 Companies Act, 1956 except otherwise stated .
 
 e) Being a Government Company, pursuant to the Gazette notification No.
 GSR 829(E) dated 21.10.2003 issued by Government of India, provisions
 of clause(g) of sub-section (1) of section 274 of the Companies Act,
 1956, are not applicable to the company.
 
 f) In our opinion and according to the best of our information and
 according to the explanations given to us, the said accounts read with
 Significant Accounting Policies (Schedule-Q) and Notes on Accounts
 (Schedule-R) give the information required by the Companies Act, 1956,
 in the manner so required and gives 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 31.03.2010;
 
 ii) In the case of Profit & 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 THE AUDITORS REPORT (Referred to in paragraph (3) thereof)
 
 i.  a.  The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b.  The fixed assets were physically verified by the management during
 the year. There is a regular programme of verification, which in our
 opinion, is reasonable having regard to the size of the Company and
 nature of its business. No material discrepancies were noticed on such
 verifications.
 
 c.  During the year no substantial disposal of fixed assets of the
 Company has taken place which would have affected its going concern
 status.
 
 ii.  a.  The inventory has been physically verified by the management
 at reasonable intervals during the year. In our opinion, the frequency
 of verification is reasonable.
 
 b.  In our opinion and according to the information and explanation
 given to us, the procedures of physical verification of inventory
 followed by the management are reasonable and adequate in relation to
 the size of the company and nature of its business.
 
 c.  On the basis of our examination of records of inventory, we are of
 the opinion that the Company is maintaining proper records of
 inventory. The discrepancies noticed on comparison of physical
 verification results with the book records are not material and have
 been properly dealt with in the books of account.
 
 iii. According to the information and explanation given to us by the
 management and records produced, the Company has neither granted nor
 taken any loans, secured or unsecured to/from companies, firms or other
 parties covered in the register maintained under section 301 of the
 Companies Act, 1956. Thus, the requirements under para 4(iii) (b) to
 (d) 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 are adequate internal control procedures
 commensurate with the size of the company and the nature of its
 business, for purchase of inventory and fixed assets and for the sale
 of goods and services.  During the course of our audit, we have not
 observed any continuing failure to correct major weakness in the
 internal control.
 
 v. According to the information and explanations given to us by the
 management and records produced, there are no transactions that need to
 be entered into the register pursuant to Section 301 of the Companies
 Act,
 
 vi. According to the information and explanations given to us, and as
 per our examination of records.the Company has not accepted any
 deposits from public and therefore, the directives issued by the
 Reserve Bank of India and the provisions of Section 58A and 58AA or any
 other relevant provision of the Companies Act, 1956, and rules framed
 there under, are not applicable.
 
 vii. In our opinion, the Company has an internal audit system
 commensurate with its size and nature of the business.
 
 viii. The Central Government has not prescribed the maintenance of cost
 records under section 209(1 )(d) of the Companies Act, 1956, in respect
 of the Company.
 
 ix. a. The company is generally regular in depositing undisputed
 statutory dues with appropriate Authority including provident fund,
 income tax, sales tax, wealth-tax, service-tax, custom duty, excise
 duty, cess and other statutory dues applicable with the appropriate
 authorities. The investor Education & Protection Fund and Employees
 State Insurance are not applicable to the company. According to the
 information and explanation given to us, there are no undisputed
 statutory dues which were outstanding as on 31-03-2010 for a period
 over six months from the date the same become payable.
 
 b. According to information and explanation given to us, and as per our
 examination of records of the Company following are the particulars of
 dues on account of sales tax, income tax, custom duty, wealth tax,
 excise duty and cess matters that have not been deposited on account of
 dispute as on 31.3.2010.
 
 
 
 Nature of the      Amount (in        Period for       Forum where 
 dues               Rs. Million)      which            pending 
                                      amount 
                                      relate 
 Sales Tax          10.61             1988-90          ACIT Delhi 
 
 VAT                203.07            2007-09          Commissioner 
                                                       VAT,  Delhi
 
 Sales Tax          0.81              1982-83, 
                                      1987-88 &        DC (Appeal) 
                                                      Jhansi
                                      1989-90 
 
 Custom Duty        58.12             1989-90         Dy Commissio
                                                      ner(Custom),
                                                      Mumbai
 
 Sales Tax          19.90             1995-96         Maharashtra 
                                                      Sales Tax
 
 Sales Tax          15.27             1996-97         Tribunal, 
                                                      Mumbai
 
 Sales Tax           0.03             1995-96         Tamil Nadu 
                                                      Sales Tax
 
 Sales Tax           0.26             2000-2001       Appellate 
                                                      Tribunal,
                                                      Chennai
 
 Sales Tax           0.31             2001-2001  
 
 Sales Tax/VAT       2.31             1998-1999       Addl
                                                      Commissioner,
                                                      (Commercial
                                                      Tax)Satna 
 
 Sales Tax/VAT       0.11             1999-2000       Addl
                                                      Commissioner,
                                                      (Commercia
                                                      Tax)Satna 
 
 Royalty             0.19             1984-85 and 
                                      1985-86         High Court, 
                                                      Allahabad
 
 
 Sales Tax           9.94             2002-03         Commissioner 
                                                      Sales Tax,
                                                      Orissa
 
 Sales Tax           0.35             1993-94         High Court, M.P.  
 
 Sales Tax           0.05             1998-99         Addl. Commissioned
                                                      Commercial Tax) 
                                                      Raipur & Korba,
 
 Sales Tax           8.63            1997-2002        Asst Commissioner 
                                                      Sales
 
 Sales Tax           7.13            2003-04 & 
                                     2004-05          Tax, Behala 
 
 Sales Tax           1.7.5           1987-88 to 
                                     1994-95          Bihar Sales Tax 
                                                      Tribunal
 
 Sales Tax           360.03          2001-02 to 
                                     2005-06          Dy Commissioner 
                                                      of Sales Tax 
                                                      (Appeals),J&K
 
 Sales Tax           11.93           2006-07          Dy Commissioner
                                                      (Appeals), Punjab
                                                      Sales Tax
 
 Provident Fund      17.54           2003-04 to 
                                     2006-07          Provident Fund
                                                      Commissioner, J&K
 
 Sales Tax            2.12           1997-98          Revenue Board,
                                                      Gwalior
 
 Sales Tax          114.64           2001-05          Dy Commissioner, 
                                                      Noida 
 
 Sales Tax            7.32           2009-10          Dy Commissioner 
                                                      Appeal, Ajmer
 
 Cess                83.50           2001-02          Spl Secretary.
                                                      Mining Department, 
                                                      Rajastan
 
 UPVAT                4.96           2009-10 
 
 Entry Tax            0.71           2007-08          Jt. Commissioner 
                                                      Appeals 
 
 Sales Tax           14.52           2006-07          Jhansi
 
 Entry Tax            3.41           2006-07
 
  
 Entry Tax            0.l6           2005-06 
 
 Entry Tax            0.33           2009-10          Dy Commissioner 
                                                      Sales Tax,
                                                      Lucknow
 
 Sales Tax            0.14           2005-06
 
 Sales Tax            2.80           2002-03          High Court/
                                                      Allahabad.
 
 Sales Tax            1.84           2003-04
 
 Sales Tax            4.07           2004-05  
 
 
 
 x. The company has no cash losses during the financial year covered by
 our audit and in the immediately preceding financial year nor are there
 any accumulated losses in this period.
 
 xi. The Company is a debt free company, so the question of default by
 the Company in repayment of dues to financial institution, bank or
 debenture holder does not arise.
 
 xii. According to the information and explanations given to us and as
 per our examination of records, the company has not granted loans and
 advances on the pledge of shares, debentures and other securities.
 
 xiii.  In our opinion, the Company is neither a chit fund nor a nidhi
 mutual benep fund/society, so the provisions of clause 4(xiii) of the
 Companies (Auditors Report) Order, 2003 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, are not applicable to the Company.
 
 xv. In our opinion, the terms and conditions on which the Company has
 given guarantees for loans taken by others from banks or financial
 institutions are not prejudicial to the interest of the Company.
 
 xvi. The Company is a debt free Company, so the question of use by the
 Company of term loan for the purpose for which it was given, does not
 arise.
 
 xvii. As the Company is a debt free company, the use of short-term
 funds for long-term investment does not arise.
 
 xviii. According to the information and explanations given to us, the
 Company has not made preferential allotment of shares to parties and
 companies covered in the register maintained under section 301 of the
 Act.
 
 xix. According to the information and explanations given to us, during
 the year under audit, the Company has not issued any debentures.
 
 xx.  The Company has not raised any money by way of public issue during
 the year.
 
 xxi.  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 Wahi & Gupta 
                                                  Chartered Accountants 
                                                  FRN 2263N
 
                                                  (Y.K.Gupta) 
                                                  Partner 
                                                  Membership No. 16020
 
 Place; New Delhi 
 
 Date: 6th August 2010