We have audited the attached Balance Sheet of LLOYD ELECTRIC &
 ENGINEERING LIMITED as at 31st March, 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 Company’s management. Our responsibility is to express an opinion
 on these financial statements based on our audit.
 
 1.  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 from any 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 presentation of the
 financial statements. We believe that our audit provides a reasonable
 basis for our opinion.
 
 2.  As required by the Companies (Auditor’s Report) Order, 2003 issued
 by the Central Government 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.
 
 3.  Further to our comments in the Annexure referred to in the
 Paragraph 2 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 purpose of our
 audit;
 
 b) In our opinion, proper books of account as required by law have been
 kept by the Company so far as it 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 together with the
 Significant 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 the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011;
 
 ii) in the case of the Profit & Loss Account, of the profit for the
 year ended on that date; and
 
 iii) in the case of the Cash Flow Statement, of the Cash Flows for the
 year ended on that date.
 
 Annexure to the Auditors’ Report
 
 ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR AUDITOR’S REPORT OF EVEN
 DATE ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2011 OF LLOYD
 ELECTRIC & ENGINEERING LIMITED
 
 On the basis of such checks as we considered appropriate and in terms
 of the information and explanations given to us, we state that
 
 1.  The company has maintained records showing full particulars
 including quantitative details and situation of the Fixed Assets. As
 per information given to us, the management has verified the Fixed
 Assets physically. We understand that no discrepancies were noticed on
 such physical verification. The Company has not disposed off any
 substantial part of its fixed assets so as to affect its going concern
 status.
 
 2.  The inventory has been physically verified during the year by the
 management and in our opinion the frequency of verification is
 reasonable. According to the information and explanations given to us,
 in our opinion, the procedures of physical verification of stock
 followed by the management are reasonable and adequate in relation to
 the size of the Company and the nature of its business. The Company is
 maintaining proper records of inventory. The discrepancies noticed on
 physical verification of stocks as compared to the book records were
 not material and have been properly dealt with in the books of account.
 
 3.  According to the informations given to us the Company has not taken
 any loans, secured or unsecured from Companies, firms, or other parties
 listed in the Register maintained under section 301 of the Companies
 Act, 1956. The Company has granted net Rs.1498.39 lakhs to Company,
 Firms listed in the register maintained u/s 301 of the Companies Act.
 
 4.  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 with regard to purchases of inventory, fixed assets and with
 regard to the sale goods. During the course of our audit no major
 weakness has been noticed in the internal controls.
 
 5.  In our opinion and according to the information and explanations
 given to us, there are transactions made in pursuance of contracts of
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956 and exceeding the value of rupees five lakh in
 respect of any party during the year have been made at prices which are
 reasonable having regard to prevailing market prices at the relevant
 time.
 
 6.  The Company has not accepted any deposits from the public therefore
 the provision of Section 58A and 58AA of the Companies Act, 1956 are
 not applicable to the company.
 
 7.  In our opinion, the Company has internal audit system, commensurate
 with the size of the Company and the nature of its business.
 
 8.  The Central Government has not prescribed maintenance of cost
 records u/s 209(1) (d) of the Companies Act 1956 for the products of
 the company.
 
 9. According to the records of the company and information and
 explanations given to us, the Company has been regular in depositing
 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
 statutory dues with the appropriate authorities during theyear.The
 disputed matter pending before authority is as under:
 
 I Particulars        Financial Year       Amount         Dispute
                                        (Rs.in Lacs)      Pending
 
    Excise Duty         2006-2007          21.75         Appellate
                                                         Tribunal
 
 10.  The company does not have accumulated Losses at the end of the
 financial year and has not incurred any cash loss during the financial
 year covered by our audit and the immediate preceding financial year.
 
 11.  The company has not defaulted in repayment of dues of financial
 institution /bankas at the Balance Sheet date.
 
 12.  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 or advances on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 13.  The provisions of any special statute applicable to chit fund/nid
 hi/mutual benefit fund/societies are not applicable to the company.
 
 14.  In our opinion and according to the information and explanations
 given to us, the Company is not a dealer or trader in securities.
 
 15.  In our opinion and according to the information and explanation
 given to us, the terms & conditions of the guarantees given by the
 Company for loan taken by the associate/subsidiary Companies from bank
 are prime facie not prejudicial to the interest of the company.
 
 16.  In our opinion and according to the information and explanation
 given to us, the term loans have been applied for the purposes for
 which they were obtained.
 
 17.  According to the Cash Flow Statement and records examined by us
 and according to the information and explanations given to us,on
 overall basis,funds raised on short term basis have, prima facie, not
 been used during the year for long term investment and vice versa.
 
 18.  During the year the company has allotted 500 No''s 11.25% Secured
 Redeemable Non-Convertible Debentures @ Rs.10 Lacs each (Refer Schedule
 C). According to the information and explanations given to us and the
 records examined by us, charge has been created in respect of the
 debentures issued.
 
 19.  The Company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained undersection
 301 oftheCompaniesAct,1956.
 
 20.  During the year,the Company has not raised any money by way of
 public issue.
 
 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, and according to the information and
 explanations given to us, we have neither come across any instances of
 material fraud on or by the company, noticed or reported during the
 year, nor have been informed of such case by management.
 
                                               ForSURESHC.MATHUR&CO.
 
                                              Chartered Accountants, 
                                     (Firm Registration No.000891 N)
 
                                                   (BRIJESHC.MATHUR)
 
 PLACE : NEW DELHI                                          PARTNER
 
 DATED: AUGUST 11,2011                         MembershipNo.-083540