1.  We have audited the attached balance sheet of Nelco Limited as at
 30th September, 2010, the profit and loss account and also 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 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 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 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 in paragraph 3
 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) 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 30th September, 2010;
 
 (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 the cash flow statement, of the cash flows for the
 year ended on that date.
 
 5.  On the basis of written representations received from the
 directors, as on 30th September, 2010, and taken on record by the Board
 of Directors, we report that none of the directors is disqualified as
 on 30th September, 2010 from being appointed as a director in terms of
 clause (g) of sub-section (1) of Section 274 of the Companies Act,
 1956.
 
 ANNEXURE TO THE AUDITORS REPORT TO THE MEMBERS OF NELCO LIMITED
 ( Referred to in paragraph (3) thereof)
 
 (i) Having regard to the nature of the Companys business/activities,
 clauses (xiii) and (xiv) of CARO are not applicable.
 
 (ii) (a) The company is maintaining proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) Physical verification of fixed assets was carried out during the
 year in accordance with the companys policy of verifying the fixed
 assets over a period of three years. In our opinion, the frequency of
 verification of fixed assets is at reasonable intervals. No material
 discrepancies between book records and the physical inventories of
 fixed assets were noticed.
 
 (c) The fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial part of the fixed assets of the Company
 and such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 (iii) (a) The inventory of the company has been physically verified by
 the management during the year and at the year end. In respect of
 stocks lying with third parties, a substantial portion was physically
 verified or has been confirmed by third parties during the year or at
 the year end. In our opinion the frequency of verification is
 reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventory
 followed by the management were found reasonable and adequate in
 relation to the size of the company and the nature of its business.
 
 (c) On the basis of our examination of records of inventory, in our
 opinion, the company has maintained proper records of inventory and the
 discrepancies noticed on physical verification between the physical
 stocks and the book records were not material in relation to the
 operations of the company.
 
 (iv) According to the information and explanations given to us, 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. As the company
 has not granted / taken any loans, secured or unsecured, to / from
 parties listed in the register maintained under Section 301 of the
 Companies Act, 1956 and accordingly paragraphs 4 (iii) (b), (c), (d),
 (f) and (g) of the Companies (Auditors Report) Order, 2003, are not
 applicable.
 
 (v) In our opinion and according to the information and explanations
 given to us, having regard to the explanation that certain items are of
 a special nature and their prices cannot be compared with alternative
 quotations, 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. Further, on the basis of our examination and the information
 and explanations given to us, we have neither come across nor have we
 been informed of any instance of major weakness in the aforesaid
 internal control system.
 
 (vi) According to the information and explanations given to us, we are
 of the opinion that there are no contracts or arrangements that need to
 be entered into the register maintained under Section 301 of the
 Companies Act, 1956 and accordingly paragraph (v)(b) of the Order is
 not applicable.
 
 (vii) In our opinion and according to the information and explanations
 given to us, the company has not accepted any deposits from the public
 during the year and has complied with the provisions of Section 58A,
 58AA and any other relevant provisions of the Companies, Act, 1956 and
 the Companies (Acceptance of Deposits) Rules, 1975. We have been
 informed that no order has been passed by Company Law Board or National
 Company Law Tribunal or Reserve Bank of India or any other court or any
 other Tribunal on the company.
 
 (viii) In our opinion, the company has an internal audit system
 commensurate with its size and nature of its business.
 
 (ix) We have broadly reviewed the books of accounts and records
 maintained by the company relating to the manufacture of Electronic
 Products, pursuant to the rule made by the Central Government for the
 maintenance of cost records under Section 209 (1) (d) of the Companies
 Act, 1956 and we are of the opinion that prima facie the prescribed
 accounts and records have been maintained and are being made up. We
 have, however, not made a detailed examination of the records with a
 view to determining whether they are accurate or complete. To the best
 of our knowledge and according to the information given to us, the
 Central Government has not prescribed the maintenance of cost records
 under Section 209 (1) (d) of the Companies Act, 1956, for any other
 products of the company.
 
 (x) (a) According to the information and explanations given to us, and
 according to the books and records as produced and examined by us, in
 our opinion, the undisputed statutory dues including provident fund,
 investor education and protection fund, income-tax, sales-tax, wealth
 tax, service tax, value added tax, custom duty, excise duty, cess and
 other material statutory dues as applicable, have generally been
 regularly deposited by the company during the year with the appropriate
 authorities. According to the information and explanations given to us,
 there are no arrears of outstanding statutory dues as mentioned above
 as at 30th September, 2010 for a period of more than six months from
 the date they became payable.
 
 (b) As at 30th September, 2010 according to the records of the company
 and the information and explanations given to us, the following are the
 particulars of dues on account of income-tax, sales-tax, custom duty,
 excise duty and service tax matters that have not been deposited on
 account of any dispute.
 
 Name of 
 the         Nature of the      Financial 
                                Year to       Forum where  
                                              the             Amount
 statute     dues               which the 
                                matter        dispute is     (Rs. in 
                                                             lakhs)
                                pertains      pending
 
 Sales - 
 Tax Laws    Sales-Tax          1989-90 and   Appellate 
                                              Authority        17.43
                                1990-91       High Court 
                                              Level
                                1985-86 to
 
                                1988-89,
                                1992-93,      Appellate 
                                              Authority       121.87
                                1996-97,
                                2001-02,     -Commissioner
 
                                2003-04, 
                                2009-10       Level
 
 Customs Duty Customs 1991 to 1993 Appellate Authority 30.04 Laws Duty -
 Assessing Officer Level Excise Duty Excise Duty 1983-84 to 1993-94
 Appellate Authority 2,064.05 Laws - Commissioner Level 1.07 
 
 2006-07 Appellate Authority
 
 - Assistant Director Level
 
 Service Tax Laws Service Tax 2003-04, 2005-06, Appellate Authority
 271.52 2006-07 - up to Commissioner Level
 
 (xi) The company does not have accumulated losses as at 30th September,
 2010 and has not incurred cash losses during the financial year ended
 on that date and in the immediately preceding financial year.
 
 (xii) In our opinion and according to the information and explanations
 given to us, the company has not defaulted in repayment of dues to any
 financial institution, bank or debenture holders during the year.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, the company has not granted any loans and advances on the
 basis of security by way of pledge of shares, debentures and other
 securities.
 
 (xiv) According to the information and explanations given to us, the
 company has not given any guarantees for loans taken by others from
 banks or financial institutions, the terms and conditions, whereof, in
 our opinion, are prejudicial to the interest of the company.
 
 (xv) In our opinion and according to the information and explanations
 given to us, the term loans were applied for the purpose for which the
 loans were obtained.
 
 (xvi) Based on the information and explanations given to us and on an
 overall examination of the balance sheet of the company, in our
 opinion, funds raised on a short term basis have not been used for long
 term investments.
 
 (xvii) The company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Companies Act, 1956, during the year. 
 
 (xviii) The company has not issued any debentures during the year. 
 
 (xix) The company has not raised any money by public issue during the
 year.
 
 (xx) 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 instance of
 significant fraud on or by the company, noticed or reported during the
 year nor have we been informed of such case by the management.
 
                                     For Deloitte Haskins & Sells
 
                                            Chartered Accountants
 
                                        (Registration No 117366W)
 
                                                        R.A.Banga
 
                                                        (Partner)
 
 Place: Mumbai                               Membership No. 37915
 
 Date: 22nd November, 2010