We have audited the attached BALANCE SHEET of NEWTON ENGINEERING AND
 CHEMICALS LIMITED (hereinafter referred to as the `Company) as at 31st
 MARCH, 2002 and also the PROFIT AND LOSS ACCOUNT of the Company 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.
 
 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 mis-statement. 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 statments
 presentation. We believe that our audit provides reasonable basis for
 our opinion.
 
 As required by the Manufacturing and Other Companies (Auditors Report)
 Order, 1988 issued by the Central Government of India in terms of sub
 section (4A) of Section 227 of the Companies Act, 1956, we annexed
 hereto a statement on the matters specified in paragraphs 4 and 5 of
 the said Order.
 
 Further to our Comments in the Annexure referred to 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 accounts as required by law have
 been kept by the Company far as appears from our examination of such
 books.
 
 c) The Balance Sheet and Profit and Loss Account dealt with by this
 report are in agreement with the books of account.
 
 d) In our opinion, the Balance Sheet and the Profit and Loss Account
 comply with the Accounting Standards referred to in sub-section (3C) of
 Section 211 of the Companies Act, 1956.
 
 e) On the basis of the written representations received from the
 Directors of the Company as on 31st March, 2002, and taken on record by
 the Board of Directors, We report that none of Directors is
 disqualified as on 31st March, 2002 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 i a best of our information and according to
 explanations given to us, the said accounts read together with the
 Significant Accounting Policies and Notes forming part thereof, give
 the information required by the Companies Act, 1956 in the manner so
 required and give a true and fair view.
 
 i) in the case of the Balance Sheet, of the state of affairs of the
 Company at 31st March, 2002.
 
 ii) in the case of Profit and Loss account of the `PROFIT of the
 Company for the year ended on that date.
 
 ANNEXURE REFERRED TO IN PARAGRAPH (I) OF OUR REPORT OF EVEN DATE TO
 
 THE MEMBERS OF NEWTON ENGINEERING & CHEMICALS LIMITED.
 
 1) As informed to us, proper records of fixed assets (including the
 fixed assets acquired on merger/amalgamation of Newton Engineering &
 Construction Company Limited) showing full particulars including
 quantitative details, item wise depreciation and situation of fixed
 assets, are in progress. We have been informed that most of the fixed
 assets have been physically verified by the Management at the close of
 the year and that no serious discrepancies have been noticed on such
 verification.
 
 2) None of the fixed assets of the Company have been revalued during
 the year.
 
 3) The stock of finished goods, stores, spare parts, raw materials and
 other construction materials of the Company lying at various sites have
 been physically verified by the Management at the end of the year.
 
 4) In our Opinion, the procedures of physical verification of stocks
 followed by the Management were found reasonable and adequate in
 relation to the size of the Company and nature of its business.
 
 5) As informed, the discrepancies noticed on verification between the
 physical stocks and book records were not material in relation to the
 operations of the Company and have been properly dealt with in the
 books of account.
 
 6) In our opinion, the valuation of stock is fair and proper in
 accordance with the normally accepted accounting principles and is on
 the same basis as in the previous year.
 
 7) According to the information and explanations given to us, unsecured
 loans has been obtained from company, firms or other parties listed in
 the register manitained under Section 301 of the Companies Act, 1956
 and/or from Companies under the same Management as defined under
 Section 370 (1-B) of the said Act. The rate of interest and other terms
 and conditions of such loans, where stipulated, are prime facie not
 prejudicial to the interest of the Company, in terms of sub section (6)
 of Section 370 of the Act, provisions of Section are not applicable to
 a Company on or after 31st October, 1998.
 
 8) According to the information and explanations given to us the
 Company has granted interest free loans to company, firms or other
 parties listed in register maintained under Section 301 of the
 Companies Act, 1956 and/or from Companies under the same Management as
 defined under Section 370(1-B) of the said Act. The terms and
 conditions of such loans are prime facie not prejudicial to the
 interest of the Company. There are, however, no stipulations with
 regards to repayment of these loans, in terms of sub section (6) of
 Section 370 of the Act, provisions of section are not applicable to a
 Company on or after 31st October, 1998.
 
 9) In respect of loans and advance in the nature of loans given by the
 Company, where stipulations have been made, parties are repaying the
 principal amounts and interest as stipulated. The employees to whom
 interest free loans and advances in the nature of loans have been given
 by the Company are repaying the principal amount as stipulated.
 
 10) in our opinion and according to the information and explanations
 given to us, there are internal control procedures commensurate with
 the size of the Company and nature of its business with regard to
 purchase of stores, raw materials including components, plant and
 machinery, equipment and other assets and for the sale of goods.
 
 11) in our opinion and according to the information and explanations
 given to us, the transactions of purchase of goods, materials and sale
 of goods, materials and services made in pursuance of contracts or
 arrangements entered in the register maintained under Section 301 of
 the Companies Act, 1956 and aggregating during the year to Rs. 50,000
 or more in respect of each party have been made at prices which are
 reasonable having regard to She prevailing market prices for such goods
 or the prices at which the transactions for similar goods have been
 made with other parties.
 
 12) As explained to us, the Company has reviewed its stock of raw
 materials, stores and finished goods at the time of physical
 verification for the purpose of determination of unserviceable and/or
 damaged items and on this basis no provision is considered necessary by
 the management as no loss is anticipated.
 
 13) In respect of the Deposits accepted from the shareholders of the
 Company, the provisions of Section 58A of the Companies Act 1956 and
 the Rules framed thereunder have been compiled with.
 
 14) The value of realisable scraps generated out of its activities,
 being insignificant, no quantitative records are maintained. However
 records have been maintained in respect of sale and disposal of such
 scraps. The Company has no by product.
 
 15) The Company has an internal audit system covering certain
 operations of the Company. However, in our opinion internal audit
 system needs to be strengthened so as to extend its scope to cover the
 wide spread operations of various sites of the Company. As informed to
 us, steps are being taken to introduce Internal Audit Department.
 
 16) The Central Government has not prescribed maintenance of cost
 records under Section 209(1)(d) of the Companies Act, 1956.
 
 17) As per the records of the Company, delays have been observed in
 remitting the Provident Fund and Employees State Insurance dues with
 the appropriate authorities. However there were no arrears at the close
 of the year.
 
 18) According to the information and explanations given to us, there
 are no undisputed amounts payable in respect of Income Tax, Wealth Tax,
 Custom Duty and Excise Duty outstanding for a period of more than six
 months as at 31st March, 2002 from the date they became payable. In
 respect of Sales tax, as informed, the account is under reconciliation
 and as such undisputed amount payable, if any, for over six months
 cannot be ascertained.
 
 19) During the course of our examination of the books of account
 carried out in accordance with generally accepted auditing practices,
 we have not come across any personal expenses which have been charged
 to Profit & Loss Account, nor have we been informed of any such case by
 the management, other than those payable under contractual obligation
 and/or accepted business practices.
 
 20) The Company is not a sick industrial Company within the meaning of
 Clause (O) of Section 3 (1) of the Sick Industrial Companies (Special
 Provisions) Act, 1985.
 
 In respect of service activities.
 
 21) According to the information and explanations given to us, the
 Company has a reasonable system, commensurate with its size and nature
 of its business, for recording receipts, issues and consumption of
 materials and stores and allocating materials consumed to each
 contract.
 
 22) The Company has a reasonable system of allocation of man-hours
 utilised to the relative contracts, commensurate with its size and
 nature of its business.
 
 23) The Company has a reasonable system of authorisation at proper
 levels, and an adequate system of internal control commensurate with
 the size of the Company and the nature of its business, as regards the
 issue of stores and allocation of stores and labour to each contract.
 
                                                        Hitesh J. Desai
                                                                Partner
 
 Date: 26-6-2002                                   For Haribhakti & Co.
 Place: VADODARA                                  Chartered Accountants