We have audited the attached Balance Sheet of Patel Engineering Ltd as
 at March 31, 2011, the Profit and Loss Account and Cash Flow Statement
 of the Company 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 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 (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, and on the basis of such checks
 as we considered appropriate and according to the information and
 explanations given to us, we annex hereto a statement on the matter
 specified in paragraphs 4 and 5 of the said Order.
 
 2.  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 so far, as appears from our examination of
 those books;
 
 c.  the Balance Sheet, the Profit and Loss Account and Cash Flow
 Statement of the Company dealt with by this report are in agreement
 with the books of accounts of the Company;
 
 d.  in our opinion, the Balance Sheet, the 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;
 
 e.  on the basis of written representations received form the
 Directors, as on March 31, 2011 and taken on record by the Board of
 Directors, we report that none of the Director is disqualified as on
 March 31, 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 together with notes
 thereon and attached thereto give in the prescribed manner the
 information required by the Companies Act, 1956 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 March 31, 2011;
 
 ii.  in case of the profit and loss account, of the profit of the
 Company 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 AUDITORS'' REPORT
 
 (Referred to in paragraph 1 of the Auditors Report of the even date to
 the members of Patel Engineering Ltd on the accounts for the year ended
 March 31, 2011), we report that:
 
 i.  a.  The Company has maintained proper records
 
 showing full particulars, including quantitative details and situation
 of fixed assets.
 
 b.  We have been informed that, the fixed assets including assets of
 the Company purchased in the name of Directors and their relatives and
 employees have been physically verified at reasonable intervals by the
 Management and no material discrepancies were noticed on such
 verifications.
 
 c.  Fixed Assets disposed off during the year were not substantial and
 therefore do not affect the going concern status of the Company.
 
 ii.  a.  Physical verification of inventories has been conducted at
 reasonable intervals by the management.
 
 b.  In our opinion and on the basis of information and explanations
 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 the nature of its business.
 
 c.  The Company has maintained proper records of inventory. We have
 been informed by the management, that the discrepancies between the
 physical stock and book records were not material.
 
 iii.  a.  The Company has granted unsecured loan at call to two
 companies covered in the register maintained under section 301 of the
 Companies Act 1956, aggregating to a maximum outstanding of Rs 169.26
 million during the year and Rs 169.26 million outstanding at the year
 end.
 
 b.  In our opinion, the rate of interest and other terms & conditions
 are prima facie not prejudicial to the interest of the Company.
 
 c.  The receipt of principal amounts and interest are at call.
 
 d.  There is no overdue amount in respect of the above loan.
 
 e.  The Company has not taken unsecured loans from Companies Firms or
 Other parties covered in the register under section 301 of the Act
 during the year Accordingly, clause 4(iii) (f) and (g) of the order is
 not applicable.
 
 iv.  In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and the nature of its business for the
 purchase of inventory, fixed assets and for work executed and we have
 not observed any continuing failure to correct major weakness in such
 internal control system.
 
 v.  a.  In our opinion and according to the
 
 information and explanations given to us, the particulars of contracts
 or arrangements referred to in section 301 of the Companies Act 1956,
 have been entered in the register required to-be maintained under that
 section.
 
 b.  As explained to us, the transactions made in pursuance of such
 contracts or arrangements and exceeding the value of Rs 5,00,000 in
 respect of any party during the year are at a negotiated price, fixed
 at reasonable levels, having regard to the technical requirements/
 quality consideration and alternate source of availability. There are
 no comparable transactions with the Company of similar nature.
 
 vi.  In our opinion and according to the information and explanations
 given to us, the Company has not accepted deposits from public and
 consequently, the directives issued by the Reserve Bank of India and
 the provision of section 58(A), 58(AA) or any other relevant provisions
 of the Companies Act 1956 and the rules framed there under are not
 applicable.
 
 vii.  The internal audit function is carried out by a firm of
 independent Chartered Accountants appointed by the management and is
 commensurate with the size of the Company and the nature of its
 business.
 
 viii. As explained to us the Central Government has not prescribed the
 maintenance of the cost records under Section 209(l)(d) of the
 Companies Act, 1956. Accordingly clause 4 (viii) is not applicable.
 
 ix.  a.  As explained to us, the Company is generally regular in
 depositing undisputed statutory dues, in respect of Provident Fund,
 Investor Education & Protection Fund, Income Tax, Sales Tax, Wealth
 Tax, Service Tax, Custom Duty, Excise Duty, cess and other material
 statutory dues with the appropriate authorities.
 
 b.  According to the information and explanations given to us, details
 of dues of sales tax, wealth tax, service tax, custom duty, excise duty
 and cess which have not been deposited as on 31st March 2011 on account
 of disputes are given below:
 
 Particulars   Financial year to 
               which amount relates        Forum where dispute
                                           is pending            Rs in 
                                                               millions
 
 Custom Duty   2001-2002, 2004-2005 
               and 2009-10                 Commissioner of appea l28.25
 
 Cess          2007-2008 and 2008-2009     High Court             53.70
 
 Sales Tax     2001-2002 to 2003-2004      Appellate Tribunal     14.98
 
 x.  The Company does not have any accumulated losses as at the end of
 the year and has not incurred cash losses during the financial year and
 in the immediately preceding financial year.
 
 xi.  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 institutions or banks or to debenture holder as at the
 balance-sheet date.
 
 xii.  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.
 
 xiii. The Company is not chit/nidhi/mutual benefit fund/ society.
 Accordingly, clause 4(xiii) of the order is not applicable.
 
 xiv. The Company is not dealing or trading in shares, securities,
 debentures and other investment.  Accordingly, clause 4(xiv) of the
 order is not applicable.
 
 xv.  In our opinion and according to the information and explanations
 given to us, the Company has given guarantee for loans taken by others
 from Banks or Financial Institutions. The terms and conditions thereof
 are not prima-facie prejudicial to the interest of the Company.
 
 xvi. In our opinion and according to the information and explanations
 given to us and on an overall examination, the term loans have been
 applied for the purpose for which they were obtained.
 
 xvii. On the basis of our examination of books of accounts and
 information and explanations given to us, in our opinion, the funds
 raised on a short term basis have not been used for long term
 investment.
 
 xviii. During the year, the Company has not made any preferential
 allotment of shares to parties covered in the register maintained Under
 Section 301 of the Act.
 
 xix. The Company has created charged on outstanding debentures issued
 during the year.
 
 xx.  The Company has not raised any money by public issue during the
 year.
 
 xxi. During the course of our audit carried out in accordance with the
 generally acceptable auditing practices and as informed by the
 Management, no fraud on or by the Company has been noticed or reported
 during the year.
 
                                                   For Vatsaraj & Co.  
                                                Chartered Accountants
 
                                                         FRN: 111327W
 
 
                                                   CA Nitesh K Dedhia 
                                                              Partner
 
                                                       M. No.: 114893
 
 
                                                              Mumbai 
                                                  September 10, 2011