Punjab Tractors

1.  We have audited the attached Balance Sheet of Punjab Tractors Ltd.,
 as at 31st March, 2008 and related Profit and Loss Account and the Cash
 Flow Statement for the year ended on that date annexed thereto which we
 have signed under reference to this 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 misstatements. 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 for our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 as
 amended by Companies (Auditors Report) (Amendment) Order, 2004
 (together the order), issued by the Central Government of India in
 terms of Sub-Section (4A) of Section 227 of The Companies Act, 1956
 of India (the Act) and on the basis of such checks of the books and
 the records of the company as we consider appropriate and according to
 the information and explanation given to us, we give in the Annexure a
 statement on the matters specified in Paragraph 4 and 5 of the said
 order.
 
 4.  Further to our comments in the Annexure referred to in Paragraph 3
 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 appears from our examination of those
 books;
 
 c) The Balance Sheet, Profit and 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 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 Act;
 
 e) On the basis of written representations received from the directors,
 as on 31st March, 2008 and taken on record by the Board of Directors,
 no director of the company is disqualified as on 31st March, 2008 from
 being appointed as a Director under clause (g) of sub-section (1) of
 Section 274 of the Act;
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto give in the prescribed
 manner the information required by the Act 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 the affairs of the
 Company as at 31st March, 2008;
 
 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
 
 Statement referred to in Paragraph (3) of our Report of even date to
 the members of Punjab Tractors Limited on the accounts for the year
 ended 31st March, 2008.
 
 (i) a) The Company is maintaining proper records to show full
 particulars including the quantitative details of Fixed Assets.
 
 b) As explained to us that the management has physically verified the
 major fixed assets of the Company in a phased manner, designed to cover
 all assets over a period of three years, which in our opinion is
 reasonable having regard to the size of the company and nature of the
 assets. No material discrepancies were noticed on such verification.
 
 c) As per the information and explanations given to us no substantial
 part of the fixed assets have been disposed off during the year, which
 affect the ability of the Company to continue as a going concern.
 
 (ii) a) The stock of finished goods, stores, spare parts and raw
 material lying in the factory have been physically verified by the
 management during /at the year-end. In our opinion and according to
 information and explanations given to us the frequency of physical
 verification is reasonable.
 
 b) In our opinion and according to the information and explanations
 given to us, the procedures of the 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.
 
 c) In our opinion and according to the information and explanations
 given to us the Company is maintaining proper records of its
 inventories and the discrepancies noticed on physical verification of
 inventory were not material and have been adequately dealt with in the
 books of account.
 
 (iii) The Company has not taken or granted any loans, secured or
 unsecured from Companies, Firms or Other parties listed in the register
 maintained under section 301 of the Companies Act, 1956.
 
 (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 with regard to the purchases of Inventories, Fixed Assets and
 for the Sale of goods.
 
 (v) To the best of our knowledge and belief and according to the
 information and explanations given to us, the Company has not entered
 into any transaction which is required to be entered in the register
 maintained in pursuance of section 301 of the Companies Act, 1956.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of the
 Section 58-A & 58AA of the Companies Act, 1956 and the Companies
 (Acceptance of Deposits) Rules, 1975 with regard to the deposits
 accepted from the Public.
 
 (vii) In our opinion, the Company has an adequate Internal Audit
 System, commensurate with its size and nature of its business.
 
 (viii) We have broadly reviewed the books of accounts as required to be
 maintained by the Company under section 209(1) (d) of the Companies
 Act, 1956 and are of the opinion that prime facie the prescribed
 accounts and records have been made and maintained. However, we are not
 required to and have not carried out detailed examination of such
 accounts and records with a view to determining whether they are
 accurate or complete.
 
 (ix) a) 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, Custom
 Duty, Excise Duty and Cess with the appropriate authorities during the
 year. As explained to us there were no arrears of the statutory dues
 for the period more than six months from the date they became payable
 at the end of the Financial year.
 
 b) Disputed Excise Duty and Sales Tax aggregating to Rs 780.22 lacs and
 Rs.2.11 lacs respectively have not been deposited since the matters are
 pending with Tribunal/Excise Appellate Authorities. In case of Sales
 Tax, the matters are pending with Sales Tax Appellate authorities. As
 explained to us, there were no disputed unpaid amount in respect of
 Income Tax, Custom Duty and Wealth Tax during the year.
 
 (x) The Company does not have accumulated losses as at the end of the
 year and the Company has not incurred cash losses during the current
 and 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 the
 banks. The Company has not obtained any borrowings either from
 Financial Institution or by way of Debentures during the year.
 
 (xii) 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 neither a chit fund nor a Nidhi / Mutual Benefit
 Fund / Society. Accordingly, the provisions of Clause 4 (xiii) of the
 Order are not applicable.
 
 (xiv) The Company is not dealing in or trading in shares, securities,
 debentures and other investments. Accordingly, the provisions of Clause
 4 (xiv) of the Order are not applicable.
 
 (xv) In our opinion and according to the information and explanations
 given to us the terms and conditions of guarantees given by the Company
 for loans taken by others from banks are not prima facie prejudicial to
 the interest of the Company.
 
 (xvi) The Company has not received any Term Loan during the year.
 
 (xvii) According to the Cash Flow Statement and other records examined
 by us and the information and explanations given to us, on an overall
 basis, funds raised on short term basis have, prima-facie, not been
 used during the year for long term investment and vice-versa, other
 than temporary deployment pending application.
 
 (xviii)The Company has not made any preferential allotment of shares to
 parties or companies covered in the register maintained under section
 301 of the Act. Accordingly, the provisions of Clause 4 (xviii) of the
 Order are not applicable.
 
 (xix) The Company has neither issued nor had any outstanding debentures
 during the year. Accordingly, the provisions of Clause 4 (xix) of the
 Order are not applicable.
 
 (xx) The Company has not raised any money by a public issue during the
 year. Accordingly, the provisions of Clause 4 (xx) of the Order are not
 applicable.
 
 (xxi) To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the company
 was noticed or reported during the year.
 
                                              For S. TANDON & ASSOCIATES
                                                Chartered Accountants
 
 New Delhi                                        KAMALKANT GAMBHIR
 Date : 7th May, 2008                                   Partner
                                                 Membership No. 86774