RPG Transmission

1. We have audited the attached balance sheet of RPG Transmission
 Limited as at March 31, 2007 and also the profit and loss account and
 the cash flow statement of the Company for the year ended on that date,
 annexed thereto, in which are incorporated the audited returns of the
 Bangladesh and Nigeria branches, audited by other auditors, duly
 appointed. 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.
 
 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 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 (Auditor's Report) Order, 2003 issued
 by the Central Government of India in terms of section 227(4A) of the
 Companies Act, 1956, we annex hereto 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:-
 
 (a) 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;
 
 (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 and audited returns have been received from Bangladesh and
 Nigeria branches not visited by us;
 
 (c) the report of the auditors of the Company's Bangladesh and Nigeria
 branches have been forwarded to the Company and have been considered by
 us in preparing our report;
 
 (d) the balance sheet, profit and loss account and cash flow statement
 dealt with by this report are in agreement with the books of account
 and with the audited returns from the Bangladesh and Nigeria branches;
 
 (e) in our opinion, the balance sheet and profit and loss account and
 cash flow statement dealt with by this report comply with the
 accounting standards referred to in section 211(3C) of the Companies
 Act, 1956;
 
 (f) on the basis of written representations received from directors as
 on March 31, 2007, and taken on record by the Board of Directors, we
 report that none of the directors is disqualified as on March 31, 2007
 from being appointed as a director in terms of section 274(1)(g) of
 the Companies Act, 1956; and
 
 (g) in our opinion and to the best of our information and according to
 the explanations given to us, the 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:
 
 - in the case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2007;
 
 - in the case of the profit and loss account, of the profit of the
 Company for the year ended on that date; and
 
 - in the case of the cash flow statement, of the cash flows for the
 year ended on that date.
 
 For A.F.FERGUSON & CO.
 Chartered Accountants
 
 Manjula Banerji
 Partner
 (Membership No.086423)
 
 Place : New Delhi  
 Date  : April 28, 2007
 
 ANNEXURE REFERRED TO IN PARAGRAPH `3' OF THE AUDITORS' REPORT TO THE
 MEMBERS OF RPG TRANSMISSION LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED
 MARCH 31, 2007.
 
 i) a) The Company is maintaining proper records showing full
 particulars including quantitative details and situation of its fixed
 assets.
 
 b) According to the information and explanations given to us, the
 Company has a programme of physically verifying all its fixed assets
 over a period of two years and, in accordance with this programme, the
 management has physically verified certain fixed assets during the
 year. In our opinion, the frequency of verification is reasonable
 having regard to the size of the Company and the nature of its fixed
 assets. No material discrepancies were noticed on such verification.
 
 c) In our opinion and according to information and explanations given
 to us, a substantial part of the fixed assets has not been disposed off
 by the Company, during the year.
 
 ii) a) During the year, the inventories have been physically verified
 by the management, except for stock lying with third parties, which
 have been confirmed by the parties. 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 inventories
 followed by the management are 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 the records of inventories, we
 are of the opinion that the Company is maintaining proper records of
 inventories. The discrepancies noticed on physical verification of
 inventories as compared to book records were not material and have been
 properly dealt with in the books of account.
 
 iii) a) According to the information and explanations given to us, the
 Company has, during the year, not granted any loans, secured or
 unsecured to companies, firms or other parties covered in the register
 maintained under section 301 of the Companies Act, 1956. Accordingly,
 paragraphs 4 (iii) (b), (c) and (d) of the Companies (Auditor's Report)
 Order, 2003 (hereinafter referred to as the Order) are not applicable.
 
 b) According to the information and explanations given to us, the
 Company has, during the year, not taken any loans, secured or unsecured
 from companies, firms or other parties covered in the register
 maintained under section 301 of the Companies Act, 1956. Accordingly,
 paragraphs 4 (iii) (e), (f) and (g) of (he Order are 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 inventories and fixed assets and for the sale of goods and
 services. Further, on the basis of our examination and according to the
 information and explanations given to us, we have neither come across
 nor have been informed of any instance of major weaknesses in the
 aforesaid internal control systems.
 
 v) According to the information and explanations given to us, during
 the year, there were no contracts or arrangements that were required to
 be entered in the register maintained pursuant to section 301 of the
 Companies Act, 1956. Accordingly, paragraphs 4(v) (a) and (b) of the
 Order are not applicable.
 
 vi) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of section
 58A and 58AA and other relevant provisions of the Companies Act, 1956
 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to
 the deposits accepted from the public.  As per the information and
 explanations given to us, no order under the aforesaid sections has
 been passed by the Company Law Board or Reserve Bank of India or any
 Court or any other Tribunal.
 
 vii) In our opinion and according to the information and explanations
 given to us, the Company has an internal audit system commensurate with
 its size and the nature of its business.
 
 viii) According to the information and explanations given to us, the
 Central Government has not prescribed the maintenance of cost records
 under section 209(1)(d) of the Companies Act, 1956, in respect of the
 products manufactured by the Company.
 
 ix) a) According to the information and explanations given to us and
 the records of the Company examined by us, the Company has been regular
 in depositing undisputed statutory dues including provident fund,
 investor education and protection fund, wealth tax, cess, customs duty,
 excise duty and other material statutory dues applicable to it and has
 generally been regular in depositing dues in case of service tax,
 income-tax, sales tax and professional tax. We are informed that there
 are no undisputed statutory dues as at the year end outstanding for a
 period of more than six months from the date they became payable.
 
 b) According to the information and explanations given to us and the
 records of the Company examined by us, there are no disputed dues of
 customs duty, wealth tax, service tax, excise duty, income tax and cess
 matters. The details of disputed sales tax dues which have not been
 deposited by the Company as at March 31, 2007 are as follows:-
 
 Statute   Nature of    Forum       Net unpaid  Amount      Period to
           the dues     where       amount      paid under  which the
                        dispute     (Rs. lacs)  protest     amount
                        is pending              (Rs. lacs)  relates
 
 Sales     Sales Tax    Authority     546.56      84.32     1990-2005
 Tax Act                upto Commi-
                        ssioners'
                        level
 
           Sales Tax                  122.93          -     1989-2001
           Tribunal                          
 
 x) According to the information and explanations given to us, the
 Company does not have accumulated losses as at the year end i.e. March
 31, 2007. The Company has not incurred cash losses during the year
 ended March 31, 2007 and in the immediately preceding period ended
 March 31, 2006.
 
 xi) According to the records of the Company examined by us and the
 information and explanations given to us, the Company, during the year,
 has not defaulted in repayment of dues to financial institutions, banks
 or debenture holders.
 
 xii) As the Company has not granted any loans and advances on the basis
 of security by way of pledge of shares, debentures and other
 securities, paragraph 4(xii) of the Order is not applicable.
 
 xiii) As the Company is not a chit fund/nidhi/mutual benefit
 funds/society to which the provisions of special statute relating to
 chit fund are applicable, paragraph 4(xiii) of the Order is not
 applicable.
 
 xiv) According to the information and explanations given to us, as the
 Company is not dealing or trading in shares, securities, debentures and
 other investments, paragraph 4(xiv) of the Order is not applicable.
 
 xv) 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 during the year.
 
 xvi) In our opinion and according to .the information and explanations
 given to us, the Company has not obtained any term loans during the
 year.
 
 xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that, during the year short term funds have not been used to finance
 long term investments.
 
 xviii) According to the information and explanations given to us and
 the records of the Company examined by us, during the year, the Company
 has not made any preferential allotment of shares to parties and
 companies covered under section 301 of the Companies Act, 1956.
 
 xix) The Company has not issued any debentures during the year.
 
 xx) According to the information and explanations given to us, the
 Company has, during the year, not raised money by way of public issue.
 
 xxi) Based upon the audit procedures performed and the information and
 explanations given by the management, we report that no fraud on or by
 the Company has been noticed or reported during the year ended March
 31, 2007.
 
 For A.F.FERGUSON & CO.
 Chartered Accountants
 Manjula Banerji
 Partner
 (Membership No.086423)
 
 Place : New Delhi  
 Date  : April 28, 2007