We have audited the Balance Sheet of Techno Electric & Engineering
 Company Limited as at March 31, 2012, the Statement of Profit and Loss
 and the Cash Flow Statement of the said Company for the year ended on
 that date, annexes hereto. 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 the management, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 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 have been kept by the
 Company as required by law so far as appears from our examination of
 those books.
 
 c) The Balance Sheet, the Statement of Profit and Loss and Cash Flow
 Statement dealt with by this Report are in agreement with the books of
 account.
 
 d) According to the information and explanations given to us and on the
 basis of written representations received from the Directors of the
 Company, taken on record by the Board of Directors, none of the
 Directors is disqualified as on March 31, 2012 from being appointed as
 a Director under Section 274(l)(g) of the Companies Act, 1956.
 
 e) Subject to Note no. 1(b) regarding accounting of certain
 
 income and expenditure on cash basis, amount indeterminate, in our
 opinion and to the best of our information and according to
 explanations given to us, the Statement of Profit and Loss and the
 Balance Sheet comply with the Accounting Standards referred to in
 Sub-Section (3C) of Section 211 of the Companies Act, 1956 and the said
 accounts, read together with the Accounting Policies and Notes, give
 the information required by the Companies Act, 1956 in the manner so
 required and the Balance Sheet gives a true and fair view of the state
 of the Company''s affairs as at 31st March, 2012 and the Statement of
 Profit and Loss gives a true and fair view of the profit for the year
 ended on that date and the Cash Flow Statement gives a true and fair
 view of the cash flow for the year ended on that date in conformity
 with the accounting principles generally accepted in India.
 
 As required by the Companies (Auditor''s Report) Order, 2003 (as
 amended) 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 the information
 and explanations given to us, we further report that :
 
 1.  a) The Company has maintained proper records of fixed assets
 showing full particulars including quantitative details and situation
 of fixed assets.
 
 b) The Company has a phased programme of physical verification of its
 fixed assets which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its business. In accordance with
 such programme, the management has physically verified fixed assets
 during the year and no material discrepancies were noticed on such
 verification.
 
 c) Substantial part of fixed assets have not been disposed off during
 the year.
 
 2.  a) The Inventories included under work-in-progress have been
 physically verified by the management during the year at reasonable
 intervals.
 
 b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of Inventories
 followed by management are reasonable and adequate in relation to the
 size of the Company and nature of its business.
 
 c) In our opinion and according to the information anc explanations
 given to us, the Company has maintained proper records of Inventories
 and the discrepancies noticed on the physical verification of
 Inventories as compared to book records were not material and have been
 properly dealt with in the books of account.
 
 3.  a) The Company has granted interest free unsecured loan of Rs
 9,828.15 Lakhs to its subsidiary company from time to time during the
 year (balance as on 31st March, 2012 Rs 870 Lakhs) and the terms and
 conditions of such loan are not prima facie prejudicial to the interest
 of the Company.
 
 The Company has not granted any other loans, secured or unsecured, to
 companies, firms or other parties covered in the Register maintained
 under section 301 of the Companies Act, 1956.
 
 b) The Company has 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. Hence, clauses 4(iii)(f)
 and 4(iii)(g) of the Order are not applicable.
 
 4.  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 purchases of inventories and fixed assets and
 for the sale of goods and services. During the course of our audit, we
 have not observed any major weaknesses in internal control system.
 
 5.  In our opinion, and according to the information and explanations
 given to us, there are no contracts or arrangements that need to be
 entered in the register required to be maintained under Section 301 of
 the companies Act, 1956. Accordingly, clause 4(v)(b) of the Order is
 not applicable to the Company.
 
 6.  The Company has not accepted any deposits from the public and
 consequently, the directives issued by the Reserve Bank of India and
 the provisions of Section 58A, 58AA or any other relevant provisions of
 the Companies Act, 1956 and the rules framed there under are not
 applicable.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size and the nature of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 company pursuant to the rules made by the Central Government for the
 maintenance of cost records under section 209(1)(d) of the Companies
 Act, 1956 in respect of Energy (Power) division of the Company and are
 of the opinion that, prima-facie, the prescribed accounts and records
 have been made and maintained. However, we have not made any detailed
 examination of cost records, to ascertain the accuracy and completeness
 thereof.
 
 9.  a ) According to the information and explanations given to us, and
 on the basis of our examination of the books of account, the Company
 has generally been regular in depositing with appropriate authorities
 undisputed statutory dues including provident fund, income-tax,
 sales-tax, custom duty, investor education and protection fund, wealth
 tax, service tax and any other material statutory dues applicable to it
 and there is no outstanding as on March 31, 2012 for a period of more
 than six months from the date they became payable.
 
 b) According to the information and explanations given to us, there are
 no dues in respect of Income-tax, sales-tax, wealth-tax, service-tax,
 custom duty, excise duty, and cess that have not been deposited with
 the appropriate authorities on account of any dispute.
 
 10.  The Company has neither accumulated losses as at March 31, 2012
 nor incurred any cash losses during the financial year ended on that
 date or in the immediately preceding financial year.
 
 11.  The Company has not defaulted in repayment of dues to financial
 institution or bank or debenture holders as may be ascertained from the
 examination of the books of account and other records of the Company.
 
 12.  According to 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.
 
 13.  The Company is not a chit fund, nidhi, mutual benefit fund or
 society. Accordingly, clause 4(xiii) of the Order is not applicable.
 
 14.  We have broadly reviewed the books of account and records
 maintained by the Company and state that prima -facie, proper records
 have been maintained of the transactions and contracts relating to
 purchase and sale of shares, securities, debentures and other
 investments and timely entries have been made therein. All the
 investments have been held by the Company in its own name.
 
 15.  In respect of Corporate Guarantee given by the Company to banks as
 holders of debentures issued by the subsidiary company, the terms and
 conditions of the same are not prima-facie prejudicial to the interest
 of the Company.  The Company has not given any other guarantee to banks
 and financial institutions for loans taken by others.
 
 16.  To the best of our knowledge and belief and according to the
 information and explanations given to us, term loans availed by the
 Company were applied for the purpose for which the loans were obtained.
 
 17.  On the basis of an overall examination of the Balance Sheet of the
 Company, in our opinion and according to the information and
 explanations given to us, no funds raised on a short-term basis have
 been used for long- term investment.
 
 18.  The Company has not made any preferential allotment of shares
 during the year to parties and companies covered in the Register
 maintained under Section 301 of the Companies Act, 1956.
 
 19.  Adequate securities have been created in respect of debentures
 issued by the Company.
 
 20.  The Company has not raised any money by public issues during the
 year.
 
 21.  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. S. Kothari & Co.
 
                                                  Chartered Accountants 
 
                                         Firm''s Registration No.302034E
 
 Centre Point
 
 21, Old Court House Street                               R. N. Bardhan
 
 Kolkata -700 001                                               Partner
 
 The 30th day of June, 2012                         Membership No.17270