1.  We have audited the attached Balance Sheet of Thermax Limited as at
 31st March 2011, and also the Profit and Loss Account and the Cash Flow
 Statement for the year ended on that date, 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 have 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 (Auditors Report) Order, 2003, issued
 by the Central Government of India in terms of Section 227(4A) of the
 Companies Act, 1956 of India (the “Act”), and on the basis of such
 checks as we considered appropriate and according to the information
 and explanations given to us, we give in the Annexure, 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:
 
 (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, 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 Section 211(3C) of the Act;
 
 (e) On the basis of written representations received from the
 Directors, as on 31st March 2011, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31st March 2011 from being appointed as a director in terms of clause
 (g) of sub-section (1) of Section 274 of the Act; and
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said Accounts, together with the
 Notes thereon and attached thereto, give, in the prescribed manner, the
 information required by the Act and also 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 31st March 2011;
 
 (ii) in the case of the Profit and Loss Account, of the profit 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 the Auditors Report
 (Referred to in paragraph 3 of our report of even date)
 
 1.  (a) The Company has maintained proper records to show full
 particulars, including quantitative details and situation, of its 
 fixed assets.
 
 (b) The fixed assets of the Company have been physically verified by
 the management at reasonable intervals during the year and the
 discrepancies noticed have been properly dealt with in the books of
 account.
 
 (c) In our opinion, and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 off by the Company during the year.
 
 2.  (a) The inventory of the Company has been physically verified by
 the management during the year. 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 inventory
 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 records of inventory, in our
 opinion, the Company has maintained proper records of inventory and the
 discrepancies noticed on physical verification between the physical
 stocks and the book records were not material.
 
 3.  The Company has neither granted nor taken loans, secured or
 unsecured to/from companies, firms or other parties covered in the
 register maintained under Section 301 of the Act. As the Company has
 not granted/taken any loans, secured or unsecured, to/from companies,
 firms etc., listed in the register maintained under Section 301 of the
 Act, paragraphs 4(iii)(a) to (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, for the purchase of inventory and fixed assets and for the
 sale of goods and services. Further, during the course of our audit we
 have neither come across nor have we been informed of any instance of
 continuing failure to correct major weaknesses in the aforesaid
 internal control procedures.
 
 5.  (a) On the basis of our examination of the books of account, we are
 of the opinion that the particulars of contracts or arrangements 
 referred to in section 301 of the Act have been entered in the register
 required to be maintained under that section.
 
 (b) In our opinion, the transactions made in pursuance of such
 contracts or arrangements have been made at prices which are reasonable
 having regard to the market prices prevailing at the relevant time as
 evaluated on the basis of quotations obtained from parties / prices
 charged by the Company in case of similar transactions during the year
 and considering that having regard to certain items purchased / sold
 are of a special nature in respect of which suitable alternative
 sources do not exist for obtaining comparative quotations in general.
 
 6.  The Company has not accepted any deposits under the provisions of
 Sections 58A and 58AA of the Act and the rules framed there under.
 
 7.  In our opinion, the Companys present internal audit system is
 commensurate with its size and nature of its business.
 
 8.  We have broadly reviewed the books of accounts maintained by the
 company in respect of product where, pursuant to the rules made by the
 Central Government of India, the maintenance of cost records has been
 prescribed under Section 209(1)(d) of the Companies Act, 1956 and are
 of the opinion that prima facie, the prescribed accounts -and records
 have been made and maintained. We have not, however, made a detailed
 examination of the records maintained as aforesaid.
 
 9.  (a) According to the information and explanations given to us and
 according to the books and records as produced and examined by us, in 
 our opinion, the undisputed statutory dues in respect of Provident 
 Fund, Investor Education and Protection Fund,Employees State 
 Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs
 Duty, Excise Duty, Cess and other material statutory dues as 
 applicable, have generally been regularly deposited by the Company
 during the year with the appropriate authorities.
 
 (b) As at 31st March 2011, according to the records of the Company and
 the information and explanations given to us, the following are the
 particulars of disputed dues on account of Sales-tax, Income-tax,
 Custom Duty, Wealth tax, Service tax, Excise Duty and Cess matters that
 have not been deposited on account of a dispute:
 
 Name of the           Nature of dues      Amount under     Period to
 statute                                   dispute not yet  which the
                                           deposited        amount
                                           (Rs. Crore)      relates
 
 Central Sales Tax 
 Act                  Sales tax including      0.025        1992-93 
 and Local Sales 
 Tax Acts             interest and penalty,    0.001        2000-01
 (including works 
 contract)            as applicable            0.010        2001-02
 
                                               5.117        2003-04
 
                                               6.484        2004-05
 
                                               0.004        2007-08
 
                                               1.157        2006-07
 
                                               0.053        2000-01 
 
                                               0.038        2001-02
 
                                               0.043        2003-04
 
                                               0.372        2001-02 
 
                                               0.184        2002-03
 
                                               0.158        2003-04
 
                                               0.336        2004-05
 
 The Central 
 Excise Act, 1944     Excise duty including 
                      interest                 0.657        2003-04 
                      and penalty, as 
                      applicable 
 
                                               0.034        2009-10
 
                                               0.188        2001-02
 
                                               0.323        2003-04
 
                                               0.848        2005-06
 
                                               0.159        2007-08
 
                                               0.065        2006-07
 
                                               4.417        1999-00
 
                                               0.218        2008-09
 
                                               3.838        2006-07 
 
                                               1.598        1997-98
 
 Customs Act,
 1962               Customs duty including 
                    interest                   0.321        2005-06
                    and penalty, as 
                    applicable
 
 Service Tax        Service Tax including 
                    intereset                  0.406        2003-04 
 (Finance Act, 
 1994)              and penalty, as 
                    applicable                 2.186        2005-06
 
 ESI Act, 1948      Dues, interest and
                    penalty as                 0.022        1989-91 
                    applicable                 0.048        1987-89 
 
 Income Tax 
 Act, 1961          Income Tax including 
                    interest                   0.846        2005-06
                    and penalty as 
                    applicable                 0.564        2006-07
                                               1.035        2007-08
 
                                               0.655        2008-09
 
 Maharashtra
 Mathadi, Hamal,    Work of Mathadi 
                    Nature carried             0.167        2008-09 
 & other Mannual 
 Workers Act        out by unregistered 
                    workers w.r.t.
 1969               applicability of the 
                    Mathadi Act
 
 
 
 Name of the statute         Forum where the  dispute is pending
 
 Central Sales Tax Act       Appellate Authority - upto
 and Local Sales Tax Acts    Commissioners level
 (including works contract) 
 
 
 
 
                             Tribunal
 
 
                             High Court
 
 
 
 The Central Excise          Appellate Authority-upto
 Act, 1944                   Commissioners level
                             Tribunal
 
 
 
 
 
 
 
                              Supreme Court
 
 Customs Act, 1962            Tribunal
 
 
 Service Tax                  Tribunal
 (Finance Act, 1994)
 
 
 ESI Act, 1948                ESI Court
                              High Court
 
 Income Tax Act,1961          Appellate Authority-upto
                              Commissioners level 
 
 Maharashtra Mathadi, Hamal,  Advisory Committee under
 & other Mannual Workers Act  Maharashtra Mathadi, Hamal, & other
 1969                         Manual Workers Act 1969
 
 
 
 10.  The Company has neither accumulated losses as at 31st March 2011,
 nor has it incurred any cash loss either during the financial year
 ended on that date or in the immediately preceding financial year.
 
 11.  Based on our audit procedures and on the information and
 explanations given by the Management, in our opinion, the Company has
 not defaulted in repayment of dues to any financial institution or bank
 or to debenture holders as at the balance sheet date.
 
 12.  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.  In our opinion, considering the nature of activities carried on by
 the Company during the year, the provisions of any special statute
 applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not
 applicable to the Company.
 
 14.  In our opinion and according to the information and explanations
 given to us, the Company is not a dealer or trader in securities.
 However, in respect of transactions relating to investment in certain
 securities, the Company has maintained proper records of transactions
 and contracts during the year and timely entries have been made
 therein.  Further, such securities have been held by the Company in its
 own name.
 
 15.  Based on the information and explanations given to us, in our
 opinion, the terms and conditions on which the Company has given
 counter guarantees / corporate guarantees on behalf of its subsidiaries
 to the banks during the year, are not prima facie prejudicial to the
 interest of the Company.
 
 16.  The Company has not taken any term loan during the year.
 
 17.  Based on the information and explanations given to us and on an
 overall examination of the balance sheet of the Company, in our
 opinion, funds raised on short term basis have not been used for long
 term investments.
 
 18.  The Company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Act during the year.
 
 19.  No debentures have been issued during the year.
 
 20.  The Company has not raised any money by public issue during the
 year.
 
 21.  During the course of our examination of the books of account
 carried out in accordance with the generally accepted auditing
 practices in India, we have neither come across any instance of fraud
 on or by the Company, either noticed or reported during the year, nor
 have we been informed of such case by the Management.
 
 
                                          For B.K. Khare & Company
                                             Chartered Accountants 
                                             Firm Reg. No. 105102W
 
                                                     H.P. Mahajani
                                                           Partner
                                            (Membership no. 30168)
 
 Place: Pune
 Date : May 3, 2011