1.  We have audited the attached Balance Sheet of Titagarh Wagons
 Limited (''the Company'') as at March 31, 2012 and also the Statement of
 Profit and Loss and the Cash Flow Statement 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.
 
 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 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 (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, we enclose
 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 above, we
 report that:
 
 i.  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;
 
 ii.  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;
 
 iii. The Balance Sheet, the Statement of Profit and Loss and the Cash
 Flow Statement dealt with by this report are in agreement with the
 books of account;
 
 iv.  In our opinion, the Balance Sheet, the Statement of Profit and
 Loss and the 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;
 
 v.  On the basis of the written representations received from the
 directors, as on March 31, 2012, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2012 from being appointed as a director in terms of clause
 (g) of sub- section (1) of Section 274 of the Companies Act, 1956;
 
 vi.  In our opinion and to the best of our information and according to
 the explanations given to us, the said 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 :-
 
 a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2012;
 
 b) in the case of the Statement of Profit and Loss, of the profit for
 the year ended on that date; and
 
 c) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All fixed assets have not been physically verified by the
 management during the year but there is a regular programme of verifying
 the fixed assets over a period of three years which, in our opinion, is
 reasonable having regard to the size of the Company and the nature of
 its assets. No material discrepancies were noticed on such
 verification.
 
 (c) There was no substantial disposal of fixed assets during the year.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 (b) 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 is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) (a) According to the information and explanations given to us,
 the Company has 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. Therefore, the provisions
 of clauses 4(iii)(a) to (d) of the Order are not applicable to the
 Company.
 
 (e) According to the information and explanations given to us, 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. Therefore, the provisions of clauses 4
 (f) and (g) of the Order are not applicable to the Company.
 
 (iv) In our opinion and according to the information and explanations
 given to us, having regard to the explanation that some of the items
 purchased are of special nature and suitable alternative sources do not
 exist for obtaining comparable quotations thereof, there is an adequate
 internal control system 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.  During the course of
 our audit, no major weakness has been noticed in the internal control
 system in respect of these areas and we have also not observed any
 continuing failure to correct major weakness in the internal control
 system of the Company.
 
 (v) In our opinion, and as informed to us, there are no contracts or
 arrangements that need to be entered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 (vi) The Company has not accepted any deposits from the public.
 
 (vii) The Company has an internal audit system, the scope and coverage
 of which, in our opinion, requires to be enlarged to be commensurate
 with the size and nature of its business.
 
 (viii) 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, related to the manufacture of wagons, coaches and
 engineering products and are of the opinion that prima facie, the
 prescribed accounts and records have been made and maintained.
 
 (ix) (a) Undisputed statutory dues including 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 have generally been regularly deposited
 with the appropriate authorities though there has been slight delay in
 afew cases.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees'' state insurance, income-tax,
 wealth- tax, service tax, sales-tax, customs duty, excise duty, cess
 and other material statutory dues were outstanding, at the year end,
 for a period of more than six months from the date they became payable.
 
 (c) According to the records of the Company, the dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and cess on account of any dispute, are as follows :
 
 Name of      Nature         Amount     Period to      Forum where
 the statue   of Dues       (Rs. in 
                             Lacs)      which the      dispute is
                                        amount relates pending
 
 The Income   Disallowance    646.18    2002-2003,     Deputy
 Tax Act,     under various             2004-2005,     Commissioner/
 1961         sections                  2006-2007,     Commissioner of
                                        2008-2009      Income Tax
 
 The West     Deferment of      3.60    2004-2005      Additional
 Bengal Sales sales tax                                Commissioner
 Tax Act,     liability                                Commercial
 1944                                                  Taxes
 
              Short             5.24    2004-2005      West Bengal
              payment of                               Taxation Tribunal
              sales tax
 
 The Central  Short            29.81    2005-2006      Joint
 Sales Tax    payment of                and            Commissioner
 Act,         sales tax,non             2007-2008      of Commercial
 1956         submission of                            Taxes 
              forms and 
              other 
              documents
 
              Non submission  262.01    2008-2009      Senior Joint
              of forms and                             Commissioner of
              others                                   Commercial
              documents                                Taxes
 
 The Value    Additional       42.00    2005-2006      Additional/Joint
 Added        demand of                 and            Commissioner
 Tax Act,     sales tax                 2007-2008
 2003         under various
              sections, 
              disallowance 
              of input 
              tax credit, 
              levy of
              purchase 
              tax etc.
 
              Disallowance    216.16    2008-2009      Senior Joint
              of IT Cand levy                          Commissioner of
              of purchase                              Commercial
              tax due to non                           Taxes
              submission of
              relevant
              documents
 
 The Central  Incorrect     7,301.71    1991-1992,     Various Appellate
 Excise Act,  availment of              1996-1997,     Authorities
 1944         cenvat credits,           2003-2004 to
              short payment             2009-2011
              of duty 
              including 
              interest etc.
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a bank. There are no
 dues to financial institution and debenture holders.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi/
 mutual benefit fund/society. Therefore, the provisions of clause 4(xiii)
 of the Order are not applicable to the Company.
 
 (xiv) In our opinion, the Company is not dealing or trading in shares,
 securities, debentures and other investments.  Accordingly, the
 provisions of clause 4(xiv) of the Order are not applicable to the
 Company.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 (xvi) Based on the information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained.
 
 (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 no funds raised on short-term basis have been used for long-term
 investment.
 
 (xviii) The Company has made preferential allotment of shares during
 the year to a party and a company covered in the register maintained
 under Section 301 of the Companies Act, 1956. In our opinion, the price
 at which these shares have been issued, is not prejudicial to the
 interest of the Company.
 
 (xix) The Company did not have any outstanding debentures during the
 year.
 
 (xx) The Company has not raised any money through public issue during
 the year.
 
 (xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 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.
 
                                               For S. R. BATLIBOI & CO.
 
                                     Firm Registration Number: 301003E 
 
                                                 Chartered Accountants 
 
                                                     per R. K. AGRAWAL
 
 Place : Kolkata                                               Partner
 
 Date : April 28, 2012                           Membership No.: 16667