We have audited the attached Balance Sheet of Triveni Engineering &
 Industries Limited as at 30th September 201 1, the Profit and Loss
 Account and also the Cash Flow Statement for the year ended on that
 date both 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.
 
 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.  We report that:
 
 1.  As required by Companies (Auditors'' Report) Order, 2003 issued by
 the Central Government in terms of Section 227 (4A) of Companies Act,
 1956 and on the basis of such checks of the books and records of the
 company as we considered appropriate after considering the reports of
 the other auditors of the Company''s Engineering Units, we give in the
 Annexure a statement on the matters specified in paragraph 4 and 5 of
 the said order.
 
 2.  Further to our comments in the Annexure referred to in paragraph!
 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 accounts as required by law have
 been kept by the company so far as appears from the examination of the
 books and according to the reports of the Engineering Units auditors
 where such audit has not been conducted by us.
 
 c) The Balance Sheet, Profit & Loss Account and Cash Flow Statements
 dealt with by this report are in agreement with the books of accounts.
 
 d) The reports of the Engineering Units auditors have been forwarded to
 us and have been considered in preparing our report.
 
 e) 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 21 1 of the
 Companies Act, 1956.
 
 f) On the basis of the written representations received from the
 Directors and taken on record by the Board of Directors, we report that
 none of the Directors of the Company is disqualified as on 30th
 September 201 1 from being appointed as a Director in terms of Clause
 (g) of sub section (1) of Section 274 of the Companies Act, 1956.
 
 g) Without qualifying our opinion, we invite attention to the Note
 No.21(a) of Schedule 25 stating that remuneration of Rs 32.32 Million
 paid to the Managing Director and the two Whole Time Directors is in
 excess of the permissible limit under Section 309(3) read with Schedule
 XIII of the Companies Act, 1956. The Company has applied to the Central
 Government for permission to waive recovery of the said excess
 managerial remuneration as informed to us.
 
 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, 1 956, in the manner so required and
 give a true and fair view in conformity with the accounting principles
 generally accepted in India:
 
 a) I n the case of the Ba la nee Sheet, of the state of affa i rs of
 the Company as at 30th September, 201 1 ;
 
 b) In the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 c) In the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 Referred to in Paragraph 1 of our report of even date on the accounts
 for the year ended on 30th September, 201 1 of Triveni Engineering &
 Industries Limited.
 
 1.  (a) The company has generally maintained proper records showing
 full particulars including quantitative details and situation of fixed
 assets.
 
 (b) Major items of fixed assets have been physically verified by the
 management during the year as per information given to us. As explained
 to us, no material discrepancies were noticed on such verification as
 compared to the available book records. In our opinion the frequency of
 verification is reasonable having regard to the size of the company and
 nature of its activities.
 
 (c) In our opinion, the company has not disposed off substantial part
 of fixed assets during the year and hence, going concern status of the
 company is not affected.
 
 2.  (a) Inventories have been physically verified by the
 
 Management to the extent practicable at reasonable intervals during the
 year or at the year-end at all locations of the company. In our opinion
 the frequency of verification is reasonable.
 
 (b) According to information given to us, the procedures for physical
 verification of the inventories followed by the management are
 reasonable and adequate in relation to the size of the company and
 nature of its business.
 
 (c) The company is maintaining proper records of inventory. The
 discrepancies noticed on such verification as compared to the book
 records were not material having regard to the size and nature of the
 operations of the company and have been properly adjusted in the books
 of account.
 
 3.  (a) According to the information and explanations given to us, the
 Company has granted unsecured loan to a company covered in the register
 maintained under Section 301 of the Companies Act, 1956. The maximum
 amount involved during the year was Rs  232.55 Million and the year end
 balance of loan granted to such party was Rs 179.21 Million.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 of such loans are not, prima facie, prejudicial to the interest of the
 company.
 
 (c) The party has repaid the principal amount as stipulated and has
 also been regular in the payment of interest.
 
 (d) In respect of aforesaid loan there was no overdue
 Amount out standing at the end of the year.
 
 (e) In our opinion and according to the information and explanations
 given to us, the company has taken unsecured loan by way of fixed
 deposit under public fixed deposit scheme of the company from one party
 covered in the register maintained under section 301 of the Act. The
 maximum amount of the loan involved during the year from such party was
 Rs 0.25 Million and the year end balance was Rs Nil.
 
 (f) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions on
 which loan has been taken from a party covered in the register
 maintained under section 301 of the Companies Act, 1956 are as
 applicable to public deposits accepted by the Company and are thus not
 prima facie, prejudicial to the interest of the Company
 
 (g) In respect of the loan taken, the company is repaying the principal
 amount and is paying the interest as stipulated.
 
 4.  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.
 During the course of our audit, we have not observed any continuing
 failure to correct major weaknesses in internal control system.
 
 5.  (a) In our opinion and according to the information and
 explanations given to us, the particulars of contracts or arrangements
 referred to in Section 301 of the Companies Act, 1956 have been entered
 in the register required to be maintained under that section.  (b)
 According to the information and explanations given to us, the
 transactions made in pursuance of contracts or arrangements entered in
 the register maintained under Section 301 of the Companies Act, 1956
 exceeding the value of Rupees half million or more in respect of any
 party have been made at prices which are reasonable having regard to
 the prevailing market prices at the relevant time except that
 transactions in respect of sale of goods, rendering of services,
 receipt of rent, purchase of Stores & Spare parts, receiving services
 and payment towards sales and marketing cost with a party for which no
 comparable quotations are available. We are informed by the management
 that the price and charges so received and paid for such transactions,
 are reasonable having regard to the volume of business, quality and the
 specialized nature of goods and services involved.
 
 6.  In our opinion and according to the information and explanations
 given to us, the company has complied with the provisions of Section
 58A, 58AA or any other relevant provisions of Act, and the Companies
 (Acceptance of Deposits) Rules, 1 975 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 National Company Law Tribunal or Reserve Bank of
 India or any court or any other Tribunal on the Company in respect of
 deposits accepted.
 
 7.  In our opinion the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the books of accounts maintained by the
 company in respect of the products where pursuant to the rules made by
 the Central Government the maintenance of cost records has been
 prescribed under Section 209(1 )(d) of the Companies Act, 1 956, and
 are of the opinion that prima facie the prescribed accounts and records
 have been maintained .  However, we are not required to carry out and
 have not carried out a detailed examination of the records with a view
 to determine whether they are accurate or complete.
 
 9.  (a) The company is generally regular in depositing with appropriate
 authorities undisputed statutory dues including provident fund,
 investor education and protection fund, employees state insurance,
 income tax, sales tax, wealth tax, service tax, custom duty, excise
 duty, cess and other statutory dues applicable to it. According to the
 information and explanations given to us, no undisputed amounts payable
 in respect of aforesaid dues were in arrears as at 30th September 201 1
 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 of custom duty, wealth tax, service tax and cess which have
 not been deposited on account of any dispute. Disputed income tax,
 sales tax and excise duty which have not been deposited on account of
 matters pending before appropriate authorities are as under:
 
 S.  Name of 
     Statute   Forum where   Nature of dues   Amount*            Year
 No.           dispute is 
               pending                        (Rs in 
                                               Million)
 
 1   Income 
     Tax Act, 
     1961      Commissioner 
                (Appeals)           Penalty        2.99       2000-01
                                 Income Tax       99.02       2007-08
 
 2   Central 
     Sales 
     Act & 
     Sales/
     Trade 
     Tax Acts 
     of 
     various
     states    Commissioner 
               (Appeals)          Sales Tax       27.21        1977-78.
 
                                    Penalty        5.22         1991-92 to
 
                                   Interest        7.42         1994-95,
 
                                                              1999-2000.
                                                                2002-03,
                                                                2003-04,
                                                                2005-06 to
                                                                2007-08.
                                                                2009-10
                Appellate 
                Tribunal          Sales Tax        3.62         1987-88,
 
                                                                1992-93
 
                                                                2001-02
 
                                                                2002-03
 
                High Court        Sales Tax        1.07         1975-76,
 
                                    Penalty        0.02         1976-77.
 
                                                                1979-80
                                                                1980-81
                                                                1986-87,
                                                                1994-95 
                                                                to
                                                                1996-97
 
 3  Excise Act, 
    1944        Commissioner 
                 (Appeals)      Excise Duty       11.03         2003-04
                                                                to
 
                                    Penalty        9.31         2010-11
 
                                   Interest        1.37
 
                Appellate 
                Tribunal        Excise Duty       37.03         2000-01
 
                                    Penalty       25.79         2003-04 to
 
                                   Interest       28.38         2008-09
 
                High Court      Excise Duty        1.19         1996-97 to
 
                                    Penalty        1.29       1999-2000,
 
                                   Interest        0.50         2003-04
 
 4  UP Sugar 
    Promotion 
    Policy 
    2004        High Court        Entry Tax       48.33         2006-07 to
 
                                  Sales Tax        3.62         2010-11
 
 *Net of amounts paid under protest or otherwise.
 
 10. The company has no accumulated losses as at 30th September 201 1
 and has not incurred any cash losses in the financial year covered by
 our audit and immediately preceding financial year.
 
 11. Based on our audit procedures and according to the information and
 explanations given to us, we are of the opinion that the company has
 not defaulted in repayment of dues to financial institutions, banks or
 debenture holders during the year.
 
 12.  In our opinion and according to the information and explanations
 given to us, no loans and advances have been granted by the company on
 the basis of security by way of pledge of shares, debentures and other
 securities.
 
 13.  In our opinion, the company is not a chit fund or a nidhi/ mutual
 benefit fund/ society. Therefore, clause 4(xiii) of the Companies
 (Auditors'' Report) Order, 2003 is not applicable to the Company.
 
 14.  In our opinion, the company is not dealing or trading in shares,
 securities, debentures and other investments.  Accordingly, Clause
 4(xiv) of the Companies (Auditors'' Report) Order, 2003 is not
 applicable to the company.
 
 15.  According to the information and explanations given to us, the
 company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 16. In our opinion, the term loans raised during the year have been
 applied for the purpose for which they were raised.
 
 17. 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
 investments.
 
 18. During the year, the company has not made any preferential
 allotment of shares to parties and companies covered in the register
 maintained under Section 301 of the Companies Act, 1956.
 
 19. According to the information and explanations given to us, during
 the period covered by our audit, the company has not issued debentures
 requiring creation of any security or charge.
 
 20.  The company has not raised any money by way of public issue during
 the year.
 
 21.  During the course of our examination of the books of accounts and
 records carried out in accordance with the generally accepted auditing
 practice and according to the information and explanations given to us,
 no fraud on or by the company has been noticed or reported during the
 year except two cases of fraudulent encashment of cheques involving a
 sum of Rs 0.60 Million were detected by the management during the year
 for which appropriate steps were taken to strengthen internal controls
 as informed to us. Further as informed to us steps have been taken to
 recover the amount, however provision has been made in the accounts in
 respect of the same.
 
                                                    For and on behalf of 
                                                  J. C. Bhalla & Company
 
                                                   Chartered Accountants
                                                  Firm Regn. No. 00111IN
 
                                                          Sudhir Mallick
 
 Place : Noida (U.P.)                                            Partner
 
 Date   : November 28, 2011                          Membership No.80051