Triveni Engineering

We have audited the attached Balance Sheet of Triveni Engineering &
 Industries Limited as at 30th September 2008, 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 Company Law Board 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 1
 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 Statement
 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 211 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 2008 from being appointed as a Director in terms of Clause
 (g) of sub section (1) of Section 274 of the Companies Act, 1956.
 
 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 30th September, 2008 ;
 
 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.
 
 ANNEXURE TO AUDITORS’ Report
 
 Referred to in Paragraph “1” of our report of even date on the accounts
 for the year ended on 30th September, 2008 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 not granted any loans, secured or unsecured to companies,
 firms and 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 Order are not applicable.
 
 (b) 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 and the year end
 balance of the loan taken from such party was Rs. 0.25 million.
 
 (c) 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.
 
 (d) 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) In our opinion and 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 prevailing market prices at the relevant
 time.
 
 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, 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 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, 1956, 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 2008
 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:
 
 Sl.  Name of the Statue       Forum where
                               Dispute is Pending
 No.
 
 1.   Income Tax Act, 1961     Commissioner
                               of Income-Tax
                               Appeals
 
 2.   Central Sales Tax        Deputy
      Act & Sales/ Trade       Commissioner/
      Tax Acts                 Commissioner
      of various               Appeals
      states
 
                               Appellate
                               Tribunal
 
                               High Court
 
 
 Nature of Dues      Amount          Year
                     (Rs.in
                    Million)
 
 Income                5.33          2005-06
 Tax
 
 Sales/Trade          15.27          1977-78,
 Tax                                 1991-92 to
                                     1998-99,
                                     2001-02 to
                                     2004-05.
 
 Sales/Trade          12.39          1987-88
 Tax                                 1993-94 to
                                     1997-98,
                                     2000-01,
                                     2001-02
 
 Sales/Trade           1.09          1979-80,
 Tax                                 1980-81,
                                     1986-87,
                                     1994-95,
                                     1995-96,
                                     1996-97
 
 Sl. Name of the Statue            Forum where
                                   Dispute is Pending
 No.
 
 3.  Excise Act                    Deputy
     1944                          Commissioner/
                                   Commissioner
                                   Appeals
 
                                   Appellate
                                   Tribunal/CESTAT
 
                                   High Court
 
                                   Supreme Court
 
 Nature of Dues      Amount       Year
                     (Rs.in
                    Million)
 
 Excise Duty           0.80       1995-96,
 Penalty               1.96       1996-97,
                                  1997-98,
                                  1998-99,
                                  1999-00,
                                  2000-01 to
                                  2007-08
 
 Excise duty          48.16       1996-97,
 Penalty              38.73       2001-02 to
 Interest             18.86       2006-07
 
 Excise duty           1.57       1996-97 to
 Penalty               1.23       1998-99,
 Interest              0.41       2003-04,
 Interest              5.94       1998-99,
                                  2002-03
 
 10. The company has no accumulated losses as at 30th September 2008 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 nor have we been informed of such case by the management that
 causes the financial statements to be materially misstated.
 
                                                 For and on behalf of
                                               J. C. Bhalla & Company
                                                Chartered Accountants
 
                                                       Sudhir Mallick
 Place : Noida (U.P.)                                         Partner
 Date  : November 19, 2008                        Membership No.80051