ALSTOM India Ltd

To the Members of ALSTOM Projects India Limited

1. We have audited the attached Balance Sheet of ALSTOM Projects India Limited (the"Company") as at March 31, 2012, and the related Statement of Profit and Lossand Cash Flow Statement for the year ended on that date annexed thereto, which we havesigned under reference to this report. These financial statements are the responsibilityof the Company’s Management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally acceptedin India. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by Management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by theCompanies (Auditor’s Report) (Amendment) Order, 2004 (together the"Order"), issued by the Central Government of India in terms of sub-section (4A)of Section 227 of ‘The Companies Act, 1956’ of India (the ‘Act’) andon the basis of such checks of the books and records of the Company as we consideredappropriate and according to the information and explanations given to us, we give in theAnnexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we reportthat:

(a) We have obtained all the information and explanations which, to the best of ourknowledge and belief, were necessary for the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;

(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt withby this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash FlowStatement dealt with by this report comply with the accounting standards referred to insub-section (3C) of Section 211 of the Act;

(e) On the basis of written representations received from the directors, as on March31, 2012 and taken on record by the Board of Directors, none of the directors isdisqualified 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 Act;

(f) In our opinion and to the best of our information and according to the explanationsgiven to us, the said financial statements together with the notes thereon and attachedthereto give, in the prescribed manner, the information required by the Act, and give atrue and fair view in conformity with the accounting principles generally accepted inIndia:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as atMarch 31, 2012;

(ii) in the case of the Statement of Profit and Loss, of the profit for the year endedon that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended onthat date.

Refferred to in paragraph 3 of the Auditors’ Report of even date to the members ofALSTOM Projects India Limited on the financial statements as of and for the year endedMarch 31, 2012

(i) (a) The Company is maintaining proper records showing full particulars, includingquantitative details and situation, of fixed assets.

(b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of three years which, in ouropinion, is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme, a portion of the fixed assets has been physicallyverified by the Management during the year and no material discrepancies between the bookrecords and the physical inventory have been noticed.

(c) In our opinion, and according to the information and explanations given to us, asubstantial part of fixed assets has not been disposed of by the Company during the year.

2. (a) The inventory (excluding stocks with third parties) has been physically verifiedby the Management during the year. In respect of inventory lying with third parties, thesehave substantially been confirmed by them. In our opinion, the frequency of verificationis reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed bythe Management are reasonable and adequate in relation to the size of the Company and thenature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, theCompany is maintaining proper records of inventory. The discrepancies noticed on physicalverification of inventory as compared to book records were not material.

3. (a) The Company has not granted any loans, secured or unsecured, to companies, firmsor other parties covered in the register maintained under Section 301 of the Act.Accordingly clauses (iii) (b), (c) and (d) of paragraph 4 of the order are not applicablein the case of the company in the current year.

(b) The Company has not taken any loans, secured or unsecured, from companies, firms orother parties covered in the register maintained under Section 301 of the Act. Accordinglyclauses (iii) (f) and (g) of paragraph 4 of the order are not applicable in the case ofthe Company in the current year.

4. In our opinion, and according to the information and explanations given to us, thereis an adequate internal control system commensurate with the size of the Company and thenature of its business for the purchase of inventory and fixed assets and for the sale ofgoods and services. Further, on the basis of our examination of the books and records ofthe Company, and according to the information and explanations given to us, no majorweakness have been noticed or reported.

5. According to the information and explanations given to us, there have been nocontracts or arrangements referred to in Section 301 of the Act during the year to beentered in the register required to be maintained under that Section. Accordingly, thequestion of commenting on transactions made in pursuance of such contracts or arrangementsdoes not arise.

6. The Company has not accepted any deposits from the public within the meaning ofSections 58A and 58AA of the Act and the rules framed there under.

7. In our opinion, the Company has an internal audit system commensurate with its sizeand the nature of its business.

8. According to the information and explanations given to us, the company is in processof preparing the cost records prescribed by the Central Government under clause (d) ofsubsection (1) of Section 209 of the Act in respect of the products of the Company.

9. (a) According to the information and explanations given to us and the records of theCompany examined by us, in our opinion, the Company is generally regular in depositingundisputed statutory dues in respect of provident fund, employees’ state insurance,income tax, sales tax and service tax, though there has been a delay in a few cases, andis regular in depositing undisputed statutory dues, including investor education andprotection fund, wealth tax, customs duty, excise duty, cess and other material statutorydues, as applicable, with the appropriate authorities.

(b) According to the information and explanations given to us and the records of theCompany examined by us, the particulars of dues of income tax, sales tax, wealth tax,service tax, customs duty and excise duty as at March 31, 2012 which have not beendeposited on account of a dispute, are as follows:

10. The Company has no accumulated losses as at 31 March 2012 and it has not incurredany cash losses in the financial year ended on that date or in the immediately precedingfinancial year.

11. The Company neither has any borrowings from any financial institution or bank norhas it issued any debentures as at the balance sheet date.

12. The Company has not granted any loans and advances on the basis of security by wayof pledge of shares, debentures and other securities.

13. The provisions of any special statute applicable to chit fund/ nidhi/ mutualbenefit fund/ societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities,debentures and other investments.

15. In our opinion, and according to the information and explanations given to us, theCompany has not given any guarantee for loans taken by others from banks or financialinstitutions during the year.

16. The Company has not obtained any term loans.

17. On the basis of an overall examination of the balance sheet of the Company, in ouropinion, and according to the information and explanations given to us, there are no fundsraised on a short-term basis which have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties andcompanies covered in the register maintained under Section 301 of the Act during the year.

19. The Company has not issued any debentures during the year; and does not have anydebentures outstanding as at the year end.

20. The Company has not raised any money by public issues during the year

21. During the course of our examination of the books and records of the Company,carried out in accordance with the generally accepted auditing practices in India, andaccording to the information and explanations given to us, we have neither come across anyinstance of material fraud on or by the Company, noticed or reported during the year, norhave we been informed of such case by the Management.