Texmaco Rail & Engineering Ltd

TO THE MEMBERS OF

TEXMACO MACHINES LIMITED

(Formerly Texmaco Machines Private limited )

We have audited the attached Balance Sheet of TEXMACO MACHINES LIMITED as at31st March. 2010 the Profit and Loss Account and also the Cash Flow Statement for the yearended on that date annexed thereto These financial statements are the responsibility ofthe Company's Management Our responsibility is to express an opinion on these financialstatements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted inIndia. 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.

As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued by theCentral Government of India in terms of sub-section (4A) of Section 227 of the CompaniesAct, 1956 and on the basis of such checks as considered appropriate and according to theinformation and explanation given to us during the course of our audit we enclose in theAnnexure hereto a statement on the matters specified in paragraph 4 and 5 of the saidOrder, further, to our comments as stated above, we report that

(i) We have obtained al! the information and explanations, which to the best of ourknow ledge 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 theCompany, so far as appears from our examination of those books.

(iii) The Balance Sheer, Profit and Loss Account and the cash flow dealt with by thisreport are in agreement with the books of account.

(iv) In our opinion, the Balance Sheet. Profit and Loss Account and the Cash flowStatement dealt with by this report comply with the. accounting standards referred to insub-section (3C) of Section 211 of the Companies Act. 1956.

(v) On the basis of the written representations received from the directors as on 31stMarch, 2010 and taken on record by the Board of Directors, we report that none of thedirectors is disqualified as on 31st March, 2010 from being appointed as a director interms 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 theexplanations given to us. the said accounts together with notes thereon and accountingpolicy give the information required by the Companies Act. 1956. in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India

(a) in the case of the Balance Sheet, of the state of affairs of the Company at 31stMarch, 2010;

(b) in the case of the Profit and Loss Account, of the Loss for the year ended on thatdate.

and

(c) in the case of Cash Flow Statement, of the cash flows for the on that date.

(Formerly Texmaco Machines Private Limited)

Annexure to the Auditors' Report (Referred to in Paragraph (1) of our Report of evendate)

i) The Company has no fixed assets and hence sub-clause (a) to (c) of clause (i) isnot applicable.

ii) The Company has no inventory and hence sub-clause (a) to (c) of clause (ii) is notapplicable

iii) The Company has neither taken nor given any loan secured or unsecured from/toCompanies, firms or other parties covered in the register, maintained under Section 301 ofthe Companies Act. W56 and hence sub-clause (b) to (g) of clause (iii) of the Companies(Auditors' Report) Order, 2003 are not applicable to the company.

iv) During the year, the Company has no purchase of inventory and fixed Assets and saleof goods and services and hence clause (iv) of the Companies (Auditors' Report) Order.2003 is not applicable

v) Based on the audit procedure applied by us and according to the information andexplanations provided by the management, we are of the opinion that sub-clause (a) &(b) of clause (v) of the companies (Auditors' Report) order 2003. is not applicable sinceno contracts or arrangements referred to in section 301 of die Companies Act. 1956 havebeen entered into by the Company during the year.

vi) The Company has not accepted any deposit from the public within the meaning ofsection 58A and 58AA of the Companies Act, 1956.

vii) Internal audit system is not applicable to the Company.

viii) Maintenance of cost records have not been prescribed by the Central Governmentunder section 209(1) (d) of the Companies Act, 1956.

ix) a) The Company is generally regular in depositing undisputed statutory duesapplicable to it including Provident Fund, Investors Education and Protection Fund.Employees State Insurance, Income Tax, Sales Tax, Service-Tax, Wealth Tax, Custom Duty,Excise Duty. Cess and other statutory dues with the appropriate authorities

There are no arrears of outstanding statutory dues as at the close of the year for aperiod of more than six months from the date they became payable

b) No amount is due on account of any dispute in respect of Sales Tax. Income Tax.Service Tax. Custom Duty. Wealth Tax. Excise Duty, and Cess at the end of the year

x) The Company has accumulated loss at the end of the year and has incurred cash, lossduring the year and immediately preceding this financial year

xi) The Company has no dues to any financial institution or bank or debenture holders

xii) Based on our examination of the records and the information and the explanationsgiven to the company has not granted any loans and or advances on the basis of security byway of pledge of shares, debentures, and the other securities.

xiii) Clause (xiii) of the Companies (Auditors' Report) Order. 2003 is not applicableto the Company as the Company is not a Chit Fund Company or nidhi/mutual benefitfund/society

xiv) In our opinion, the Company is not dealing in or trading in shares, securities,debenture, and other investments Accordingly, the provisions of Clause 4 (xiv) of theCompanies (Auditors' Report) Order 2003 are not applicable to the company.

xv) According to the information and explanations given to us. the Company has notgiven any guarantees for loans taken by others from bank or financial institutions

xvi) According to the information and explanations given to us, no term loans wereraised during the year

xvii) Based on our checking and the information and the explanation given to us. theCompany has not raised any fund on short-term basis and as such clause (xvii) of theCompanies (Auditors' Report) Order. 2003 is not applicable

xviii) The Company has not made any preferential allotment of shares during the year toparties and companies covered in the register maintained U/s 301 of the Companies Act,1956.

xix) During the year covered by our audit report the Company has not issued secureddebentures,

xx) The Company has not raised any money by the public issues during the year coveredby our report

xxi) Based upon the audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and as per the information and explanation givenby the management, we report that no fraud on or by the Company has been noticed orreported during the course of our audit.