2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those standards required that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit inculdes, examining on attest basis, evidence supporting the amounts and disclosures in the financial statements an audit also inculdes 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.

3. As required by the Manufacturing and Other Companies (Auditors Report) Order, 1988 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 of India and on the basis of such checks as we considered appropriate and according to the information and expiations given to us, as set out 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 purpose of our Audit.

ii) In our opinion, proper books of accounts as required by Law have been kept by the Company so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the branches not visited by us.

iii) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account.

iv) In our opinion, the Balance Sheet and Profit and Loss A/c. dealt with by this report Company 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 form the Directors, as on 31.03.2002 and taken on record by the board of directors, report that none of the directors disqualified as on 31st March, 2002 from being appointed as directors 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 together with Notes thereto and statement on significant accounting policies given in the prescribed manner the information required by the Act, and also give, a true and fair view in conformity with the accounting principles generally accepted in India.

vii) 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 31st March, 2002; and

b) In the case of Profit and Loss Account, of the profit/loss for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF AUDITORS REPORT OF EVEN DATE ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2002 OF M/S. WESTERN INDUSTRIES LIMITED.

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

i) As required by Manufacturing and other Companies (Auditors Report) order, 2000 issued by the Company Law Board in terms of Section 227 (4A) of the Companies Act, 1956 and in terms of the information and explanations given to us and on the basis of such checks as we considered appropriate we further state as under:

ii) The Company has maintained proper records showing full particulars, including quantitative details and situation of Fixed Assets. The Fixed Assets have been physically verified by the Management at the year-end and no discrepancies have been noticed on such verification.

iii) None of the Fixed Assets have been revalued during the year.

iv) We are informed that the Stocks of Raw Material and components of the Company have been physically verified by the Management as at the close of the year.

v) In our opinion, the procedures of physical verification of stocks followed by the management are reasonable and adequate in relation to the size of the company.

vi) No discrepancies have been reported as noticed on physical verification of stocks as compared to book records.

vii) In our and on the basis of our examination, the valuation of stocks is fair and proper in accordance with normally accepted accounting principals and is on the same basis as in the preceding year. The closing stock has ascertained and certified and valued by the Management are adopted which are found to be in agreement with stock records.

viii) The company has not taken any loans. Secured or Unsecured form Companies, firm or other parties listed in the register maintained under section 301 of the companies act, 1956 or from the companies under the same management as defined under sub section (1 B) of section 370 of the companies act, 1956.

ix) Loans and advances in the nature of loans have been given to certain parties and the terms & conditions including rate of interest pertaining to the loans are not prejudicial to the interest of the Company.

x) In our opinion and according to information and explanation given us to there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of raw materials, component, plant and machinery, equipment, other assets and for sale of goods.

xi) During the year under audit no damaged are unusable goods are reported as noticed by the management.

xii) The company has neither invited nor accepted deposits from the public.

xiii) In the normal course of business the company has no byproducts and saleable scrap.

xiv) The company has instituted and internal audit system, which is commensurate with size and nature of business.

xv) The maintenance of cost records has not been prescribed by the Central Government under section 209(1)(D) of the companies act, 1956. Hence, no such records have been maintained by the company.

xvi) During the year in the report no undisputed amount in respect of Income Tax, Sales Tax, Customs Duty and Excise Duty were outstanding for period of more than six months.

xvii) In our opinion and according to the information and explanation given to us personal expenses have not been changed to revenue account.

xviii) The TDS outstanding as of 31.03.2002 relate to deduction from salary payments and payments to professional services aggregate being to Rs. 1,99,454/-, which were not remitted to the concerned department.

xix) The PF and ESI dues relate to deduction from salary payments to the employees of the company aggregating to Rs. 1,23,458/-, and same has not been remitted to the respective department for the year.

xx) The company is not a sick industrial company within the meaning of Section (o) of the sick industrial companies (special provisions) act, 1985 (1 of 1986).

                                                  For Allamsetti & Co
                                                Chartered Accountants

Place: Secunderabad                                A. Kesava Rao, FCA
Date: 04.10.2002                                              Partner