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Auditor Report of Ashok Leyland Ltd.

Mar 31, 2017

To The Members of Ashok Leyland Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Ashok Leyland Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2017, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.

In conducting our audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.

We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditor of the amalgamating company in terms of their report referred to in the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements. Opinion

In our opinion, and to the best of our information and according to the explanations given to us, and based on the consideration of report of the other auditor on the financial information of the amalgamating company referred to in the Other Matters paragraph below, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2017, and its profit, total comprehensive income, cash flows and the changes in equity for the year ended on that date.

Other Matters

The standalone Ind AS financial statements include the financial information of erstwhile Hinduja Foundries Limited ("amalgamating company") for the period October 1, 2016 to March 31, 2017 consequent to amalgamation into the Company, which has been effected on April 24, 2017, with the appointed date of October 1, 2016 (Refer Note 3.21 to the standalone Ind AS financial statements). We did not audit the financial information of the amalgamating company for the period October 1, 2016 to March 31, 2017, included in the standalone Ind AS financial statements of the Company, whose financial information reflect total assets of ''85,225.21 lakhs as at March 31, 2017 and total revenues of ''36,558.10 lakhs for the staid period, as considered in the standalone Ind AS financial statements. The said financial information of the amalgamating company, has been audited by other auditor whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of the amalgamating company and our report in terms of sub-sections (3) and (11) of Section 143 of the Act, in so far as it relates to the amalgamating company, is based solely on the report of the other auditor.

Our opinion on the standalone Ind AS financial statements and our report on Other Legal and Regulatory Requirements below is not modified in respect of this matter with respect to our reliance on the work done and the report of the other auditor.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our audit and on the consideration of the report of the other auditor on the financial information of the amalgamating company referred to in the Other Matters paragraph above, we report, to the extent applicable that:

a) We have sought and 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 account as required by law have been kept by the Company so far as it appears from our examination of those books and the report of the other auditor on the financial information of the amalgamating company referred in the Other Matters paragraph above.

c) The report on the financial information of the amalgamating company audited by the other auditor referred in the Other Matters paragraph above, has been sent to us and has been properly dealt with by us in preparing this report.

d) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Statement of Cash Flows and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account and the financial information of the amalgamating company audited by the other auditor referred in the Other Matters paragraph above.

e) In our opinion, and based on the consideration of the report of the other auditor on the financial information of the amalgamating company referred in the Other Matters paragraph above, the aforesaid standalone financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act.

f) On the basis of the written representations received from the directors as on March 31, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017 from being appointed as a director in terms of Section 164(2) of the Act.

g) With respect to the adequacy of the internal financial controls over financial reporting and the operating effectiveness of such controls, refer to our report in "Annexure A", which is based on our audit and the consideration of the report of the other auditor on the financial information of the amalgamating company referred in the Other Matters paragraph above.

Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting.

h) With respect to the other matter to be included in the Auditors'' Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our

information and according to the explanations given to us and to the other auditor in terms of the report of the other auditor in respect of the amalgamating company referred in the Other Matters paragraph above:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements;

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company; and

iv. The Company has provided requisite disclosures in the standalone financial statements as regards its holding and dealings in Specified Bank Notes as defined in the Notification S.O. 3407(E) dated the November 8, 2016 of the Ministry of Finance, during the period from November 8, 2016 to December 30, 2016. Based on audit procedures performed by us and the representations provided to us by the Management and on the consideration of the report of the other auditor on the financial information of the amalgamating company referred in the Other Matters paragraph above, we report that the disclosures are in accordance with the books of account maintained by the Company and produced to us and to other auditor.

2. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Ashok Leyland Limited ("the Company") as of March 31, 2017 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors'' Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India and the Standards on Auditing deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditor of the amalgamating company in terms of their report referred to in the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, and based on the consideration of report of the other auditor on the financial information of the amalgamating company referred to in the Other Matters paragraph below, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by the Institute of Chartered Accountants of India.

Other Matters

The standalone Ind AS financial statements include the financial information of erstwhile Hinduja Foundries Limited ("amalgamating company") for the period October 1, 2016 to March 31, 2017 consequent to amalgamation into the Company, which has been effected on April 24, 2017, with the appointed date of October 1, 2016 (Refer Note 3.21 to the standalone Ind AS financial statements). The said financial information of the amalgamating company, has been audited by other auditor whose report has been furnished to us, and our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting in so far as it relates to the amalgamating company, is based on the report of the other auditor.

Our reporting on the Order includes erstwhile Hinduja Foundries Limited ("the amalgamating company") for the period October 1,

2016 to March 31, 2017, consequent to amalgamation into the Company, which has been audited by other auditor in terms of their report referred in the Other Matters paragraph of our report of even date, and our report in respect of the amalgamating company is based solely on the report of the other auditor, to the extent considered applicable for reporting under the Order in the case of the standalone Ind AS financial statements.

(i) In respect of its fixed assets:

a) The Company/ the amalgamating company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets.

b) The fixed assets were physically verified during the year by the Management in accordance with a phased programme of verification, which, in our opinion and the opinion of the other auditor, provides for physical verification of all the fixed assets at reasonable intervals having regard to the size of the Company, nature

and value of its assets. According to the information and explanation given to us and the other auditor, no material discrepancies were noticed on such verification.

c) According to the information and explanations given to us and the other auditor and the records examined by us and the other auditor and based on the examination of the registered sale deeds/ transfer deeds/ conveyance deeds provided to us and the other auditor, we report that, the title deeds, comprising all the immovable properties of land and buildings, are held in the name of the Company/ the amalgamating company as at the balance sheet date, except for certain portion of land at Bhandara unit of the Company admeasuring 25.16 acres in respect of which the title deed is not in the name of the Company - Also Refer Note 1.1(2) to the Financial Statements. Immovable properties of land and buildings whose title deeds have been pledged as security for loans, guarantees, etc., are held in the name of the Company/ the amalgamating company based on the confirmations directly received by us and the other auditor from lenders. In respect of immovable properties of land and buildings that have been taken on lease and disclosed under other non-current and other current assets in the financial statements, the lease agreements are in the name of the Company/ the amalgamating company, where the Company/ the amalgamating company is the lessee in the agreement.

(ii) As explained to us and the other auditor, the inventories, other than goods in transit and stock lying with third parties (where certificates confirming physical inventory are received), were physically verified during the year by the Management at reasonable intervals and no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us and the other auditor, the Company has granted unsecured loan to a company covered in the register maintained under Section 189 of the Companies Act, 2013, in respect of which:

a. The terms and conditions of the grant of such loan are, in our opinion, prima facie, not prejudicial to the Company''s interest.

b. The schedule of repayment of principal and payment of interest has been stipulated and repayments or receipts of principal amounts and interest have been regular as per stipulations.

c. There is no overdue amount remaining outstanding as at the year-end.

(iv) In our opinion and the opinion of the other auditor and according to the information and explanations given to us and the other auditor, the Company has complied with the provisions of Sections 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities, as applicable.

(v) According to information and explanations given to us and the other auditor, the Company has not accepted any deposit during the year and there are no unclaimed deposits to which the provisions of Section 73 to 76 or any other relevant provisions of the Companies Act, 2013 are applicable.

(vi) The maintenance of cost records has been specified by the Central Government under Section 148(1) of the Companies Act, 2013 for certain products of the Company. We and the other auditor have broadly reviewed the cost records maintained by the Company/ the amalgamating company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under Sub-section (1) of Section 148 of the Companies

Act, 2013, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We and the other auditor have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us and the other auditor, and the books of account examined by us and the other auditor, in respect of statutory dues:

a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues applicable to it with the appropriate authorities during the year. There were no undisputed amounts payable in respect of the aforesaid statutory dues in arrears as at March 31, 2017 for a period of more than six months from the date they became payable.

b) Details of dues of Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax and Cess which have not been deposited as at March 31, 2017 on account of disputes are as stated below:

Nature of Dues

Disputed

Dues*

Period to which the amount relates

Forum where the dispute is pending

Amount stayed out of disputed dues

Income

Tax

1,826.79

Various periods from 2007 - 2013

Appellate authority -Tribunal

-

200.71

Various periods from 2006 - 2010

High Court

-

Sales Tax and Value Added Tax

22,261.21

Various periods from 1993 - 2016

Appellate authority - up to

Commissioner

level

20,535.06

2,767.35

Various periods from 1987 - 2013

Appellate authority -Tribunal

2,767.35

660.48

Various periods from 1986 - 2001

Central Sales tax Appellate authority

660.48

108.92

Various periods from 2006 - 2012

High Court

108.92

Excise Duty and cess thereon

196.24

Various periods from 2008 - 2016

Appellate authority - up to

Commissioner

level

152.70

2,372.23

Various periods from 2008 - 2016

Appellate authority -Tribunal

2,312.11

Customs

Duty

1.78

Various periods from 2006 - 2007

Appellate authority -Tribunal

-

Service Tax and cess thereon

3,214.28

Various periods from 2009 - 2014

Appellate authority - unto

Commissioner

level

3,214.28

335.07

Various periods from 2009 - 2011

Appellate authority -Tribunal

335.07

(viii) In our opinion and the opinion of other auditor and according to the information and explanations given to us and the other auditor, the Company has not defaulted in the repayment of loans or borrowings to banks and government and dues to debenture holders. There are no loans or borrowings from the financial institutions.

(ix) In our opinion and the opinion of other auditor and according to the information and explanation given to us and the other auditor, term loans have been applied by the Company during the year for the purpose for which they were raised. The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) during the year.

(x) To the best of our and the other auditor''s knowledge and belief, and according to the information and explanations given to us and the other auditor, and considering the size and nature of the Company''s operations, no fraud by the Company and no fraud of material significance on the Company by its officers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us, the Company has paid/ provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act, 2013.

(xii) The Company is not a Nidhi Company and, hence, reporting under clause (xii) of the Order is not applicable.

(xiii) In our opinion and according to the information and explanations given to us, the Company is in compliance with Sections 177 and 188 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.

(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and, hence, reporting under clause (xiv) of the Order is not applicable to the Company.

(xv) In our opinion and the opinion of the other auditor and according to the information and explanations given to us and the other auditor, during the year, the Company has not entered into any non-cash transactions with its directors or persons connected with him, and hence provisions of Section 192 of the Companies Act, 2013 are not applicable.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

For M.S. Krishnaswami & Rajan For Deloitte Haskins & Sells LLP

Chartered Accountants Chartered Accountants

Firm''s Registration No. 01554S Firm''s Registration No. 117366W/W-100018

M S Murali A Siddharth

Partner Partner

Membership No. 26453 Membership No. 31467

May 25, 2017 Chennai


Mar 31, 2015

1. We have audited the accompanying standalone financial statements of Ashok Leyland Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

2. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

3. Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

4. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

5. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

6. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

7. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2015, and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

8. As required by the Companies (Auditor''s report) Order, 2015 ("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure

a statement on the matters specified in paragraphs 3 and 4 of the Order.

9. As required by Section 143(3) of the Act, we report that:

(a) We have sought and 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 account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) On the basis of the written representations received from the directors as on March 31, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015 from being appointed as a director in terms of Section 164(2) of the Act.

(f) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has, in accordance with the generally accepted accounting practice, disclosed the impact of pending litigations on its financial position in its financial statements - Also Refer Note 3.2.7 to the financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses under the applicable law or accounting standards.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT (Referred to in paragraph 8 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date on the accounts of Ashok Leyland Limited ("the Company") for the year ended March 31, 2015)

(i) In respect of its fixed assets:

a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets.

b) The fixed assets were physically verified during the year by the Management in accordance with a phased programme of verification, which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals having regard to the size of the Company, nature and value of its assets. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(ii) In respect of its inventories:

a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

c) In our opinion and according to the information and explanations given to us, the Company has generally maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013 and accordingly, the provisions of clause (iii) of paragraph 3 of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there is generally an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventories and fixed assets and for the sale of goods and services, and during the course of our audit, we have not observed any continuing failure to correct major weaknesses in such internal control system.

(v) According to information and explanations given to us, the Company has not accepted any deposits and accordingly, the provisions of clause (v) of paragraph 3 of the Order are not applicable to the Company.

(vi) In our opinion and according to the information and explanations given to us, the requirement for maintenance of cost records pursuant to the Companies (Cost records and Audit) Rules, 2014 specified by the Central Government of India under Section 148 of the Companies Act, 2013 are not applicable to the Company for the year under audit.

(vii) According to the information and explanations given to us and the books of account examined by us, in respect of statutory dues:

a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues applicable to it with the appropriate authorities during the year. There were no undisputed amounts payable in respect of the aforesaid statutory dues outstanding as at March 31, 2015 for a period of more than six months from the date they became payable.

b) There are no dues of Wealth Tax and Customs Duty which have not been deposited on account of any dispute with the relevant authorities. Details of dues towards Income Tax, Sales Tax, Service Tax, Excise Duty, Value Added Tax and Cess that have not been deposited as at March 31, 2015 on account of disputes are as stated below:

Rs. Lakhs

Nature Disputed Period to Forum where Amount of Dues Dues which the the dispute is stayed amount pending out of relates disputed dues

Income 7,390.63 Assessment Appellate 7,390.63 Tax years 2005- authority - 06, 2006-07 Income Tax and 2008- Appellate 09 Tribunal

Sales 21,724.88 Various Appellate 6,210.84 Tax and periods authority Value from 1993 - upto Added - 2014 Commissioner Tax level

268.69 Various Appellate 232.85 periods authority - from 1987 Tribunal -2013

723.81 Various High Court 655.69 periods from 1986 -2012

Excise 62.43 Various Appellate - Duty periods authority and cess from 2008 - upto thereon - 2012 Commissioner level

1,251.75 Appellate 1,246.75 authority - Tribunal

Service 40.89 Various Appellate - Tax and periods authority cess from 2011 - upto thereon - 2014 Commissioner level

c) The amounts required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder, have been transferred to such fund within time.

(viii) The Company does not have accumulated losses at the end of the financial year and the Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to financial institutions, banks and debenture holders.

(x) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company in earlier years, for loans taken by a subsidiary and a joint venture company from banks or financial institutions are not, prima facie, prejudicial to the interests of the Company.

(xi) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained.

(xii) To the best of our knowledge and belief, and according to the information and explanations given to us, and considering the size and nature of the Company''s operations, no fraud of material significance on the Company or no fraud by the Company has been noticed or reported during the year.

For M. S. Krishnaswami & Rajan For Deloitte Haskins & Sells LLP

Chartered Accountants Chartered Accountants

Registration No. 01554S Firm''s Registration No. 117366W/W-100018

M. S. Murali A. Siddharth

partner partner

Membership No. 26453 Membership No. 31467

May 12, 2015 May 12, 2015

Chennai Mumbai


Mar 31, 2014

Report on the Financial Statements

1. We have audited the accompanying Financial Statements of Ashok Leyland Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profi t and Loss and the Cash Flow Statement for the year then ended and a summary of signifi cant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

2. The Company''s Management is responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Company in accordance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 ("the Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Aff airs) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatements, whether due to fraud or error.

Auditors'' Responsibility

3. Our responsibility is to express an opinion on these

financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the fi nancial statements. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control relevant to the Company''s preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eff ectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the fi nancial statements.

5. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid fi nancial statements give the information required by the Act 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 aff airs of the Company as at March 31, 2014;

(b) in the case of the Statement of Profi t and Loss, of the profi t of the Company for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that date.

Report on Other Legal and Regulatory Requirements

7. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specifi ed in paragraphs 4 and 5 of the Order.

8. As required by Section 227(3) of the Act, we report that:

(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 account as required by law have been kept by the Company so far as appears from our examination of those books;

(c) the Balance Sheet, the Statement of Profi t and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, the Statement of Profi t and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Aff airs).

(e) on the basis of written representations received from the directors as on March 31, 2014 and taken on record by the Board of Directors, none of the directors is disqualifi ed as on March 31, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

In our opinion and on the basis of such checks as we considered appropriate, and according to the information and explanations given to us, the nature of the Company''s business/ activities/ results during the year are such that clauses (vi), (xiii), (xiv), (xviii), and (xx) of paragraph 4 of the Order are not applicable to the Company. Further, in respect of other clauses, on the basis of such checks as we considered appropriate, we report that:

1. In respect of its fi xed assets:

(i) the Company is maintaining proper records showing full particulars including quantitative details and situation of fi xed assets.

(ii) the fi xed assets were physically verifi ed by the Management during the year under a phased programme of verifi cation, which, in our opinion, provides for physical verifi cation of all the fi xed assets at reasonable intervals having regard to the size of the Company, nature and value of its assets. According to the information and explanations given to us, no material discrepancies have been noticed during the year on such verifi cation.

(iii) the fi xed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fi xed assets of the Company and such disposal has, in our opinion, not aff ected the going concern status of the Company.

2. In respect of its inventories:

(i) the inventories have been physically verifi ed during the year by the Management at reasonable intervals.

(ii) in our opinion and according to the information and explanations given to us, the procedures of physical verifi cation of the inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(iii) in our opinion and according to the information and explanations given to us, the Company is generally maintaining proper records of its inventories and no material discrepancies were noticed on physical verifi cation.

3. On the basis of our examination of the books of account, the Company has neither granted nor taken any loans, secured or unsecured, to / from companies, fi rms or other parties covered in the register maintained under section 301 of the Act.

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventories and fi xed assets, for payment of expenses and for sale of goods and services. Further, on the basis of our examination of the books and records of the Company, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

a) the particulars of contracts or arrangements referred to in Section 301 of the Act that needed to be entered into the register, maintained under the said section have been so entered.

b) where each of such transactions is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

7. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government of India under Section 209(1)(d) of the Act and are of the opinion that, prima facie, the prescribed accounts and cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

8. According to the information and explanations given to us and the books of account examined by us, in respect of statutory dues:

(i) the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues, as applicable, with the appropriate authorities during the year.

(ii) there were no undisputed amounts payable in respect of such statutory dues outstanding as at March 31, 2014 for a period of more than six months from the date they became payable.

(iii) there are no dues of wealth-tax and customs duty which have not been deposited on account of any dispute. Details of dues towards income tax, sales tax, service tax, excise duty and cess that have not been deposited as at March 31, 2014 on account of disputes are as stated below:

9. The Company does not have any accumulated losses as at March 31, 2014 and has not incurred any cash losses in the fi nancial year ended on that date or in the immediate- ly preceding fi nancial year.

10. In our opinion, the Company has not defaulted in repayment of dues to any fi nancial institutions, banks or debenture holders during the year.

11. 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.

12. In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company, for loans taken by others from banks or fi nancial institutions, are not, prima facie, prejudicial to the interest of the Company.

13. In our opinion and according to the information and explanations given to us, the term loans availed by the Company were, prima facie, applied for the purpose for which they were obtained.

14. In our opinion and according to the information and explanations given to us, and on an overall examination of the fi nancial statements of the Company, funds raised during the year on short-term basis have, prima facie, not been used for long-term investment.

15. According to the information and explanations given to us, during the period covered by our audit report, the Company has created securities / charges in respect of debentures issued.

16. To the best of our knowledge and belief, and according to the information and explanations given to us, and considering the size and nature of the Company''s operations, no fraud of material signifi cance on or by the Company has been noticed or reported during the year.

For M.S. Krishnaswami & Rajan For Deloitte Haskins & Sells LLP

Chartered Accountants Chartered Accountants

Registration No. 01554S Firm''s Registration No. 117366W/W-100018

M.S. Murali A. Siddharth

Partner Partner

Membership No. 26453 Membership No. 31467

May 22, 2014 Chennai


Mar 31, 2012

1. We have audited the attached Balance Sheet of ASHOK LEYLAND LIMITED ("the Company") as at March 31, 2012, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date, both annexed thereto, (collectively referred to as the financial statements), signed by us under reference to this report. 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.

2. We conducted our audit in accordance with auditing and assurance 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.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose 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 in paragraph 3 above, we report as follows:

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 account, as required by law, have been kept by the Company so far as appears from our examination of those books.

c. the financial statements dealt with by this report are in agreement with the books of account.

d. in our opinion, the aforesaid financial statements comply in all material respects with the applicable Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 (the Act).

e. in our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements read with the Statement on Significant Accounting Policies and Notes to the Financial Statements, give the information required by the Act, in the manner so required and give a true and fair view, in conformity with the accounting principles generally accepted in India:

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

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

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

5. On the basis of written representations received from the Directors as on March 31, 2012, and taken on record by the Board of Directors, we report that none of the Directors is prima facie disqualified as on March 31, 2012 from being appointed as a director in terms of Section 274(l)(g) of the Act.

As required by the Companies (Auditor's Report) Order, 2003 (CARO) issued by the Government of India in terms of Section 227(4A) of the Companies Act, 1956, and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we report that:

1. (i) the Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(ii) the fixed assets are being physically verified under a phased programme of verification, which, in our opinion, is reasonable having regard to the nature and value of its assets. However, no material discrepancies have been noticed on such verification.

(iii) the Company has not disposed off substantial part of its fixed assets during the year.

2. (i) inventories have been physically verified during the year by the management at reasonable intervals.

(ii) the procedures of physical verification of the inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(iii) the Company is maintaining proper records of its inventories and no material discrepancies were noticed on physical verification.

3. the Company has neither granted nor taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the register maintained under Section 301 of the Act.

4. there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for sale of goods and services. Further, on the basis of our examination of the books and records of the Company, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. a) in our opinion and to the best of our knowledge and belief, the particulars of contracts or arrangements referred to Section 301 that needed to be entered into the register, maintained under the said section have been so entered.

b) where each of such transactions is in excess of Rs 5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

6. the Company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and the provisions of Section 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 1975 apply.

7. the Company has an internal audit system commensurate with its size and nature of its business.

8. we have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(l)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. (i) the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities during the year.

(ii) no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at the balance sheet date for a period of more than six months from the date they became payable.

(iii) there are no dues of income tax, wealth-tax and customs duty which have not been deposited on account of any dispute. Details of dues towards sales tax, excise duty, service tax and cess that have not been deposited on account of dispute are as stated below:

Rs.Lakhs

Nature of Dues Period to Forum Amount dues which the where they stayed amount dispute is not relates pending included in dues

Sales Tax 2,224.33 Various Appellate 2,846.88 periods Deputy/ from Additional 1993-2010 Commis- sioner

35.84 Various Tribunal 204.30 periods from 1987-2007

- Various High Court 49.09 periods from 1986-2001 Excise 26.78 Various Commis- - Duty, periods sioner of and cess from Central thereon 2008-2011 Excise (Ap- peals)

1,415.09 Tribunal 4.88 (CESTAT)

Service tax 51.62 Various Tribunal - and cess periods (CESTAT) thereon from 2009-2011

- Various Tribunal 230.31 periods (CESTAT) from 2006-2009

Income - 2005-06 Commis- 8,045.47 Tax and sionerof 2007-2008 Income Tax (Appeals)

10. the Company does not have any accumulated losses as at March 31, 2012 and has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders during the year.

12. the Company has maintained adequate documents and records where it has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. the provisions of any special statute applicable to a chit fund, nidhi or mutual benefit fund / societies are not applicable to the Company.

14. the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly the provisions of Clause 4(xiv) of the CARO are not applicable to the Company.

15. the terms and conditions of guarantees given during the year by the Company, for loans taken by others from banks or financial institutions, are not prima facie prejudicial to the interest of the Company.

16. the term loans availed by the Company were prima facie, applied for the purpose for which they were obtained.

17. on an overall examination of the financial statements of the Company, funds raised on short-term basis have, prima facie, not been used for long-term investment.

18. the Company has not made any preferential allotment of shares during the year to any party.

19. the Company has created securities / charges in respect Of debentures issued and outstanding.

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

21. considering the size and nature of the Company's operations, no fraud of material significance on or by the Company has been noticed or reported during the year.

For M.S. KRISHNASWAMI & RAJAN

For DELOITTE HASKINS & SELLS

Chartered Accountants Chartered Accountants

Registration No. 01554S Registration No. 117366W

M.K. RAJAN R. LAXMINARAYAN

Partner Partner

Membership No.4059 Membership No.33023

May 14, 2012 Chennai


Mar 31, 2011

1. We have audited the attached Balance Sheet of ASHOK LEYLAND LIMITED (the Company") as at March 31, 2011, the Profit and Loss Account and the Cash Flow Statement for the year ended on that date, both annexed thereto, (collectively referred to as the financial statements), signed by us under reference to this report. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing and assurance 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.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose 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 in paragraph 3 above, we report as follows:

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 account, as required by law, have been kept by the Company so far as appears from our examination of those books.

c. the financial statements dealt with by this report are in agreement with the books of account.

d. in our opinion, the aforesaid financial statements comply in all material respects with the applicable Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 (the Act).

e. in our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements read with the Statement on Significant Accounting Policies and Notes to the Accounts, give the information required by the Act, in the manner so required and also give a true and fair view, in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011;

(ii) in the case of the Profit and Loss account, of the profit for the year ended on that date; and

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

5. On the basis of written representations received from the directors as on March 31, 2011, and taken on record by the Board of Directors, we report that none of the directors is prima facie disqualified as on March 31, 2011 from being appointed as a director in terms of Section 274 (1)(g)of the Act.

ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph 3 of our report of even date on the accounts for the year ended March 31, 2011 of Ashok Leyland Limited).

As required by the Companies (Auditors Report) Order, 2003 (CARO) issued by the Government of India in terms of Section 227(4A) of the Companies Act, 1956, and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we report that:

1. (i) the Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(ii) the fixed assets are being physically verified under a phased programme of verification, which, in our opinion, is reasonable having regard to the nature and value of its assets, and no material discrepancies have been noticed on such verification.

(iii) the Company has not disposed off substantial part of its fixed assets during the year.

2. (i) inventories have been physically verified during the year by the management at reasonable intervals.

(ii) the procedures of physical verification of the inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(iii) the Company is maintaining proper records of its inventories and no material discrepancies were noticed on physical verification.

3. the Company has neither granted nor taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the register maintained under Section 301 of the Act.

4. there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for sale of goods and services. Further, on the basis of our examination

of the books and records of the Company, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. to the best of our knowledge there are no contracts or arrangements referred to in Section 301 of the Act which need to be entered in the register maintained under the said section.

6. the Company has not accepted any deposits from the public to which the provisions of Section 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 1975 apply.

7. the Company has an internal audit system commensurate with its size and nature of its business.

8. we have broadly reviewed the books of account and records maintained by the Company relating to the manufacture of commercial vehicles, diesel engines, gensets and auto components pursuant to the order made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Act and are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

9. (i) the Company is regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities during the year.

(ii) there are no dues of income tax, wealth-tax and customs duty which have not been deposited on account of any dispute. Details of dues towards sales tax, excise duty, service tax and cess that

have not been deposited on account of dispute are as stated below:

Rs. Lakhs

Nature Dues Forum where Amount of dues the dispute stayed not is pending included in dues

Sales 1,284.29 Appellate 1,384.23 tax Deputy / Additional Commissioner

15.12 Tribunal 697.09

Excise 24.70 Commissioner Duty, of central and cess Excise thereon (Appeals)

1,419.66 Tribunal - (CESTAT)

Service 230.31 Tribunal - tax and (CESTAT) cess thereon

10. the Company does not have any accumulated losses as at March 31, 2011 and has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders during the year.

12. the Company has maintained adequate documents and records where it has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. the provisions of any special statute applicable to a chit fund, nidhi, mutual benefit fund / societies are not applicable to the Company.

14. the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly the provisions of clause 4 (xiv) of the CARO are not applicable to the Company.

15. the terms and conditions of guarantees given during the year by the Company, for loans taken by others from banks or financial institutions, are not prima facie prejudicial to the interest of the company.

16. the term loans availed by the Company were prima facie, applied for the purpose for which they were obtained.

17. on an overall examination of the financial statements of the Company, funds raised on short- term basis have, prima facie, not been used for long-term investment.

18. the Company has not made any preferential allotment of shares during the year to any party.

19. the Company has created securities / charges in respect of debentures issued and outstanding.

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

21. considering the size and nature of the Companys operations, no fraud of material significance on or by the Company has been noticed or reported during the year.

For M.S. Krishnaswami & Rajan For Deloitte Haskins & Sells Chartered Accountants Chartered Accountants Registration No. 01554S Registration No. 117366W

M.K. Rajan R. Laxminarayan Partner Partner Membership No.4059 Membership No.33023

May 19, 2011 Chennai


Mar 31, 2010

1. We have audited the attached Balance Sheet of ASHOK LEYLAND LIMITED as at March 31, 2010, the profit and Loss Account and the Cash Flow Statement (fnancial statements) for the year ended on that date, annexed thereto, signed by us under reference to this report. These fnancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fnancial statements based on our audit.

2. We conducted our audit in accordance with auditing and assurance standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fnancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fnancial statements. An audit also includes assessing the accounting principles used and signifcant estimates made by management, as well as evaluating the overall fnancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specifed in paragraphs 4 and 5 of the said Order.

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

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 account, as required by law, have been kept by the Company so far as appears from our examination of those books.

c) the fnancial statements dealt with by this report are in agreement with the books of account.

d) in our opinion, the aforesaid fnancial statements comply in all material respects with the applicable Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 (the Act).

e) in our opinion and to the best of our information and according to the explanations given to us, the aforesaid fnancial statements read with the Statement on Signifcant Accounting Policies and Notes to the Accounts, give the information required by the Act, in the manner so required and also give a true and fair view, in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;

(ii) in the case of the profit and Loss Account, of the profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash fows for the year ended on that date

5. On the basis of written representations received from the directors as on March 31, 2010, and taken on record by the Board of Directors, we report that none of the directors is prima facie disqualifed as on March 31, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Act.

ANNEXURE TO THE AUDITORS’ REPORT (Referred to in paragraph 3 of our report of even date)

As required by the Companies (Auditor’s Report) Order, 2003 (CARO) issued by the Government of India in terms of Section 227(4A) of the Companies Act, 1956, and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we report that:

1. (i) the Company is maintaining proper records showing full particulars including quantitative details and situation of fxed assets.

(ii) the fxed assets are being physically verifed under a phased programme of verifcation, which, in our opinion, is reasonable having regard to the nature and value of its assets, and no material discrepancies have been noticed on such verifcation.

(iii) the Company has not disposed off substantial part of its fxed assets during the year.

2. (i) inventories have been physically verifed during the year by the management at reasonable intervals.

(ii) the procedures of physical verifcation of the inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(iii) the Company is maintaining proper records of its inventories and no material discrepancies were noticed on physical verifcation.

3. the Company has neither granted nor taken any loans, secured or unsecured, to / from companies, frms or other parties covered in the register maintained under Section 301 of the Act.

4. there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fxed assets and for sale of goods and services. Further, on the basis of our examination of the books and records of the Company, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. to the best of our knowledge there are no contracts or arrangements referred to in Section 301 of the Act which need to be entered in the register maintained under the said section.

6. the Company has not accepted any deposits from the public to which the provisions of Section 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 apply.

7. the Company has an internal audit system commensurate with its size and nature of its business.

8. we have broadly reviewed the books of account and records maintained by the Company relating to the manufacture of commercial vehicles, diesel engines, gensets and auto components pursuant to the order made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Act and are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

9. (i) the Company is regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees’ state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities during the year.

(ii) there are no dues of income tax / wealth tax, service tax, customs duty, which have not been deposited on account of any dispute. Details of dues towards sales tax, excise duty and cess that have not been deposited on account of dispute are as stated below:

Nature Dues Forum where Amount stayed of dues the dispute is not included in pending dues

Rs.Lakhs Rs.Lakhs

Sales 152.31 Appellate Tax Deputy / Additional Commissioner 1,040.11

8.82 Tribunal 851.54

Excise 238.62 Commissioner -- Duty of Central and Excise cess (Appeals)

10. the Company does not have any accumulated losses as at March 31, 2010 and has not incurred any cash losses in the fnancial year ended on that date or in the immediately preceding fnancial year.

11. the Company has not defaulted in repayment of dues to any fnancial institution, bank or debenture holders during the year.

12. the Company has maintained adequate documents and records where it has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. the provisions of any special statute applicable to a chit fund, nidhi, mutual beneft fund / societies are not applicable to the Company.

14. the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the CARO are not applicable to the Company.

15. the terms and conditions of guarantees given during the year by the Company, for loans taken by others from banks or fnancial institutions, are not prima facie prejudicial to the interest of the Company.

16. the term loans availed by the Company were prima facie, applied for the purpose for which they were obtained.

17. on an overall examination of the fnancial statements of the Company, funds raised on short-term basis have, prima facie, not been used for long-term investment.

18. the Company has not made any preferential allotment of shares during the year to any party.

19. the Company has created securities / charges in respect of debentures issued and outstanding.

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

21. considering the size and nature of the Company’s operations, no fraud of material signifcance on or by the Company has been noticed or reported during the year.

For M.S. KRISHNASWAMI & RAJAN For DELOITTE HASKINS & SELLS

Chartered Accountants Chartered Accountants

Registration No. 01554S Registration No. 117366W

M.K. RAJAN R. LAXMINARAYAN

Partner Partner

Membership No. 4059 Membership No. 33023

April 29, 2010

Chennai

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