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Auditor Report of Fag Bearings India Ltd.

Dec 31, 2014

We have audited the accompanying financial statements of FAG Bearings India Limited (''the Company''), which comprise the Balance Sheet as at December 31, 2014, the Statement of Profit and Loss, and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these 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 Standards notified under the Companies Act, 1956 (''the Act'') read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control 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.

Auditor''s Responsibility

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 ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and 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 control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, 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:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at December 31, 2014;

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

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

Emphasis of Matter

We draw attention to Note 43 to the financial statements in respect of change in accounting policy in respect of accounting for forward contracts. During the year, the Company has adopted and applied the principles of hedge accounting as set out in Accounting Standard (AS)-30, ''Financial Instruments: Recognition and Measurement'' issued by Institute of Chartered Accountants of India to forward contracts in respect of highly probable transactions or firm commitments which were previously accounted following the principles of prudence as per AS-1 ''Disclosure of Accounting Policies''. Consequently, the Company has recorded M 203 million representing mark to mark loss in the hedging reserve as at December 31, 2014 resulting in net profit for the year being higher to that extent. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

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

2. 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 purpose 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, Statement of Profit and Loss, and 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 Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013; and

(e) on the basis of written representations received from the Directors as on December 31, 2014, and taken on record by the Board of Directors, none of the Directors is disqualified as on December 31, 2014, from being appointed as a Director in terms of Section 164(2) of the Companies Act, 2013.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT December 31, 2014 With reference to the Annexure referred to in our report of even date, we report that:

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

(b) The Company has a programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of two years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Accordingly, a part of the fixed assets were physically verified by the management in the current year and no material discrepancies were noticed on such verification.

(c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the ongoing concern assumption.

(ii) (a) The inventory, except goods-in-transit and stocks lying with certain third parties, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained.

(b) The procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) According to the information and explanations given to us, we are of the opinion that there are no Companies, firms or other parties covered in the register required under Section 301 of the Act / Section 189 of the Companies Act, 2013 (as applicable). Accordingly, paragraph (iii) of the Order is not applicable.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories and fixed assets are for the Company''s specialised requirements and similarly certain goods sold and services rendered are for the specialised requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, 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 inventories and fixed assets and with regard to the sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

(v) In our opinion, and according to the information and explanations given to us, there are no contracts and arrangements, the particulars of which need to be entered into the register maintained under Section 301 of the Act / Section 189 of the Companies Act, 2013 (as applicable).

(vi) The Company has not accepted any deposits from public.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1)(d) of the Act / Section 128 of the Companies Act, 2013 (as applicable), in respect of bearings and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted / accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty, Value added tax, Investor Education and Protection Fund and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty, Value added tax, Investor Education and Protection Fund and other material statutory dues were in arrears as at December 31, 2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Income-tax, Sales-tax, Service tax, Wealth tax, Excise duty, Customs duty, and Value added tax, which have not been deposited with the appropriate authorities on account of any dispute other than those mentioned below:

Name of Nature of Amount Period Forum where the the statute the dues (in million) dispute is pending

State and Central Duty and 2.8 2004-05 Joint Commissioner interest Appeals

Sales Tax Act 3.7 2008-09 Joint Commissioner Appeals

9.9 2009-10 Commissioner Appeals

1.4 2009-10 Dy. Commissioner Sales Tax

0.3 2006-07 Dy. Commissioner Sales Tax

Central Excise Duty, int 12.4 2003-04, High Court Act, erest and 2004-05, 1944 penalty 2006- 07,

2007- 08

13.1 2003-04, Commissioner Appeals

2004-05,

2006- 07,

2007- 08,

2009-10

2.2 2004-05 Appellate Tribunal

The Income Tax Tax and 174.4 2000-01 to Income Tax Act, interest - Appellate 1961 2010-11 Tribunal and Assessing Officer

The above are net of amounts paid under protest for Sales tax M 78.3 million and for Income tax M 2,691.4 million. The Income tax dues of M 174.4 million mentioned above represent cases where the Company has received favorable orders and the department has gone for further appeals with higher authorities for various assessment years.

(x) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year or in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company did not have any outstanding dues to any financial institution, banks or debenture holders during the year.

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, and according to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

(xviii) As stated in paragraph (iii) above, there are no Companies / firms / parties covered in the register required to be maintained under Section 301 of the Act / Section 189 of the Companies Act, 2013 (as applicable). Accordingly, paragraph (xviii) of the Order is not applicable.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For B S R & Co. LLP Chartered Accountants Firm''s Reg. No. 101248W / W-100022

Vijay Mathur Partner Mumbai: February 11, 2015 Membership No. 046476


Dec 31, 2013

We have audited the accompanying financial statements of FAG Bearings India Limited (''the Company''), which comprise the Balance Sheet as at December 31, 2013, the Statement of Profit and Loss, and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies, and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these 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 Standards notified under the Companies Act, 1956 (''the Act'') read with the General Circular 15 / 2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control 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.

Auditor''s Responsibility

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 ethical requirements and plan, and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and 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 control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, 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:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at December 31, 2013;

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

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

Report on Other Legal and Regulatory Requirements

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

2. 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 purpose 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, Statement of Profit and Loss, and 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 Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15 / 2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013; and

(e) on the basis of written representations received from the directors as on December 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on December 31, 2013, from being appointed as a director in terms of clause (g) of sub- section (1) of Section 274 of the Act.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

With reference to the Annexure referred to in our report of even date, we report that:

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

(b) The Company has a programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of two years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Accordingly, a part of the fixed assets were physically verified by the management in the current year and no material discrepancies were noticed on such verification.

(c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern assumption.

(ii) (a) The inventory, except goods-in-transit and stocks lying with certain third parties, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year-end, written confirmations have been obtained.

(b) The procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) According to the information and explanations given to us, we are of the opinion that there are no companies, firms or other parties covered in the register required under Section 301 of the Act. Accordingly, paragraph (iii) of the Order is not applicable.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories and fixed assets are for the Company''s specialised requirements and similarly certain goods sold and services rendered are for the specialised requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, 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 inventories and fixed assets and with regard to the sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

(v) In our opinion, and according to the information and explanations given to us, there are no contracts and arrangements, the particulars of which need to be entered into the register maintained under Section 301 of the Act.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A, Section 58AA or other relevant provisions of the Act, and the rules framed thereunder with regard to deposits accepted from the public. Accordingly, there have been no proceedings before the Company Law Board or National Company Law Tribunal (as applicable) or Reserve Bank of India or any Court or any other Tribunal in this matter and no order has been passed by any of the aforesaid authorities.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1)(d) of the Act in respect of bearings and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty, Value added tax, Investor Education and Protection Fund and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Customs duty, Excise duty, Value added tax, Investor Education and Protection Fund and other material statutory dues were in arrears as at December 31, 2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Income tax, Sales tax, Service tax, Wealth tax, Excise duty, Customs duty, and Value added tax, which have not been deposited with the appropriate authorities on account of any dispute other than those mentioned below:

Name of the statute Nature of the dues Amount (Rs. in million) Period Forum where the dispute is pending

State and Central Duty and interest 2.8 2004-05 Dy. Commissioner Sales Tax

Sales Tax Act 0.1 2003-04 Joint Commissioner Appeals

3.7 2008-09 Joint Commissioner Appeals

Central Excise Act, Duty, interest and penalty 12.4 2003-04, High Court 1944 2004-05, 2006-07, 2007-08

12.4 2003-04, Commissioner Appeals 2004-05, 2006-07, 2007-08, 2009-10

2.1 2004-05 Assistant Commissioner Appeals

The Income Tax Act, Tax and interest 136.6 2000-01 to Income Tax - Appellate 1961 2008-09 Tribunal and Assessing Officer

The above are net of amounts paid under protest for Sales Tax Rs. 68.3 million and for Income Tax Rs. 2,285.2 million.

The Income Tax dues of Rs. 136.6 million mentioned above represents cases where the Company has received favorable orders and the department has gone for further appeals with higher authorities for various assessment years.

(x) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year or in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company did not have any outstanding dues to any financial institution, banks or debenture holders during the year.

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, and according to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

(xviii) As stated in paragraph (iii) above, there are no companies / firms / parties covered in the register required to be maintained under Section 301 of the Act. Accordingly, paragraph (xviii) of the Order is not applicable.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For B S R & Co. LLP

Chartered Accountants

Firm''s Reg. No. 101248W

Vijay Mathur

Partner

Mumbai: February 11, 2014 Membership No. 046476


Dec 31, 2012

We have audited the attached Balance Sheet of FAG Bearings India Limited (''the Company'') as at December 31, 2012 and the related Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company''s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

As required by the Companies (Auditor''s Report) Order, 2003 (‘the Order'') issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (‘the Act''), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, 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 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act;

(e) on the basis of written representations received from the directors of the Company as at December 31, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on December 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act; and

(f) in our opinion, and to the best of our information and according to the explanations given to us, they said accounts 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 December 31, 2012;

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

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

With reference to the Annexure referred to in our report of even date, we report that:

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

(b) The Company has a programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of two years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Accordingly, a significant part of fixed assets were physically verified by the management in the current year and no material discrepancies were noticed on such verification.

(c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the ongoing concern assumption.

(ii) (a) The inventory, except goods-in-transit and stocks lying with third parties, has been physically verified by the management during

the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year end, written confirmations have been obtained.

(b) The procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(iii) According to the information and explanations given to us, we are of the opinion that there are no companies, firms or other parties covered in the register required under Section 301 of the Act. Accordingly, paragraph 4(iii) of the Order is not applicable.

(iv) In our opinion and according to the information and explanations given to us and having regard to the explanation that purchases of certain items of inventories and fixed assets are for the Company''s specialized requirements and similarly certain goods sold and services rendered are for the specialized requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, 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 inventories and fixed assets and with regard to the sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

(v) In our opinion, and according to the information and explanations given to us, there are no contracts and arrangements, the particulars of which need to be entered into the register maintained under Section 301 of the Act.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A, Section 58AA or other relevant provisions of the Act and the rules framed there under with regard to deposits accepted from the public. Accordingly, there have been no proceedings before the Company Law Board or National Company Law Tribunal (as applicable) or Reserve Bank of India or any Court or any other Tribunal in this matter and no order has been passed by any of the aforesaid authorities.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(1)(d) of the Act in respect of bearings and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company,

amounts deducted / accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty, Value added tax, Investor Education and Protection Fund and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty, Value added tax, Investor Education and Protection Fund and other material statutory dues were in arrears as at December 31, 2012 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Income tax, Sales tax, Service tax, Wealth tax, Excise duty and Customs duty, which have not been deposited with the appropriate authorities on account of any dispute other than those mentioned below:

(Rs. in million)

Name of the statute Nature of the dues Amount Period Forum where the dispute is pending

State and Central Sales Tax Act Duty and interest 2.8 2004-05 Joint Commissioner Appeals

8.3 2006-07

0.1 2003-04

3.7 2008-09 Commissioner Appeals



Central Excise Act, 1944 Duty, interest and penalty 12.4 2003-04, High court

2004-05,

2006-07,

2007-08

11.7 2003-04, Commissioner Appeals 2004-05,

2006-07,

2007-08,

2009-10

1.9 2004-05 Assistant Commissioner Appeals

The Income Tax Act, 1961 Tax and interest 106.3 2000-01 Income Tax - Appellate

to 2008-09 Tribunal and Assessing Officer

The above are net of amounts paid under protest for Sales tax (Rs.67.3 million; 2011: Rs.57.3 million), and for Income tax (Rs.1,814.4 million; 2011: Rs.1,799.4 million).

(x) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company did not have any outstanding dues to any financial institution, banks or debenture holders during the year.

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion and according to the information and explanations given to us, the Company is not a chit fund or a nidhi / mutual benefit fund / society.

(xiv) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

(xviii) As stated in paragraph (iii) above, there are no companies / firms / parties covered in the register required to be maintained under Section 301 of the Act.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by public issues during the year.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For B S R & Co.

Chartered Accountants

Firm''s Reg. No. 101248W

Vijay Mathur

Partner

Mumbai: February 14, 2013 Membership No. 046476


Dec 31, 2011

We have audited the attached Balance Sheet of FAG Bearings India Limited ('the Company') as at December 31,2011 and the related Profit and Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

As required by the Companies (Auditors' Report) Order, 2003 ('the Order') issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 ('the Act'), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, we report that:

-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;

-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;

-the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

-in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3 C) of Section 211 Of the Act;

- on the basis of written representations received from the directors of the Company as at December 31, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on December 31, 2011 from being appointed as a director in terms of Clause (g) of sub-section (1) of Section 274 of the Act; and

- 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 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 December 31,2011;

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

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

With reference to the Annexure referred to in our report ofthe even date, we report that: ,

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

(b) The Company has a programme of physical verification of its fixed assets by which all fixed assets are verified - once in every two years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Accordingly, all assets were physically verified by the management in the previous year and no material discrepancies were noticed on such verification.

(c) Fixed assets disposed off during the year were not substantial, and therefore, do not affect the going concern assumption.

[II] (a) The inventory, except goods-in-transit and stocks lying with third parties, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable. For stocks lying with third parties at the year 'end, written confirmations have been obtained.

(b) The procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

[III] According to the information and explanations given to us, we are Of the opinion that there are no Companies, firms or other parties covered in the register required under Section 301 of the Act. Accordingly, paragraph 4(iii) of the Order is not applicable.

[IV] In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories and fixed assets are for the Company's specialised requirements and similarly certain goods sold and services rendered are for the specialised requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, 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 inventories and fixed assets and with regard to the sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

[V] In our opinion, and according to the information and explanations given to us, there are no contracts and arrangements the particulars of which need to be entered into the register maintained under Section 301 of the Companies Act, 1956.

[VI] In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A, Section 58AA or other relevant provisions of the Act, and the rules framed there under with regard to deposits accepted from the public. Accordingly, there have been no proceedings before the Company Law Board or National Company Law Tribunal (as applicable) or Reserve Bank of India or any Court or any other Tribunal in this matter and no order has been passed by any of the aforesaid authorities.

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

[VIII] We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Section 209(l)(d) of the Act in respect of bearings and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

[IX](a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty, Value added tax, Investor Education and Protection Fund and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, value added tax, investor education and protection fund and other material statutory dues were in arrears as at December 31,2011 for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us, there are no dues of income tax, sales tax, service tax, wealth tax, excise duty and customs duty, which have not been deposited with the appropriate authorities on account of any dispute other than those mentioned below:

Name of Nature of Amount Period Forum where the dispute the statute the Dues (Rs. in million) is pending

State and Central Duty interest 2.4 2002 Sales tax appellate tribunal Sales Tax Act and penalty 20.3 2004-05 Joint commissioner 0.1 2005-06 Appeals 8.3 2006-07 0.1 2003-04 Dy. Commissioner Appeals

Central Excise Act, Duty interest 0.7 2007-08 Central Excise & Service 1944 and penalty Tax Appellate Tribunal

11.3 2003-04, Commissioner Appeals 2004-05,

2006-07,

2007-08,

2008-09,

2009-10

1.8 2004-05 Assistant Commissioner Appeals

The Income Tax Act, Tax, interest 27.7 2006-07 Income Tax Appellate 1961 and penalty Tribunal 39.3 2007-08 Commissioner Appeals

[X] The Company does not have any accumulated losses at the end ofthe financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year.

[XI] In our opinion and according to the information and explanations given to us, the Company did not have any outstanding dues to any financial institution, banks or debenture holders during the year.

[XII] The Company has not granted loans and advances on the basis Of security by way of pledge of shares, debentures and other securities.

[XIII] In our opinion, and according to the information and explanations given to us, the Company is not a chit fund ora nidhi / mutual benefit fund / society.

[XIV] According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

[XV] According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks Or financial institutions.

[XVI] The Company did not have any term loans out standing during the year.

[XVII] According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that the funds raised on short-term basis have not been used for long-term investment.

[XVIII] As stated in paragraph (iii) above, there are no companies / firms / parties covered in the register required to be maintained under Section 301 of the Act.

[XIX] The Company did not have any outstanding debentures during the year.

[XX] The Company has not raised any money by public issues during the year.

[XXI] According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For B S R & Co. Chartered Accountants Firm's Reg. No. 101248W

Vijay Mathur Partner Mumbai: February 9, 2012 Membership No. 046476


Dec 31, 2010

We have audited the attached Balance Sheet of FAG Bearings India Limited, as at December 31,2010 and also the Profit and Loss Account for the year ended on that date annexed thereto and the Cash Flow Statement for the year ended on that date. 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.

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

1) As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, (referred to as the "Act") we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2) Further to our comments in the Annexure referred to above, we report that:

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary forthe purposes of our audit;

b) in our opinion, proper books of account as required bylaw, have been kept by the Company so far as appears from ourexamination of such books;

c) the Balance Sheet, the Profit and Loss Account 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 Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors, as on December 31, 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on December 31, 2010 from being appointed as a director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

0 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:

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

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

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

ANNEXURE REFERRED TO IN PARAGRAPH 1OFTHE AUDITORS REPORTTO THE MEMBERS OF FAG BEARINGS INDIA LIMITED ON THE ACCOUNTS FORTHEYEAR ENDED DECEMBER 31,2010

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

(b) The Company has a regular programme of physical verification of fixed assets which, in our opinion is reasonable. The assets which were to be covered as per the said programme, have been physically verified by the management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) There was no disposal of substantial part of fixed assets duringthe year.

Q (a) The inventories have been physically verified by the management duringtheyearat 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 are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of the inventory, we are of the opinion that the Company is maintaining proper records of inventory. According to the information and explanations given to us, no material discrepancies were noticed on physical verification between the physical stock and the book records.

- The Company has not taken / granted any loans, secured or unsecured from / to Companies, firms or other parties covered in the register maintained under Section 301 of the Act. Hence, the provisions of Clause 4(iii) of the Companies (AuditorsReport) Order, 2003 are not applicable to the Company.

- In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items are of a special nature and comparable alternative quotations are not available, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Duringthe course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system in respect of these areas.

Q The Company has not entered into any transactions with any Companies, firms or other parties which are required to be entered into the register maintained under Section 301 of the Companies Act, 1956.

- In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975, with regard to the deposits accepted from the public in earlieryear/s which have remained unclaimed. We have been informed that during the year, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in respect of such deposits.

-} The Company has a dedicated internal audit department carrying out Internal Audits. In our opinion, the Company has an internal audit system commensurate with the size and the nature of its business.

-| We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government forthe maintenance of cost records under Section 209(l)(d)ofthe Act and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records.

- (a) According to the information and explanations given to us and according to the records of the Company, the Company has been generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, value added tax, wealth tax, service tax, octroi, custom duty, excise duty, cess and other material statutory dues applicabletoit.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, value added tax, wealth tax, service tax, octroi, custom duty, excise duty, cess and other material statutory dues applicable to it were in arrears as atthe Balance Sheet date fora period of more than sixmonths from the date they became payable.

(c) As explained to us and according to the records of the Company, the following dues as at the year end of income tax/ sales tax / value added tax / wealth tax / service tax / custom duty / excise duty / cess have not been deposited on accountofdispute:

Name of Nature of Due as at the Statute the Dues the year end (Rs. in million)

The Income Tax Income Tax 47.2 Act, 1961

The Central SalesTax SalesTax 2.4 Act, 1956

The Central SalesTax 9.0 Sales Tax Act, 1956

The Central SalesTax 1.8 SalesTaxAct, 1956

The Bombay BST 0.5

Sales Tax Act (excludinginterest)

The Central SalesTax 19.6 Sales Tax Act, 1956 (includinginterest)

The Central SalesTax 0.7

Sales Tax Act, 1956 (includinginterest)

The Bombay BST 0.2 Sales Tax Act (includinginterest)

The Central SalesTax 12.3 Sales Tax Act, 1956

The Central Excise Duty 35.0* Excise Act, 1944 (including penalty and interest)

















Name of the Period to which Forum where Statue the amount relates dispute is pending

The Income Tax Act, 1961 AY 2006-07 IncomeTax Appellate Tribunal

The Central SalesTax Act, 1956 2002 Gujarat VAT Tribunal

The Central SalesTaxAct, 1956 January2003 JointCommissioner to December 2003 of Sales Tax (Appeals)

The Central SalesTaxAct, 1956 2003-04 Deputy Commissioner of Sales Tax (Appeals) Mumbai

The Bombay Sales Tax Act 2003-04 Deputy Commissioner (Appeals), Mumbai

The Central SalesTaxAct, 1956 2004 Joint Commissioner of Sales Tax (Appeals)

The Central SalesTaxAct, 1956 2004-05 Sales Tax Authority, Pune

The Bombay SalesTaxAct 2004-05 Sales Tax Authority, Pune

The Central SalesTaxAct, 1956 2006-07 Joint Commissioner (Appeals)

The Central SalesTaxAct, 1944 April 2003 to Commissioner June 2010 (Appeals)

*Rs. 23.7 million since deleted on account of favourable order dated January 13,2011.

Q The Company does not have accumulated losses. The Company has not incurred any cash losses during the financial year covered by our audit and in the immediately preceding financialyear.

$ As the Company has no amount due to any financial institution, bank or debenture holderthe provisions of Clause 4(xi) of the Order, are not applicable to the Company.

- As the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities, the provisions of Clause 4(xii) of the Order are not applicable.

-p As the Company is not a chit fund / nidhi / mutual benefit fund / society, the provisions of Clause 4(xiii) of the Order are not applicable.

- Based on our examination of the records and evaluation of the related internal controls, we are of the opinion that proper records have been maintained of the transactions and contracts of dealings or trading in shares, securities, debentures and other investments with timely entries in those records. We also report that the Company has held the shares, securities, debentures and other investments in its own name.

- According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks orfinancial institutions.

© As the Company has not obtained any term loans, the provisions of Clause 4(xvi) of the Order are not applicable.

-> According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investments.

- According to the information and explanations given to us, the Company has not made any preferential allotment of shares duringtheyearto parties orCompanies covered in the register maintained underSection 301 of the Act.

- As the Company has not issued any debentures, the provisions of Clause 4(xix) of the Order are not applicable.

- As the Company has not raised any money during the year byway of public issue, the provisions of Clause 4(xx) of the Orderare not applicable.

Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of ouraudit.

For Mohinder Puri & Co.

Chartered Accountants Firm No. 000204N

Vikas Vig

Partner

Membership No. 16920

Mumbai: February 17, 2011


Dec 31, 2009

We have audited the attached Balance Sheet of FAG Bearings India Limited, as at December 31, 2009 and also the Profit and Loss Account for the year ended on that date annexed thereto and the Cash Flow Statement for the year ended on that date. 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.

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

1) As required by the Companies (Auditors Report) order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order, 2004 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, (referred to as the "Act") we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

2) Further to our comments in the Annexure referred to above, 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 such books;

c) the Balance Sheet, the Profit and Loss Account 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 Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors, as on December 31, 2009 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on December31, 2009 from being appointed as a director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

f) 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:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at December 31,2009,

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

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE AUDITORS REPORT TO THE MEMBERS OF FAG BEARINGS INDIA LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 2009

i(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) The Company has a regular programme of physical verification of fixed assets which, in our opinion is reasonable. The assets which were to be covered as per the said programme, have been physically verified by the management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification. (c) There was no disposal of substantial part of fixed assets during the year.

ii(a) The inventories have been physically verified by the management during the year 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 are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) On the basis of our examination of the records of the inventory, we are of the opinion that the Company is maintaining proper records of inventory. According to the information and explanations given to us, no material discrepancies were noticed on physical verification between the physical stock and the book records.

iii The Company has not taken / granted any loans, secured or unsecured from / to companies, firms or other parties HI covered in the register maintained under Section 301 of the Act. Hence, the provisions of Clause 4(iii) of the I Companies (Auditors Report) order, 2003 are not applicable to the Company.

iv In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items are of a special nature and comparable alternative quotations are not available, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system in respect of these areas.

v(a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion, the transactions that need to be entered into the register in pursuance of Section 301 of the Act have been so entered. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the registers maintained under Section 301 of the Act and exceeding the value of rupees five lakh in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975, with regard to the deposits accepted from the public in earlier years which have remained unclaimed. We have been informed that during the year, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in respect of such deposits.

vii The Company has a dedicated internal audit department carrying out Internal Audits. In our opinion, the Company has an internal audit system commensurate with the size and the nature of its business.

viii We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 209(l)(d) of the Act and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records.

(a) According to the information and explanations given to us and according to the records of the Company, except for a short deposit of Central Sales Tax, which was later paid, the Company has been generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, value added tax, wealth tax, service tax, octroi, custom duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, value added tax, wealth tax, service tax, octroi, custom duty, excise duty, cess and other material statutory dues applicable to it were in arrears as at the Balance Sheet date for a period of more than six months from the date they became payable.

(c) As explained to us and according to the records of the Company, the following dues as at the year end of income tax / sales tax / value added tax / wealth tax / service tax / custom duty / excise duty / cess have not been deposited on account of dispute:

Name of Nature of Due as at the the Statute the Dues year end (Rs.)

The Central Sales Tax 3,819,805 Sales Tax Act, 1956

The Central Sales Tax 13,572,126 Sales Tax Act, 1956 (including interest)

The Gujarat Sales Tax 1,085,868 Sales Tax Act, 1969 (including interest)

The Central Sales Tax 44,154,235 Sales Tax Act, 1956 (including interest)

The Central Sales Tax 23,873,348 Sales Tax Act, 1956 (including interest)

The Finance Act, 1994 Service Tax 60,605,967 (including penalty and interest)

The Finance Act, 1994 Service Tax 859,592

The Central Excise Duty 22,695,391 Excise Act, 1944 (including penalty and interest)



Name of the Statue Period to which Forum where the amount relates dispute is pending

The Central Sales Tax Act, 1956 2002 Gujarat VAT Tribunal

The Central Sales Tax Act, 1956 January 2003 to Joint Commissioner of December 2003 Sales Tax (Appeals)

The Gujarat Sales Tax Act, 1969 2004 Joint Commissioner of Sales Tax (Appeals)

The Central Sales Tax Act, 1956 2004 Joint Commissioner of Sales Tax (Appeals)

The Central Sales TaxAct, 1956 January 2005 to Joint Commissioner of March 2006 Sales Tax (Appeals)

The Finance Act, 1994 July 2003 to Central Excise and December 2005 Service Tax Appellate Tribunal

The Finance Act, 1994 2005 Central Excise and Service Tax Appellate Tribunal

The Central Excise Act, 1944 November 2003 to The Company is in the December 2007 process of Filing an Appeal

x The Company does not have accumulated losses. The Company has not incurred any cash losses during the financial year covered by our audit and in the immediately preceding financial year.

xi As the Company has no amount due to any financial institution, bank or debenture holder the provisions of Clause 4(xi)ofthe order, are not applicable to the Company.

xii As the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities, the provisions of Clause 4(xii) of the order are not applicable.

xiii As the Company is not a chit fund / nidhi / mutual benefit fund / society, the provisions of Clause 4(xiii) of the order are not applicable.

xiv Based on our examination of the records and evaluation of the related internal controls, we are of the opinion that proper records have been maintained of the transactions and contracts of dealings or trading in shares, securities, debentures and other investments with timely entries in those records. We also report that the Company has held the shares, securities, debentures and other investments in its own name.

xv According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi As the Company has not obtained any term loans, the provisions of Clause 4(xvi) of the order are not applicable.

¦ According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investments.

xviii According to the information and explanations given to us, the Company has not made any preferential allotment of shares during the year to parties or companies covered in the register maintained under Section 301 of the Act.

xix As the Company has not issued any debentures, the provisions of Clause 4(xix) of the order are not applicable.

xx the Company has not raised any money during the year by way of public issue, the provisions of Clause 4(xx) of the order are not applicable.

xxi Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For Mohinder Puri & Co.

Chartered Accountants

VikasVig

Partner

Membership No. 16920

Mumbai: February 11, 2010

 
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