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Auditor Report of Federal-Mogul Goetze (India) Ltd.

Mar 31, 2015

1. We have audited the accompanying financial statements of Federal-Mogul Goetze (India) Limited, ("the Company"), which comprise the Balance Sheet as at 31 March 2015, and the Statement of Profit and Loss and Cash Flow Statement for the period 1 January 2014 to 31 March 2015, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the

Financial Statements

2. 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 principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13 September 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.

Auditors'' Responsibility

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

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors'' 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 Company''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.

5. We believe that the audit evidence we have obtained is sufficient 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 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 31 March 2015.

ii) in the case of Statement of Profit and Loss, of the profit for the period 1 January 2014 to 31 March 2015; and

iii) in the case of the Cash Flow Statement, of the cash flows for the period 1 January 2014 to 31 March 2015

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 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.

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

d. in our opinion, the financial statements comply with the Accounting Standards notified under Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 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 31 March 2015 under section 164(2) of the Companies Act, 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015, from being appointed as a director in terms of section 164(2) of the Companies Act, 2013, provisions of which are consistent with clause (g) of sub-section (1) of section 274 of the Act.

Other Matter

9. The Ministry of Corporate Affairs (''MCA'') had on 1 April 2014, vide its General Circular No. 07/2014, ''Dissemination of information with regards to the provisions of the Companies Act, 2013 as notified till date vis-a-vis corresponding provisions of the Companies Act, 1956'', identified such sections of the Act that would cease/ continue to have effect from 1 April 2014. Accordingly, in terms of the aforesaid Circular, our

reporting in respect of clauses (iii), (v)(a) and (b), (vi), (viii), (xiv), (xviii) of the Companies (Auditor''s Report) Order, 2003 (dealing with sections 49, 58A, 58AA, 209(1 )(d) and 301 of the Act) is only for the period beginning from 1 January 2014 till 31 March 2014 since as per the aforementioned MCA Circular these sections have ceased to have effect from 1 April 2014.

Annexure to the Independent Auditors'' Report of even date to the members of Federal-Mogul Goetze (India) Limited, on the financial statements for the period 1 January 2014 to 31 March 2015 Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) All fixed assets have not been physically verified by the management during the period, however, there is a regular program of verification once in three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the period.

(ii) (a) The management has conducted physical verification of invent -ory at reasonable intervals during the period except goods in transit.

(b) The procedures of physical verification of inventory 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 and no material discrepancies between physical inventory and book records were noticed on physical verification.

(iii) (a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(b) to 4(iii) (d) of the Order are not applicable.

(e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(f) and 4(iii)(g) of the Order are not applicable.

(iv) In our opinion, 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, no major weakness has been noticed in the internal control system in respect of these areas.

(v) (a) The Company has not entered into any contracts or arrangements referred to in Section 301 of the Act.

Accordingly, the provisions of clause 4(v) of the Order are not applicable.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

(vii) In our opinion, the Company has an internal audit system commensurate with its 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 clause (d) of sub-section (1) of Section 209 of the Act in respect of Company''s products 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 cost records with a view to determine whether they are accurate or complete.

(ix)(a) Undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities, though there has been a slight delay in a few cases. Further, no undisputed amounts payable in respect thereof were outstanding at the year- end for a period of more than six months from the date they became payable.

(b) The dues outstanding in respect of income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess on account of any dispute, are as follows:

Name of the Nature of dues Amount Amount statute (Rs. Paid Under Lacs) Protest (Rs in lacs)

The Central Excise Act,1944 Trade discount 33.74 The Central Excise Act,1944 Excise duty on turnover discount 42.71

The Central Excise Excise duty on turnover 189.48 Act, 1944 discount The Central Excise Act,1944 Cenvat credit availed twice 5.04

The Central Excise Act,1944 Demand on removal of non- saleable stock removed from RG-1 8.57

The Central Excise Act,1944 Excise duty on capital goods 3.19

The Central Excise Act, 1944 Classification of Light metal cylinder casting 6.97

The Central Excise Act,1944 Demand on sale of various types of scrap 3.33

The Central Excise Act,1944 Demand in respect of Modvat credits on input and Capital goods 2.54

The Central Excise Act,1944 Demand in respect of Modvat credits on input and Capital goods 1.76

The Central Excise Act,1944 Interest on reversal of Special addition duty 14.02

The Central Excise Act,1944 Conversion of aluminum scrap into ingots from Colts department 15.14 -

The Central Excise Act,1944 Input tax credit on various expenses 16.61 -

The Central Excise Act,1944 Input tax credit on various expenses 62.41 -

The Central Excise Act,1944 Input tax credit on various expenses 695.23 -

The Central Excise Act,1944 Input tax credit on various expenses 153.84 -

The Central Excise Act,1944 Disallowance of service tax credit on various services 96.11 -

The Central Excise Act,1944 Disallowance of service tax credit on various services 19.18 -

The Central Excise Act,1944 Availment of Cenvat on Job work charges 152.21 -

The Central Excise Act,1944 Disallowance of service tax credit on various services 16.79 -

Karnataka VAT Act, 2003 Difference in VAT rates (classification issue) 97 140.81

Karnataka VAT Act, 2003 Difference in VAT rates (classification issue) 278.51 55

Income tax Act, 1961 Disallowance of expenditure in relation to exempt income 3.05 -

Income tax Act, 1961 Disallowance of expenditure in relation to exempt income 8.59 -

Income tax Act, 1961 Interest free loan to subsidiary 72.68 -

Income tax Act, 1961 Disallowance of development expenditure treated as capital in nature 68.45 -

Income tax Act, 1961 Disallowance of certain expenses 158.01 -

Income tax Act, 1961 Loss in relation to diminution in value of shares disallowed 12.39 -

Income tax Act, 1961 Brought forward losses of the amalgamating company denied 5,674.45 -

Income tax Act, 1961 Disallowance for amalgamating expenses 0.69 -

Income tax Act, 1961 Provision for expenses disallowed 85.17 -

Income tax Act, 1961 Disallowance of proportionate royalty expense 39.52 -

Income tax Act, 1961 Distribution of gift coupons to shareholders at AGM 16.54 -

Income tax Act, 1961 Disallowance of exemption on dividend 66.55 -

Income tax Act, 1961 Addition of revaluation reserves to book profits 16.71 -

Income tax Act, 1961 Apportionment of common administrative costs 1.52 -

Income tax Act, 1961 Disallowance of lease rent expenses 345.8 -

Income tax Act, 1961 Applicability of interest u/s 234D 0.51 -

Income tax Act, 1961 Disallowance of expenditure in relation to exempt income 21.21 -

Income tax Act, 1961 Addition to revaluation reserves to book profits 17.65 -

Income tax Act, 1961 Loss in relation to diminution in value of shares disallowed 19.23 -

UP VAT Difference in VAT rates (classification issue) 82.78 10.291

Karnataka VAT Entry tax on import of capital goods 410 216

The Central Excise Act,1944 Denial of Cenvat credit of excise duty/ service tax paid on common inputs/ services, 393.78 -

The Central Excise Act,1944 CENVAT credit taken in respect of the said inputs or capital goods 5.81 - Name of the statute Period to Forum where dispute is which the Pending amount relates The Central Excise Act,1944 2000 - 2004 Joint Commissioner of Central Excise, Bengaluru

The Central Excise Act,1944 2000 - 2003 Central Excise and Service Tax Appellate Tribunal Chenna

The Central Excise Act,1944 2001 - 2006 Central Excise and Service Tax Appellate Tribunal.

The Central Excise Act,1944 2005-2007 Central Excise and Service Tax Appellate T ribunal.

The Central Excise Act,1944 July 2005 to Commissioner - Central Excise December 2005

The Central Excise Act,1944 2010- 2011 Assistant Commissioner (Central Excise), Bhiwadi, Rajasthan

The Central Excise Act,1944 1998-99 Joint Commissioner of Central Excise.

The Central Excise Act,1944 2001 -02 Additional Commissioner

The Central Excise Act,1944 1995- 96, Joint Commissioner of Central 2003-2004 Excise, Patiala Punjab

The Central Excise Act,1944 1997- 99 Assistant Commissioner

The Central Excise Act,1944 2000-02 Central Excise & Service Tax Appellate Tribunal, Chandigarh

The Central Excise Act,1944 2000-2001 Hon''ble Supreme Court

The Central Excise Act,1944 2009-10 Joint Commissioner, Jaipur

The Central Excise Act,1944 2008-11 Assistant Commissioner, Bhiwadi, Rajasthan

The Central Excise Act,1944 2008-11 Central Excise and Service Tax Appellate Tribunal, Bengaluru

The Central Excise Act,1944 2011 Commissioner & Commissioner Appeal

The Central Excise Act,1944 2005- 11 Joint Commissioner of Central Excise, Patiala, Punjab

The Central Excise Act,1944 2006- 07 Central Excise and Service Tax Appellate Tribunal, Chandigarh

The Central Excise Act,1944 2011 Commissioner Central Excise, Bengaluru

The Central Excise Act,1944 2011- 12 Hon''ble High Court of Karnataka

Karnataka VAT Act, 2003 1996- 97 to Hon''ble High Court of 2001 -02 Karnataka

Karnataka VAT Act, 2003 2005-06 Hon''ble High Court of Karnataka

Income tax Act, 1961 2000-01 Hon''ble Supreme, Delhi

Income tax Act, 1961 2001 -02 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2007- 08 Income tax appellate tribunal

Income tax Act, 1961 2001 -02 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2002-03 Income Tax Appellate Tribunal

Income tax Act, 1961 2001 -02 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2002-03 Income Tax Appellate Tribunal

Income tax Act, 1961 2002-03 Income Tax Appellate Tribunal

Income tax Act, 1961 1997- 98 Hon''ble High Court, Delhi

Income tax Act, 1961 2005-06 Income Tax Officer

Income tax Act, 1961 1995-96 & Hon''ble High Court, Delhi 1996-97

Income tax Act, 1961 1998- 99 Hon''ble Supreme Court

Income tax Act, 1961 1998- 99 Hon''ble Supreme Court

Income tax Act, 1961 1997-98 Hon''ble High Court, Delhi

Income tax Act, 1961 1997-98 Hon''ble High Court, Delhi

Income tax Act, 1961 2000-01 Hon''ble Supreme Court, Delhi

Income tax Act, 1961 1999- 00 Hon''ble Supreme Court

Income tax Act, 1961 1999-00 Hon''ble Supreme Court

Income tax Act, 1961 2004-05 Income Tax Officer

UP VAT 2007-08 Commissioner UP

Karnataka VAT 2007- 11 Assistant Commissioner of Commercial Taxes, Audit Bangalore,

The Central excise Act 1944 2012- 13 Commissioner & Commissioner Appeal

The Central excise Act 1944 2008- 2011 Commissioner of Central Excise

Name of the Nature of dues Amount Amount statute (Rs. Paid Under Lacs) Protest (Rs in lacs)

The Central Excise Act,1944 Denial of Cenvat credit of excise duty/ service tax paid on common inputs/ input services, 472.94 -

The Central Excise Act,1944 Payment of service tax under GTA on inwards/ outwards freight 13.81 -

The Central Excise Act,1944 Payment of service tax under GTA on inwards/ outwards freight 18.13 -

The Central Excise Act,1944 Service tax credit on security & advertising services 10.70 -

Delhi VAT Act 2004 VAT on sale of Fixed assets payable 613.93 -

Delhi VAT Act 2004 Non submission of C form and F forms 73.44 -

Bihar VAT Act 2005 non submission of Sales Invoices & Form F 25.66 16.5

MVAT Act 2002 F-Form disallowed 9.2 -

West Bengal VAT Act 2003 Disallowance of sales return 1.76 -

West Bengal VAT Act 2003 Disallowance of pre-fitment warranty materials 1.18 -

West Bengal VAT Act 2003 Disallowance of F form 1.87 -

West Bengal VAT Act 2003 Dispute in sales of gross turnover & stock transfer 1.56 -

The Central Excise Act ,1944 Input tax credit on various expenses 86.44 25

The Central Excise Act, 1944 Input tax credit on various expenses 113.70 -

Income tax Act, 1961 Disallowance of expenditure in relation to exempt income 1.99 -

Wealth tax act, 1957 Disallowance of debt relating to taxable wealth 3.9 -

Income tax Act, 1961 Disallowance of expenditure in relation to exempt income 3.56 -

Income tax Act, 1961 Interest free loan to subsidiary 70.68 -

Income tax Act, 1961 Disallowance of prior period expenses 14.45 -

Income tax Act, 1961 Disallowance of proportionate royalty expense 73.29 -

Income tax Act, 1961 Disallowance of club expenses 1.63 -

Income tax Act, 1961 Default notices on account of short deduction/ short payment of tax deduction at Source 19.06 -

Karnataka VAT Act, 2003 Sale made on concessional form. 1.36 1.38

Karnataka VAT Act, 2003 Sales tax demand for the assessment year 2014-15 293 -

Rajasthan VAT Act 2003 Non submission of statutory form on the concessional sale 2.15 -

Rajasthan VAT Act 2003 Non submission of statutory form on the concessional sale. 0.03 -

Rajasthan VAT Act 2003 Sale tax demand on forms 306 -

The Central Excise Act, 1944 VAT demand on the stock transfer - not allowed and tax on the stock transfer 32.11 -

The Central Excise Act, 1944 Demand issued for non - submission of stock transfer forms in the audit. 30.19 -

The Central Excise Act, 1944 Service tax credit disallowed on the health service 134.00 -

Income tax Act, 1961 Disallowance if expenditure in relation to exempt income. 1.77 -

Income tax Act, 1961 Amount of proportionate royalty disallowed. 83.68 -

Income tax Act, 1961 Dis-allowance of club expenses. 1.79 -

Income tax Act, 1961 Management fee disallowed. 199.5 -

Income tax Act, 1961 Advances written of disallowed. 17.85 -

The Central Excise Act, 1944 Reversal of credit obtained on LPG 0.97 -

The Central Excise Act, 1944 Dis-allowance of service tax credit 349.17 -

The Central Excise Act, 1944 Service tax credit disallowed. 294.00 -

The Central Excise Act, 1944 Payment of Service tax on PF & ESI contribution by FMGIL 4.54 -

The Central Excise Act, 1944 Service tax not paid on royalty 670.21 -

The Central Excise Act, 1944 Input credit on Job work Invoice issued by FMTPR 0.84 -

The Central Excise Act, 1944 Disallowance of service tax credit. 611.96 -

Name of the statute Period to Forum where dispute is which the Pending amount relates

The Central Excise Act,1944 2012-13 Commissioner & Commissioner Appeal

The Central Excise Act,1944 2009-12 Commissioner(Appeals)

The Central Excise Act,1944 2012-13 Joint Commissioner (Appeals)

The Central Excise Act,1944 2011-13 Joint Commissioner (Appeals)

Delhi VAT Act 2004 2007-08 Delhi - Commissioner

Delhi VAT Act 2004 2008-09 Delhi - Commissioner

Bihar VAT Act 2005 2005-06 Deputy Commissioner, Patna

MVAT Act 2002 2000-01 Sales tax Pune

West Bengal VAT Act 2003 2006-07 Assistant Commissioner (Kolkata)

West Bengal VAT Act 2003 2006-07 Assistant Commissioner (Kolkata)

West Bengal VAT Act 2003 2004-05 Assistant Commissioner (Kolkata)

West Bengal VAT Act 2003 2001-02 Assistant Commissioner (Kolkata)

The Central Excise Act,1944 2006-07 Custom Excise & Service Tax Appellate Tribunal

The Central Excise Act,1944 May 2005 to July 2005 Custom Excise & Service Tax Appellate Tribunal Income tax Act, 1961 2004-2005 Income Tax Officer

Wealth tax act, 1957 2006-07 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2006-07 Income Tax Appellate Tribunal

Income tax Act, 1961 2008-09 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2008-09 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2008-09 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2008-09 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2009-10 to Income tax Officer 2015-16

Karnataka VAT Act, 2003 2007-08 Assistant Commissioner, Bangalore

Karnataka VAT Act, 2003 2014-15 Deputy Commissioner of Commercial Taxes

Rajasthan VAT Act 2003 2008-09 Assistant commissioner, Bhiwadi

Rajasthan VAT Act 2003 2009-10 Commercial Tax Officer, Bhiwadi

Rajasthan VAT Act 2003 2012-13 Assistant Commissioner, Bhiwadi

The Central Excise Act,1944 2012-13 Commissioner, Uttar Pradesh

The Central Excise Act,1944 2008-09 Pune,-Deputy Commissioner,

The Central Excise Act,1944 2006-11 Commissioner

Income tax Act, 1961 2010-11 Commissioner of Income Tax Appeals

Income tax Act, 1961 2010-11 Commissioner of Income Tax Appeals

Income tax Act, 1961 2010-11 Commissioner of Income Tax Appeals

Income tax Act, 1961 2011-12 Dispute Resolution Panel

Income tax Act, 1961 2011-12 Dispute Resolution Panel

The Central Excise Act,1944 2014.15 Commissioner of Central Excise

The Central Excise Act,1944 Aug 2013 Commissioner of Central to July 2014 Excise

The Central Excise Act,1944 2012-13 Commissioner

The Central Excise Act,1944 2012-13 Deputy. Commissioner

The Central Excise Act,1944 2008-13 Commissioner Service Tax

The Central Excise Act,1944 July 2011 Assistant Commissioner of to Feb 2013 Central Excise

The Central Excise Act,1944 01.03.2005 Hon''ble High Court to 30.06.2008

(x) In our opinion, the Company has no accumulated losses at the end of the financial period and it has not incurred cash losses in the current and the immediately preceding financial year.

(xi) In our opinion, the Company has not defaulted in repayment of dues to any financial institution or a bank. The company does not have any outstanding debenture during the period.

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

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Accordingly, provisions of clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) The Company has not given any guarantees for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 4(xv) of the Order are not applicable.

(xvi) In our opinion, the Company has applied the term loans for the purpose for which these loans were obtained.

(xvii) In our opinion and based on an overall examination of the balance sheet of the Company, we report that the Company has utilized funds raised on short term basis through short term loans from bank and other current liabilities aggregating to Rs. 2,753 lacs for various long term purposes.

(xviii) During the period, the Company has not made any preferential allotment of shares to parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) The Company has neither issued nor had any outstanding debentures during the period. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the period. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker Chandiok & Co LLP

(formerly Walker, Chandiok & Co) Chartered Accountants Firm Registration No.: 001076N

per Neeraj Sharma Partner Place: Gurgaon Membership Date: 22 May 2015 No.: 502103


Dec 31, 2013

1. We have audited the accompanying financial statements of Federal-Mogul Goetze (India) Limited, ("the Company"), which comprise the Balance Sheet as at 31 December 2013, and the Statement of Profit and Loss and 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

2. 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 principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13 September 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.

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

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors'' 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 Company''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.

5. We believe that the audit evidence we have obtained is sufficient 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 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 31 December 2013;

ii) in the case of 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

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 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.

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

d. in our opinion, the financial statements comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 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 31 December 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 December 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 of even date to the members of Federal-Mogul Goetze (India) Limited, on the financial statements for the year ended 31 December 2013

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, 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 regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of -three year, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.

ii. (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory 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 and no material discrepancies between physical inventory and book records were noticed on physical verification.

iii. (a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(b) to 4(iii) (d) of the Order are not applicable.

(b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(f) and 4(iii)(g) of the Order are not applicable.

iv. In our opinion, 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, no major weakness has been noticed in the internal control system in respect of these areas.

v. (a) The Company has not entered into any contracts or arrangements referred to in Section 301 of the Act. Accordingly, the provisions of clause 4(v) of the Order are not applicable.

vi. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

vii. In our opinion, the Company has an internal audit system commensurate with its 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 clause (d) of sub-section (1) of Section 209 of the Act in respect of Company''s products 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 cost records with a view to determine whether they are accurate or complete.

ix. a) Undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales- tax, wealth tax, service tax, custom duty, excise duty, cess have not generally been regularly deposited with the appropriate authorities though the delays in deposit have not been significant. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they become payable:

Undisputed amounts payable in respect thereof, which were outstanding at the year-end for a period of more than six months from the date they became payable are as follows:

Name of Nature of Amount Period to Due Date Date of the statute the dues (Rs. in which the Payment lacs) amount relates

Finance Service tax on royalty, 361.26 October 2007 to Various Not yet Act, 1994 business auxiliary 31 December 2012 dates from paid (Service services, consultancy October Tax) services and manpower 2007 to 31 recruitment December agency''s services 2012

b) The dues outstanding in respect of income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess on account of any dispute, are as follows:

Name of the Nature of dues Amount Amount statute (Rs. Paid Under Lacs) Protest (Rs in lacs)

The Central Excise Act,1944 Trade discount 33.74

The Central Excise Act,1944 Excise duty on turnover discount 42.71

The Central Excise Act,1944 Excise duty on turnover discount 189.48

The Central Excise Act,1944 Convert credit availed twice 5.04

The Central Excise Act,1944 Demand on removal of non-saleable stock removed from RG-1 8.57

The Central Excise Act,1944 Excise duty on capital goods 3.19

The Central Excise Act,1944 Classification of Light metal cylinder casting 6.97

The Central Excise Act,1944 Demand on sale of various types of scrap 3.33

The Central Excise Act,1944 Demand in respect of Modvat credits on Input and Capital goods 4.38

The Central Excise Act,1944 Modvat credit on grinding wheels, stones, honing sticks 9.34

The Central Excise Act,1944 Interest on reversal of SAD 14.02

The Central Excise Act,1944 Conversion of Aluminum Scrap into Ingots from Colts department 15.14

Finance Act, 1994 (Service Tax) Input tax credit on various expenses 0.09

Finance Act, 1994 (Service Tax) Input tax credit on various expenses 79.02

Finance Act, 1994 (Service Tax) Input tax credit on various expenses 695.23

Finance Act, 1994 (Service Tax) Input tax credit on various expenses 153.84

Finance Act, 1994 (Service Tax) Disallowance of service tax credit on various services 96.11

Finance Act, 1994 (Service Tax) Disallowance of service tax credit on various services 19.18

Finance Act, 1994 (Service Tax) Service tax on royalty and technical know how 39.95

Finance Act, 1994 (Service Tax) Availment of Convert on Job work charges 152.21

Finance Act, 1994 (Service Tax) Disallowance of service tax credit on various services 76.54

Karnataka VAT Act, 2003 Difference in VAT rates (classification issue) 442.92 140.81

Karnataka VAT Act, 2003 Difference in VAT rates (classification issue) 278.51 55

Income tax Act, 1961 Disallowance of expenditure in relation to exempt income 3.05

Income tax Act, 1961 Disallowance of expenditure in relation to exempt income 8.59

Income tax Act, 1961 Interest free loan to subsidiary 72.68

Income tax Act, 1961 Disallowance of development expenditure treated as capital in nature 68.45

Income tax Act, 1961 Disallowance of development expenditure treated as capital in nature 11.61

Income tax Act, 1961 Disallowance of prior period expenses 8.02

Income tax Act, 1961 Disallowance of prior period expenses 57.57

Income tax Act, 1961 Depreciation not allowed on assets of inactive Vegetable Oil Division 10.17

Income tax Act, 1961 Depreciation not allowed on assets of inactive Vegetable Oil Division 9.53

Income tax Act, 1961 Loss in relation to diminution in value of shares disallowed 12.39

Income tax Act, 1961 Disallowance of Commission and brokerage expenses for facilitating loan funds 6.52

Income tax Act, 1961 Disallowance of Commission and brokerage expenses for facilitating loan funds 37.76

Income tax Act, 1961 Disallowance of loan processing fees paid to bank 33.99

Income tax Act, 1961 Disallowance of foreign exchange fluctuation loss 5.04

Income tax Act, 1961 Brought forward losses of the amalgamating company denied 5,674.45

Income tax Act, 1961 Disallowance of filing fees for increasing authorized share capital of the Company 2.21

Income tax Act, 1961 Disallowance for amalgamating expenses 0.69

Income tax Act, 1961 Provision for expenses disallowed 85.17

Income tax Act, 1961 Provision for expenses disallowed 57.64

Income tax Act, 1961 Disallowance of proportionate royalty expense 39.52

Income tax Act, 1961 Distribution of gift coupons to shareholders at AGM 16.54



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

The Central Excise Act,1944 2000 - 2004 Joint Commissioner of Central Excise, Bangalore

The Central Excise Act,1944 2000 - 2003 Central Excise and Service Tax Appellate Tribunal, Chennai

The Central Excise Act,1944 2001 - 2006 Central Excise and Service Tax Appellate Tribunal, Chandigarh

The Central Excise Act,1944 2005-2007 Central Excise and Service Tax Appellate Tribunal, Bengaluru

The Central Excise Act,1944 July 2005 to Central Excise and Service Tax Appellate December 2005 Tribunal, Bengaluru

The Central Excise Act,1944 2010-2011 Assistant Commissioner (Central Excise), Bhiwadi, Rajasthan

The Central Excise Act,1944 1998-1999 Joint Commissioner of Central Excise, Patiala Punjab

The Central Excise Act,1944 2001-2002 Joint Commissioner of Central Excise, Patiala Punjab

The Central Excise Act,1944 1995-96, 1997-98, 1995-1996, 1997-1998, Joint Commissioner of

The Central Excise Act,1944 2003-2004 Central Excise, Patiala Punjab

The Central Excise Act,1944 1987-1990 Honorable High Court of Punjab and Haryana

The Central Excise Act,1944 2000-2001 Central Excise & Service Tax Appellate Tribunal, Chandigarh

The Central Excise Act,1944 2000-2001 Honorable Supreme Court

Finance Act, 1994 (Service Tax) 2008-2009 Commissioner (Appeals), Jaipur, Rajasthan

Finance Act, 1994 (Service Tax) 2009-2010 to Assistant Commissioner, Bhiwadi, Rajasthan 2011-2012

Finance Act, 1994 (Service Tax) 2008-2011 Central Excise and Service Tax Appellate Tribunal, Bengaluru

Finance Act, 1994 (Service Tax) 2011 Commissioner of Central Excise, Bengaluru

Finance Act, 1994 (Service Tax) 2005-2011 Joint Commissioner of Central Excise, Patiala, Punjab

Finance Act, 1994 (Service Tax) 2006-2007 Central Excise and Service Tax Appellate Tribunal, Chandigarh

Finance Act, 1994 (Service Tax) 1999-2003, Joint Commissioner of Central Excise, Patiala, Punjab 2004-2005

Finance Act, 1994 (Service Tax) 2011 Commissioner Central Excise, Bengaluru

Finance Act, 1994 (Service Tax) 2011-2012 Honorable High Court of Karnataka

Karnataka VAT Act, 2003 1996-97 to Honorable High Court of Karnataka

2001-02

Karnataka VAT Act, 2003 2005-2006 Honorable High Court of Karnataka

Income tax Act, 1961 2000-2001 Honorable High Court, Delhi

Income tax Act, 1961 2001-2002 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2007-2008 Income tax appellate tribunal

Income tax Act, 1961 2001-2002 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2001-2002 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2001-2002 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2001-2002 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2001-2002 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 1997-1998 Honorable High Court, Delhi

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2005-2006 Income Tax Appellate Tribunal

Income tax Act, 1961 1995-1996 & Honorable High Court, Delhi 1996-1997

Name of the Nature of dues Amount Amount statute (Rs. Paid Under Lacs) Protest (Rs in lacs)

Income tax Act, 1961 Disallowance of exemption on dividend 66.55

Income tax Act, 1961 Addition of Revaluation Reserves to book profits 16.71

Income tax Act, 1961 Apportionment of common administrative costs 1.52

Income tax Act, 1961 Disallowance of lease rent expenses 345.80

Income tax Act, 1961 Applicability of interest u/s 234D 0.51

Income tax Act, 1961 Disallowance of expenditure in relation to exempt income 21.21

Income tax Act, 1961 Addition to Revaluation Reserves to book profits 17.65

Income tax Act, 1961 Loss in relation to diminution in value of shares disallowed 19.23

2004-2005 Commissioner Income Tax (Appeals)

UP VAT Difference in VAT rates (classification issue) 82.78 10.291

Karnataka Tax on Entry of Goods Act, 1979 Entry tax on import of capital goods 147.67

Karnataka Tax on Entry of Goods Act, 1979 Entry tax on import of capital goods 116.52

Karnataka Tax on Entry of Goods Act, 1979 Entry tax on import of capital goods 118.00

Karnataka Tax on Entry of Goods Act, 1979 Entry tax on import of capital goods 40.76

Karnataka Tax on Entry of Goods Act, 1979 Entry tax on import of capital goods 48.38

Finance Act, 1994 (Service Tax) Denial of Cenvat credit of excise duty/ service tax paid on common inputs/ input services, 393.78

Finance Act, 1994 (Service Tax) CENVAT credit taken in respect of the said inputs or capital goods" 5.81

Finance Act, 1994 (Service Tax) Denial of Cenvat credit of excise duty/ service tax paid on common inputs/ input services, 472.94

Finance Act, 1994 (Service Tax) Payment of Service Tax under GTA on inwards/ Outwards freight 7.09

Finance Act, 1994 (Service Tax) Payment of Service Tax under GTA on inwards/ Outwards freight 13.81

Finance Act, 1994 (Service Tax) Payment of Service Tax under GTA on inwards/ Outwards freight 18.13

Finance Act, 1994 (Service Tax) Service tax credit on security & advertising services 6.42

VAT Cenvat credit of excess paid Service Tax on royalty 35.12

VAT Non submission of C- Forms 134.40

VAT VAT on Sale of FA payable 613.93

VAT Non submission of C form and F forms 73.44

VAT non submission of Sales Invoices & Form F 25.66 16.5

VAT F Form Disallowed 9.20

VAT Disallowance of sales return 1.76

VAT Disallowance of Pre- fitment warranty materials 1.18

VAT Disallowance of F form 1.87

VAT Dispute in sales of gross turnover & stock transfer 1.56

The Central Excise Act,1944 Demand in respect of Modvat credits on Input and Capital goods 1.76

Finance Act, 1994 (Service Tax) Input tax credit on various expenses 86.44 25

Finance Act, 1994 (Service Tax) Input tax credit on various expenses 113.70

Income tax Act, 1961 Disallowance of expenditure in relation to exempt income 1.99

Wealth tax act, 1957 Disallowance of debt relating to taxable wealth 3.90

Income tax Act, 1961 Default notices on account of short term deduction/ short payment of tax deduction at source 7.51

Income tax Act, 1961 Interest free loan to subsidiary 32.80

Income tax Act, 1961 Disallowance of expenditure in relation to exempt income 3.56

Income tax Act, 1961 Interest free loan to subsidiary 70.68

Income tax Act, 1961 Disallowance of prior period expenses 14.45

Income tax Act, 1961 Disallowance of proportionate royalty expense 73.29

Income tax Act, 1961 Disallowance of Club Expenses 1.63

Income tax Act, 1961 Default notices on account of short deduction/ short payment of tax deduction at Source 19.71

Next Appellate Auth. Sale made on concessional form. 1.36

Sales tax demand Non Submission of Statutory Form on the concessional sale 1.00

Sales tax demand Non Submission of Statutory Form on the concessional sale 2.14

Sales tax demand Non submission of Statutory Form on the concessional sale & Export Forms at the time of Assessment. 9.44

Sales tax demand Non - submission of Concessional form on the concessional sale at the time of audit. 339.10

Sales tax demand VAT Demand on the stock transfer - not allowed and tax on the stock transfer 32.11

Sales tax demand Demand issued for non - submission of Stock Transfer forms in the audit. 30.19

Service Tax Service tax credit disallowed on the health service 134.00

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

Income tax Act, 1961 1998-1999 Supreme Court

Income tax Act, 1961 1998-1999 Supreme Court

Income tax Act, 1961 1997-1998 Honorable High Court, Delhi

Income tax Act, 1961 1997-1998 Honorable High Court, Delhi

Income tax Act, 1961 2000-2001 Honorable High Court, Delhi

Income tax Act, 1961 1999-2000 Honorable High Court, Delhi

Income tax Act, 1961 1999-2000 Honorable High Court, Delhi

Income tax Act, 1961 2007-2008 Commissioner (Appeals), Ghaziabad

2004-2005 2006-2007 Honorable Supreme Court

UP VAT 2007-2008 Honorable Supreme Court

Karnataka Tax on Entry of Goods Act, 1979 2008-2009 Honorable Supreme Court

Karnataka Tax on Entry of Goods Act, 1979 2009-2010 Honorable Supreme Court

Karnataka Tax on Entry of Goods Act, 1979 2010-2011 Honorable Supreme Court

Karnataka Tax on Entry of Goods Act, 1979 2012-2013 Commissioner & Commissioner Appeal

Karnataka Tax on Entry of Goods Act, 1979 2012-2013 Commissioner of Central Excise

Finance Act, 1994 (Service Tax) 2012-2013 Commissioner & Commissioner Appeal

Finance Act, 1994 (Service Tax) 2012-2013 Commissioner (Appeals)

Finance Act, 1994 (Service Tax) 2009-2012 Commissioner(Appeals)

Finance Act, 1994 (Service Tax) 2012-2013 Joint Commissioner (Appeals)

Finance Act, 1994 (Service Tax) 2011-2013 Joint Commissioner (Appeals)

Finance Act, 1994 (Service Tax) 2012-2013 Additional Commissioner

VAT 2011-2012 Asstt. Commissioner, Bhiwadi

VAT 2007-2008 Delhi - Commissioner

VAT 2008-2009 Delhi - Commissioner

VAT 2005-2006 ITAT

VAT 2000-2001 ITAT

VAT 2006-2007 Commissioner(Appeals)

VAT 2006-2007 Commissioner(Appeals)

VAT 2004-2005 Commissioner(Appeals)

VAT 2001-2002 Commissioner(Appeals)

VAT 1997-1999 Asstt. Commissioner

The Central Excise Act,1944 2006-2007 Commissioner Appeals

The Central Excise Act,1944 May 2005 to CESTAT July 2005

Finance Act, 1994 (Service Tax) 2004-2005 Commissioner Income Tax (Appeals)

Finance Act, 1994 (Service Tax) 2006-2007 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2006-2007 Commissioner Income Tax (Appeals)

Wealth tax act, 1957 2006-2007 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2008-2009 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2008-2009 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2008-2009 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2008-2009 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2008-2009 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2012-2013 Income tax Officer

Income tax Act, 1961 2007-2008 Asstt. Commissioner

Income tax Act, 1961 2007-2008 Asstt. commissioner, Bhiwadi

Next Appellate Auth. 2008-2009 Asstt. commissioner, Bhiwadi

Sales tax demand 2009-2010 Asstt. commissioner, Bhiwadi

Sales tax demand 2011-2012 Asstt. commissioner, Bhiwadi

Sales tax demand 2012-2013 Commissioner, UP

Sales tax demand 2008-2009 Pune, Dy Commissioner,

Service Tax 2006-2011 Commissioner

x. In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

xi. The Company has not defaulted in repayment of dues to any bank or financial institution during the year. The Company did not have any outstanding debentures during the year.

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

xiii. In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Accordingly, provisions of clause 4(xiii) of the Order are not applicable.

xiv. In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

xv. The Company has not given any guarantees for loans taken by others from banks or financial institutions.

Accordingly, the provisions of clause 4(xv) of the Order are not applicable.

xvi. In our opinion, the Company has applied the term loans for the purpose for which these loans were obtained.

xvii. In our opinion, the Company has used funds raised on short-term basis for long-term investment.

xviii. During the year, the Company has not made any preferential allotment of shares to parties /and companies covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

xix. The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

xx. The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

xxi. No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker, Chandiok & Co.

Chartered Accountants

Firm Registration No.: 001076N

per David Jones

Partner

Place : New Delhi Membership

Date : February 28, 2014 No.: 98113


Dec 31, 2012

1. We have audited the attached Balance Sheet of Federal-Mogul Goetze (India) Limited (''the Company''), as at 31 December 2012, and also the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto (collectively referred as the ''financial statements''). 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 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 for our opinion.

3. As required by the Companies (Auditor''s Report) Order, 2003 (''the Order'') (as amended) 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 Order.

4. As detailed in note 47 of the accompanying financial statements, the Company is pursuing a matter regarding certain discrepancies noted in availing sales tax benefits. The matter is currently pending with the appropriate authorities, management based on certain internal assessment has accrued a provision to an extent of Rs. 625.81 lacs (including estimated interest and penalties) to meet future tax obligations. Out of this provision, the Company has deposited Rs 398.03 lacs with the appropriate authorities during the year. However, the extent of exact future liabilities that may arise is presently not determinable. Accordingly, we are unable to comment upon the adequacy of provision recorded in this respect and the consequential impact of the outcome of the proceedings.

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

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

(e) Subject to our comments in Para 4 above, in our opinion and to the best of our information and according to the explanations given to us, the financial statements dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act and 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, in the case of:

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

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

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

Annexure to the Auditors'' Report of even date to the members of Federal- Mogul Goetze (India) Limited, on the financial statements for the year ended 31 December 2012

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, 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 regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.

ii. (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory 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 and no material discrepancies were noticed on physical verification.

iii. (a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(b) to 4(iii)(d) of the Order are not applicable.

(b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(f) and 4(iii)(g) of the Order are not applicable.

iv. In our opinion, 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, no major weakness has been noticed in the internal control system in respect of these areas.

v. (a) The Company has not entered into any contracts or arrangements referred to in Section 301 of the Act. Accordingly, the provisions of clause 4(v) of the Order are not applicable.

vi. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

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

viii. 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(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not done a detailed examination of the cost records with a view to determine whether they are accurate or complete.

ix. a) Undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales- tax, wealth-tax, service-tax, custom duty, excise duty, cess and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities, except in case of Undisputed amounts payable in respect of Central Sales Tax, which is outstanding at the year-end for a period of more than six months from the date they became payable are as follows:

Name of Nature of Amount Period to Due Date Date of the statute the dues (Rs) which the Payment amount relates

Central Liability 236.78 FY 2005-06 to - - Sales Tax related lacs FY 2008-09 to CST

b) The dues outstanding in respect of sales-tax, income-tax, custom duty, wealth-tax, excise duty, cess on account of any dispute, are as follows:

Name of the Nature of dues Amount statute (Rs. Lacs) The Central Excise Act,1944 Trade discount 33.74

The Central Excise Act,1944 Excise duty on turnover discount 42.71

The Central Excise Act,1944 Excise duty on turnover discount 214.50

The Central Excise Act,1944 Cenvat credit availed twice 5.04

The Central Excise Act,1944 Demand on removal of non-saleable stock 8.57 removed from RG-1

The Central Excise Act,1944 Excise duty on capital goods 3.19

The Central Excise Act,1944 Classification of Light metal cylinder casting 6.97

The Central Excise Act,1944 Demand on sale of various types of scrap 3.33

The Central Excise Act,1944 Demand in respect of Modvat credits on Input and Capital goods 6.17

The Central Excise Act,1944 Modvat credit on grinding wheels, stones, honing sticks 9.34

The Central Excise Act,1944 Interest on reversal of SAD 14.02

The Central Excise Act,1944 Conversion of Aluminum Scrap into Ingots 15.14 from Colts department

Finance Act, 1994 (Service Tax) Input tax credit on various expenses 0.09

Finance Act, 1994 (Service Tax) Input tax credit on various expenses 79.02

Finance Act, 1994 (Service Tax) Input tax credit on various expenses 895.38

Finance Act, 1994 (Service Tax) Input tax credit on various expenses 153.84

Finance Act, 1994 (Service Tax) Disallowance of service tax credit on 96.11 various services

Finance Act, 1994 (Service Tax) Disallowance of service tax credit on 19.18 various services

Finance Act, 1994 (Service Tax) Input credit on various services 5.09

Finance Act, 1994 (Service Tax) Service tax on royalty and technical know how 39.95

Finance Act, 1994 (Service Tax) Payment of Service Tax under GTA on 67.02 inwards/outwards freight

Finance Act, 1994 (Service Tax) Availment of Cenvat on Job work charges 152.21

Finance Act, 1994 (Service Tax) Payment of Service Tax under GTA 78.14

Finance Act, 1994 (Service Tax) Input tax credit on various expenses 4.28

Karnataka VAT Act, 2003 Difference in VAT rates (classification issue) 301.38

Karnataka VAT Act, 2003 Difference in VAT rates (classification issue) 278.51

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

The Central Excise Act,1944 2000 - 2004 Joint Commissioner of Central Excise, Banguluru

The Central Excise Act,1944 2000 - 2003 Central Excise and Service Tax Appellate Tribunal, Chennai

The Central Excise Act,1944 2001 - 2006 Central Excise and Service Tax Appellate Tribunal Chandigarh

The Central Excise Act,1944 2005-07 Central Excise and Service Tax Appellate Tribunal, Banguluru

The Central Excise Act,1944 July 2005 to Central Excise and Service Tax Appellate Tribunal, Banguluru December 2005

The Central Excise Act,1944 2010-11 Assistant Commissioner (Central Excise), Bhiwadi, Rajasthan

The Central Excise Act,1944 1998-1999 Joint Commissioner of Central Excise, Patiala Punjab

The Central Excise Act,1944 2001-2002 Joint Commissioner of Central Excise, Patiala Punjab

The Central Excise Act,1944 1995-1996,1997-1998, Joint Commissioner of Central Excise, Patiala Punjab 1998-1999,2003-2004

The Central Excise Act,1944 1987-1990 Honorable High Court of Punjab and Haryana

The Central Excise Act,1944 2000-2001 Central Excise & Service Tax Appellate Tribunal, Chandigarh

The Central Excise Act,1944 2000-2002 Honorable Supreme Court

Finance Act, 1994 (Service Tax) 2008-2009 Commissioner (Appeals),Jaipur, Rajasthan

Finance Act, 1994 (Service Tax) 2009-2010 to 2011-2012 Superintendent, Bhiwadi, Rajasthan

Finance Act, 1994 (Service Tax) 2005-2011 Central Excise and Service Tax Appellate Tribunal, Banguluru

Finance Act, 1994 (Service Tax) 2010-12 Commissioner of Central Excise, Banguluru

Finance Act, 1994 (Service Tax) 2005-2011 Joint Commissioner of Central Excise, Patiala, Punjab

Finance Act, 1994 (Service Tax) 2006-2007 Central Excise and Service Tax Appellate Tribunal, Chandigarh

Finance Act, 1994 (Service Tax) 2008-09 Superintendent Audit, Patiala, Punjab

Finance Act, 1994 (Service Tax) 1999-2005 Joint Commissioner of Central Excise, Patiala, Punjab

Finance Act, 1994 (Service Tax) 2005-2008 Joint Commissioner of Central Excise, Patiala, Punjab

Finance Act, 1994 (Service Tax) 2011-2012 Commissioner Central Excise, Banguluru

Finance Act, 1994 (Service Tax) 2009-2012 Superintendent

Finance Act, 1994 (Service Tax) 2011-2012 Superintendent

Karnataka VAT Act, 2003 1998-1999 to Honorable High Court of Karnataka 2001-2002 and 2007-08

Karnataka VAT Act, 2003 2005-06 Honorable High Court of Karnataka

Name of the Nature of dues Amount statute (Rs. Lacs)

Income tax Act, 1961 Disallowance of expenditure in relation to exempt income 3.05

Income tax Act, 1961 Disallowance of expenditure in relation to exempt income 10.59

Income tax Act, 1961 Interest free loan to subsidiary 105.48

Income tax Act, 1961 Disallowance of development expenditure treated as 68.45 capital in nature

Income tax Act, 1961 Disallowance of development expenditure treated as 11.61 capital in nature

Income tax Act, 1961 Disallowance of prior period expenses 92.64

Income tax Act, 1961 Disallowance of prior period expenses 57.57

Income tax Act, 1961 Depreciation not allowed on assets of inactive Vegetable Oil Division 10.17

Income tax Act, 1961 Depreciation not allowed on assets of inactive Vegetable Oil Division 9.53

Income tax Act, 1961 Loss in relation to diminution in value of shares disallowed 12.39

Income tax Act, 1961 Disallowance of Commission and brokerage expenses for 6.52 facilitating loan funds

Income tax Act, 1961 Disallowance of Commission and brokerage expenses for 37.76 facilitating loan funds

Income tax Act, 1961 Disallowance of loan processing fees paid to bank 33.99

Income tax Act, 1961 Disallowance of foreign exchange fluctuation loss 5.04

Income tax Act, 1961 Brought forward losses of the amalgamating company denied 5,674.45

Income tax Act, 1961 Disallowance of filing fees for increasing authorized share 2.21 capital of the Company

Income tax Act, 1961 Disallowance for amalgamating expenses 0.69

Income tax Act, 1961 Provision for expenses disallowed 85.17

Income tax Act, 1961 Provision for expenses disallowed 57.64

Income tax Act, 1961 Disallowance of proportionate royalty expense 39.52

Income tax Act, 1961 Disallowance of proportionate royalty expense 103.47

Income tax Act, 1961 Distribution of gift coupons to shareholders at 16.54 Annual General Meeting

Income tax Act, 1961 Disallowance of exemption on dividend 66.55

Income tax Act, 1961 Addition of Revaluation Reserves to book profits 16.71

Income tax Act, 1961 Provision for diminution in the value asset added to book profits 38.75

Income tax Act, 1961 Apportionment of common administrative costs 1.52

Income tax Act, 1961 Disallowance of lease rent expenses 345.80

Income tax Act, 1961 Applicability of interest u/s 234D 0.51

Income tax Act, 1961 Disallowance of expenditure in relation to exempt income 21.21

Income tax Act, 1961 Addition to Revaluation Reserves to book profits 17.65

Income tax Act, 1961 Loss in relation to diminution in value of shares disallowed 19.23

Income tax Act, 1961 Disallowance of Club expenses 2.80

Delhi VAT VAT on assets transaferred to Anil Nanda 64.98

UP VAT Difference in VAT rates (classification issue) 82.78

Karnataka Tax on Entry of Goods Act, 1979 Entry tax on import of capital goods 147.67

Karnataka Tax on Entry of Goods Act, 1979 Entry tax on import of capital goods 116.52

Karnataka Tax on Entry of Goods Act, 1979 Entry tax on import of capital goods 118.00

Karnataka Tax on Entry of Goods Act, 1979 Entry tax on import of capital goods 12.43

Karnataka Tax on Entry of Goods Act, 1979 Entry tax on import of capital goods 16.03

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

Income tax Act, 1961 2000-2001 Honorable High Court

Income tax Act, 1961 2001-2002 & 2004-05 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2006-07 & 2007-2008 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2001-2002 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2001-2002 & 2007-2008 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2001-2002 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2001-2002 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2001-2002 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2002-03 Income Tax Appellate Tribunal

Income tax Act, 1961 1997-1998 Honorable High Court

Income tax Act, 1961 2002-2003 Income Tax Appellate Tribunal

Income tax Act, 1961 2003-2004 & 2005-2006 Income Tax Appellate Tribunal

Income tax Act, 1961 2004-2005 & 2007-2008 Commissioner Income Tax (Appeals)

Income tax Act, 1961 1995-1996 & 1996-1997 Honorable High Court

Income tax Act, 1961 1998-1999 Honorable High Court

Income tax Act, 1961 1998-1999 Honorable High Court

Income tax Act, 1961 2005-2006 Income Tax Appellate Tribunal

Income tax Act, 1961 1997-1998 Honorable High Court

Income tax Act, 1961 1997-1998 Honorable High Court

Income tax Act, 1961 2000-2001 Honorable High Court

Income tax Act, 1961 1999-2000 Honorable High Court

Income tax Act, 1961 1999-2000 Honorable High Court

Income tax Act, 1961 2004-2005 Commissioner Income Tax (Appeals)

Income tax Act, 1961 2007-2008 Commissioner Income Tax (Appeals)

Delhi VAT 2007-2008 Commissioner (Appeals), Delhi

UP VAT 2007-2008 Commissioner (Appeals), Ghaziabad

Karnataka Tax on Entry of Goods Act, 1979 2006-2007 Honorable Supreme Court

Karnataka Tax on Entry of Goods Act, 1979 2007-2008 Honorable Supreme Court

Karnataka Tax on Entry of Goods Act, 1979 2008-2009 Honorable Supreme Court

Karnataka Tax on Entry of Goods Act, 1979 2009-2010 Honorable Supreme Court

Karnataka Tax on Entry of Goods Act, 1979 2010-2011 Honorable Supreme Court

x. In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

xi. The Company has not defaulted in repayment of dues to any bank or financial institution during the year. The Company did not have any outstanding debentures during the year.

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

xiii. In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable.

xiv. In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

xv. In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are not, prima facie, prejudicial to the interest of the Company.

xvi. In our opinion, the Company has applied the term loans for the purpose for which these loans were obtained.

xvii. In our opinion, the Company has used funds raised on short-term basis for long-term investment. The Company has accepted short term borrowings amounting to Rs 5242.21 which are both repayable on demand or within one year and such funds have been invested for acquiring non-current assets of the Company.

xviii. During the year, the Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

xix. The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

xx. The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

xxi. According to the information and explanations given to us ana as described in note 44 to the financial statements, there were certain discrepancies in respect of availing sales tax benefits at one of the units of the Company which, at present, are being further investigated by management. No fraud on or by the Company has been noticed or reported during the period covered by our audit other than the matter mentioned above.

For Walker, Chandiok & Co.

Chartered Accountants

Firm Registration No.: 001076N

per David Jones

Partner

Place : New Delhi Membership

Date : February 28, 2013 No.: 98113


Dec 31, 2011

We have audited the accompanying financial statements of Federal-Mogul Goetze (India) Limited ("the Company"), which comprise the Balance Sheet as at December 31, 2011, and the Statement of Profit and Loss and 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 accounting principles generally accepted in India, including the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). 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 company'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.

Basis for Qualified Opinion

Refer Note no. 1 9 of Schedule 24 on the Company's investments in G. I. Power Corporation Limited ('GIPCL') of the value of Rs 1,070.92 lacs representing investment in equity shares of Rs. 194.48 lacs and in preference shares of Rs. 876.44 lacs. During the year, Company's holding in GIPCL was reduced to 6.60% from earlier holding of 26.00%. The Company has been unable to produce audited financial information and, as represented to us, is also in discussion for sale of these investments at par, that are yet to be concluded. In view of these uncertainties and due to non-availability of audited financial information as at December 31, 2011, we are not in a position to assess as to whether provision, if any, needs to be made towards carrying value of these investments and consequential impact thereof.

Qualified opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, the impact whereof is unascertainable, 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, 2011;

(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) Except for the matter described in the Basis for Qualified Opinion paragraph above, 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) Except for the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

(e) On the basis of written representations received from the directors as on December 31, 2011, and taken on record by the Board of Directors, 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 Companies Act, 1956.

Annexure referred to in paragraph 1 of our report of even date under Section 'Report on Other Legal and Regulatory Requirements'

Re: Federal-Mogul Goetze (India) Limited ('the Company')

i. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets, except for certain items of plant and machinery and certain items of furniture at one of its facilities, where the records are maintained for group of similar assets and not for each individual asset.

(b) The Company has a programme for physical verification on a rotational basis, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Accordingly, certain fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification.

(c) There was no disposal of a substantial part of fixed assets during the year.

ii. (a) The inventory has been physically verified by the management during the year, except for stores and spares inventory of Rs 585.53 lacs which has not been verified during or at the end of the year. In our opinion, the frequency of verification is reasonable. Inventories lying with outside parties (including with transporters, job workers and at ports) have been confirmed by them as at year end.

(b) The procedures of physical verification of inventory followed by the management, except for stores and spares inventory of Rs 585.53 lacs, 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, except for stores and spares inventory of Rs. 585.53 lacs and no material discrepancies were noticed on physical verification.

iii. (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii) (a) to (d) of the Order are not applicable to the Company and hence not commented upon.

(b) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii) (e) to (g) of the Order are not applicable to the Company and hence not commented upon.

iv. The Company's significant purchases of fixed assets are from its group companies and their associates. We are explained that these items are of unique and specialized nature, and hence, in such cases, it is not possible to make the comparison of prices with the market rates or with purchases from other parties. Read with the above, in our opinion and according to the information and explanations given to us, 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 major weakness or continuing failure to correct any major weakness in the internal control system of the company in respect of these areas.

v. (a) According to the information and explanations provided by the management, we are of the opinion that there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provision of clause 4(v) (b) of the Order is not applicable to the Company.

vi. The Company has not accepted any deposits from the public.

vii. In our opinion, the Company has an internal audit system commensurate with the size and 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(1) (d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate and complete.

ix. a) 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 have generally been regularly deposited with the appropriate authorities, except for income tax and service tax, which have not been regularly deposited with the appropriate authorities in a few cases, though the delays in deposit have not been serious.

b) According to the information and explanations given to us, no material undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales- tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

c) According to the records of the Company, the dues outstanding of income-tax, sales- tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:

Name of the Nature of dues Amount Period to which the Forum where dispute is pending statute (Rs. Lacs) amount relates

Central Excise Act, 1944 Trade Discount 33.74 2000-2004 Joint Commissioner of Central Excise, Bangalore

Central Excise Act, 1944 Excise Duty on Turnover Discount 107.18 2000-2006 Central Excise & Service Tax Appellate Tribunal, Bangalore

Central Excise Act, 1944 Excise Duty on Turnover Discount 214.50 2001-2006 Central Excise & Service Tax Appellate Tribunal, Chandigarh

Central Excise Act, 1944 Sale returns 5.28 2001-2003 Central Excise & Service Tax Appellate Tribunal, Bangalore

Central Excise Act, 1944 Cenvat credit availed twice 5.04 2006-2007 Central Excise & Service Tax Appellate Tribunal, Bangalore

Central Excise Act, 1944 Excise duty on Engineering charges 0.34 2006-2007 Assistant Commissioner of Central Excise, Bangalore

Central Excise Act, 1944 Cenvat Credit availed twice 0.93 August 2005 to Deputy Commissioner of Central Excise, Bangalore December 2005

Central Excise Act, 1944 Demand on removal non saleable stock 8.57 July 2005 to Central Excise & Service Tax Appellate Tribunal, Bangalore removed from RG -1 December 2005

Central Excise Act, 1944 Excise duty on Capital goods 3.19 2010-2011 Assistant Commissioner (Central Excise), Bhiwadi, Rajasthan

Central Excise Act, 1944 Classifi cation of Light metal cylinder Casting 6.97 1998-1999 Joint Commissioner of Central Excise, Patiala, Punjab

Central Excise Act, 1944 Demand on sale of various types of scrap 3.33 2001-2002 Joint Commissioner of Central Excise, Patiala, Punjab

Central Excise Act, 1944 Demand in respect of Modvat Credits on 6.17 1995-1996. 1997-1998 Joint Commissioner of Central Excise, Patiala, Punjab

Input & Capital goods 1998-1999 2003-2004

Central Excise Act, 1944 Modvat credit on grinding wheels, stones, 9.34 1987-1990 Punjab & Haryana High Court honing sticks

Central Excise Act, 1944 Interest on reversal of SAD 14.02 2000-2001 Central Excise & Service Tax Appellate Tribunal, Chandigarh

Central Excise Act, 1944 Conversion of Aluminum Scrap into 15.14 2000-2002 Supreme Court Ingots from Colts Department

Finance Act, 1994 (service tax) Input tax credit on various expenses 1.25 2008-2009 Commissioner (Appeals), Jaipur, Rajasthan

Finance Act, 1994 (service tax) Input tax credit on various expenses 50.32 2009-2010 to Assistant Commissioner/ Joint Commissioner (Central Excise), 2011-2012 Jaipur, Rajasthan

Finance Act, 1994 (service tax) Input tax credit on various expenses 678.79 2005-2010 Central Excise & Service Tax Appellate Tribunal, Bangalore

Finance Act, 1994 (service tax) Input tax credit on various expenses 370.43 April 2010 to Commissioner of Central Excise, Bangalore September 2011

Finance Act, 1994 (service tax) Service Tax on 'Common Inputs Distribution' 1,017.92 March 2005 to Central Excise & Service Tax Appellate Tribunal, Bangalore June 2008

Finance Act, 1994 (service tax) Disallowance of service tax credit on various services 96.11 2005-2011 Joint Commissioner of Central Excise, Patiala, Punjab

Finance Act, 1994 (service tax) Disallowance of service tax credit on various services 21.57 2006-2007, 2007-2008 Central Excise & Service Tax Appellate Tribunal, Chandigarh

Finance Act, 1994 (service tax) Input credit on various services 5.09 2008-2009 Superintendent Audit, Patiala, Punjab

Finance Act, 1994 (service tax) Service Tax on Royalty & Technical Know how 23.16 1999-2003 Joint Commissioner of Central Excise, Patiala, Punjab

Finance Act, 1994 (service tax) Payment of Service Tax under GTA on inwards 67.02 2005-2008 Joint Commissioner of Central Excise, Patiala, Punjab /Outwards freight

Finance Act, 1994 (service tax) Service Tax on Royalty & Technical Know how 16.79 2004-2005 Joint Commissioner of Central Excise, Patiala, Punjab

Karnataka VAT Act, 2003 Difference in VAT rates 153.02 1998-1999 to Joint Commissioner (Appeals), Bangalore 2001-2002 and 2007-2008

Karnataka VAT Act, 2003 Difference in rates, Input tax credit & other matters 225.00 2005-2006 Superintendent Audit, Bangalore

Income tax Act,1961 Disallowance of expenditure in relation to exempt income 3.05 2000-2001 High Court

Income tax Act,1961 Disallowance of expenditure in relation to 10.59 2001-2002 & 2004-2005 Commissioner Income Tax (Appeals) exempt income 2004-2005

Income tax Act,1961 Interest free loan to subsidiary 105.48 2006-2007 & 2007-2008 Commissioner Income Tax (Appeals)

Income tax Act,1961 Disallowance of development expenditure 22.32 2000-2001 High Court treated as capital in nature

Income tax Act,1961 Disallowance of development expenditure 68.45 2001-2002 Commissioner Income Tax (Appeals) treated as capital in nature

Income tax Act,1961 Disallowance of development expenditure 11.61 2002-2003 Income Tax Appellate Tribunal treated as capital in nature

Income tax Act,1961 Disallowance of prior period expenses 5.10 2000-2001 High Court

Income tax Act,1961 Disallowance of prior period expenses 92.64 2001-2002 & 2007-2008 Commissioner Income Tax (Appeals)

Income tax Act,1961 Disallowance of prior period expenses 57.57 2002-2003 Income Tax Appellate Tribunal

Income tax Act,1961 Depreciation not allowed on assets of inactive 10.17 2001-2002 Commissioner Income Tax (Appeals) Vegetable Oil Division

Income tax Act,1961 Depreciation not allowed on assets of inactive 22.23 2002-2003 & Income Tax Appellate Tribunal Vegetable Oil Division 2003-2004

Income tax Act,1961 Loss in relation to diminution in value of shares disallowed 84.80 2000-2001 High Court

Income tax Act,1961 Loss in relation to diminution in value of shares disallowed 12.39 2001-2002 Commissioner Income Tax (Appeals)

Income tax Act,1961 Disallowance of Commission and Brokerage expenses 6.52 2001-2002 Commissioner Income Tax (Appeals) for facilitating loan funds

Income tax Act,1961 Disallowance of Commission and Brokerage expenses 37.76 2002-2003 Income Tax Appellate Tribunal for facilitating loan funds

Income tax Act,1961 Disallowance of loan processing fee paid to bank 33.99 2002-2003 Income Tax Appellate Tribunal

Income tax Act,1961 Disallowance of foreign exchange fluctuation loss 5.04 2002-2003 Income Tax Appellate Tribunal

Income tax Act,1961 Brought forward losses of the amalgamating 5,674.45 2002-2003 Income Tax Appellate Tribunal company denied

Income tax Act,1961 Disallowance of filing fee for increasing authorized 2.21 2002-2003 Income Tax Appellate Tribunal share capital of the Company

Income tax Act,1961 Disallowance of amalgamation expenses 0.89 2000-2001 High Court

Income tax Act,1961 Disallowance of amalgamation expenses 0.69 2002-2003 Income Tax Appellate Tribunal

Income tax Act,1961 Provision for expenses disallowed 85.17 1997-1998 High Court

Income tax Act,1961 Provision for expenses disallowed 57.64 2002-2003 Income Tax Appellate Tribunal

Income tax Act,1961 Disallowance of proportionate royalty expense 52.57 2003-2004 & 2005-2006 Income Tax Appellate Tribunal

Income tax Act,1961 Disallowance of proportionate royalty expense 103.47 2004-2005 & 2007-2008 Commissioner Income Tax (Appeals)

Income tax Act,1961 Distribution of gift coupons to shareholders at 16.54 1995-1996 & 1996-1997 High Court Annual General Meeting

Income tax Act,1961 Disallowance of exemption on dividend 66.55 1998-1999 High Court

Income tax Act,1961 Addition of Revaluation Reserves to book profits 16.71 1998-1999 High Court

Income tax Act,1961 Provision for diminution in the value of asset 38.75 2005-2006 Income Tax Appellate Tribunal added to book profits

Income tax Act,1961 Apportion ment of common administrative costs 1.52 1997-1998 High Court

Income tax Act,1961 Disallowance of lease rent expenses 345.80 1997-1998 High Court

Income tax Act,1961 Applicability of interest u/s 234D 0.51 2000-2001 High Court

Income tax Act,1961 Disallowance of expenditure in relation to exempt income 21.21 1999-2000 High Court

Income tax Act,1961 Depreciation not allowed on assets of inactive 13.63 1999-2000 High Court Vegetable Oil Division

Income tax Act,1961 Addition of Revaluation Reserves to book profits 17.65 1999-2000 High Court

Income tax Act,1961 Loss in relation to diminution in value of shares disallowed 19.23 2004-2005 Commissioner Income Tax (Appeals)

Income tax Act,1961 Disallowance of Club Expenses 2.80 2007-2008 Commissioner Income Tax (Appeals)

x. The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

xi. Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to the banks. The Company has no outstanding dues in respect of a financial institution or debenture holders.

xii. According to the information and explanations given to us and based on the documents and records produced to us, 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, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

xiv. In our opinion, the Company is not dealing in or trading in shares, securities, debentures ana other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

xv. According to the information and explanations given to us, the Company has given guarantee for loan taken by a subsidiary from a bank; the terms and conditions whereof in our opinion are not prima-facie prejudicial to the interest of the Company. There are no other guarantees given by the Company for loans taken by others from bank or financial institutions.

xvi. Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds amounting to Rs. 5,049.06 lacs raised on short term basis in the form of intercorporate deposits and working capital / cash credit facility from affiliates and banks respectively have been used for long-term investment representing acquisition of fixed assets.

xviii. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

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

xx. We have verified that the end use of money raised by public issues is as disclosed in the notes to the financial statements.

xxi. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per 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 S.R. BATLIBOI & CO.

Firm registration number: 301003E

Chartered Accountants

per Pankaj Chadha

Partner

Place : Gurgaon Membership

Date : February 29, 2012 No.: 91813

 
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