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Auditor Report of Kirloskar Pneumatic Company Ltd.

Mar 31, 2016

We have audited the accompanying standalone financial statements of Kirloskar Pneumatic Company Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

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

Auditor''s Responsibility

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

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Basis for qualified opinion

Ministry of Corporate Affairs has directed the company to recover the remuneration in excess of 5% of the net profits u/s 349 of the Companies Act 1956, paid to Executive Chairman for FY 2012-13 & 2013-14. Company''s application for payment of minimum remuneration for the year 2014-15 has been rejected for this reason and therefore remuneration paid in excess of limits specified in Schedule V of the Companies Act 2013 also is required to be recovered. Such excess remuneration amounts to Rs. 200.39 lakhs. The company has filed Form MR-2 with the Ministry for waiver of the said recovery and therefore the company has not recovered this amount nor accounted for the recoverable amount. As a result, the profits of the company for the year ended 31st March 2016 are lower by Rs. 131.04 lakhs (net of Tax) & correspondingly the Reserves & Surplus are also lower by the same amount. (refer Note No. 31)

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2016, and its profit and its 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, 2016 issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books

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

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

(e) In our opinion there are no financial transactions or matters which have any adverse effect on the functioning of the company.

(f) On the basis of the written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016 from being appointed as a director in terms of Section 164 (2) of the Act;

(g) The qualification relating to the non compliance with the directions of the Ministry of Corporate Affairs regarding the remuneration of Executive Chairman are as stated in the Basis for Qualified Opinion paragraph above.

(h) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure B;

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 37 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

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

(Referred to in our above report of even date)

(i) (a) The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets;

(b) As explained to us, considering the nature of the Fixed Assets, the same have been physically verified by the management at reasonable intervals during the year as per the verification plan adopted by the company, which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanations given to us and the records produced to us for our verification, the discrepancies noticed during such physical verification were not material and the same have been properly dealt with in the books of account;

(c) The title deeds of immovable properties are held in the name of the company;

(ii) The physical verification of inventory has been conducted at reasonable intervals by the management and no material discrepancies were noticed during such verification;

(iii) The company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

(iv) In respect of loans, investments, guarantees, and security the provisions of section 185 and 186 of the Companies Act, 2013 have been complied with.

(v) In our opinion and according to the information & explanations given to us, the company has not accepted any deposits.

(vi) The Company is maintaining cost records as prescribed under Section 148 (1) of the Companies Act, 2013. However, we have not verified the same for completeness or accuracy.

(vii) (a) According to the records of the company, the company is regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities and there were no arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable;

(b) According to the records of the company, there are no dues of income tax or sales tax or service tax or duty of customs or excise duty or value added tax which have not been deposited on account of any dispute except :

Name of the Amount Period to which Nature of dues Forum Statute (Rs) amount relates

Excise Duty Demand of penalty on reversal of 18,44,000 FY 1997-98 to 2001-02 CESTAT, Delhi Cenvat Credit not made upto Feb-2002

Service Tax Wrong availment of CENVAT 12,79,793 FY 2013-14 Addn. Commissioner Central Excise & Customs

Customs Non compliance of conditions for 14,54,000 FY 1997-98 Asst. Commissioner Duty availing concessional rate of (Customs) Mumbai customs duty

Sales Tax Non- production of C Forms 102,000 FY 1992-93 Asst. Commissioner Appeal 56,831,414 FY 2009-10 Jt. Commissioner Appeal

12,207,000 FY 2010-11 Jt. Commissioner Appeal

Sales Tax Demand under Work Contract Tax 475,000 AY 1985-86 to 1987-88 Asst. Commissioner Appeal

(viii) Based on our audit procedures and on the information and explanations given by themanagement, we are of the opinion that the company has not defaulted in repayment of loans or borrowing to a financial institution, bank, Government or dues to debenture holders.

(ix) The company has not raised any moneys by way of initial public offer or further public offer (including debt instruments) and term loans during the year;

(x) Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud by the company or any fraud on the Company by its officers or employees has been noticed or reported during the year;

(xi) Managerial remuneration for the year has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act;

(xii) The company is not a Nidhi Company;

(xiii) Based upon the audit procedures performed and information and explanations given by the management, all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards;

(xiv) The company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review;

(xv) Based upon the audit procedures performed and information and explanations given by the management, the company has not entered into any non-cash transactions with directors or persons connected with him within the meaning of the provisions of section 192 of Companies Act, 2013;

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

For M/S P G BHAGWAT Chartered Accountants

Firm''s Registration Number : 101118W



sd/-

S S Athavale

Partner

Membership Number 83374

Place : Pune

Date : 27th April, 2016


Mar 31, 2015

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

Management's Responsibility for the Standalone Financial Statements

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

Auditor's Responsibility

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

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

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

Emphasis of Matter

We draw attention to the following matter in the Notes to the financial statements:

Chairman's remuneration for FY 2014-15 is in excess of limits laid down in Schedule V of the Companies Act 2013, and is subject to the approval of the Central Government (refer Note No. 31)

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

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

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

(e) In our opinion there are no financial transactions or matters which have any adverse effect on the functioning of the Company.

(f) On the basis of the written representations received from the directors as on 31 March, 2015 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 Act;

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 37 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

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

(Referred to in our above report of even date)

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

(b) As explained to us, considering the nature of the Fixed Assets, the same have been physically verified by the management at reasonable intervals during the year as per the verification plan adopted by the company, which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanations given to us and the records produced to us for our verification, the discrepancies noticed during such physical verification were not material and the same have been properly dealt with in the books of account.

2. (a) The inventory has been physically verified during the year by the management, which, is in our opinion, at reasonable intervals.

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

(c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. No material discrepancies were noticed on verification between the physical stock and the book records.

3. The Company has not granted any loans, secured or unsecured, to companies, firms and other parties covered in the Register maintained under Section 189 of the Companies Act, 2013, during the year.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

5. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits.

6. The Company is maintaining cost records as prescribed under Section 148 (1) of the Companies Act, 2013. However, we have not verified the same for completeness or accuracy.

7. (a) According to the records of the Company, the Company is regular in depositing undisputed statutory dues with the appropriate authorities. There were no amounts payable in respect of the statutory dues outstanding, as at the Balance Sheet date for a period of more than six months from the date they became payable.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, ESI, Sale Tax, VAT, Income Tax, Customs duty, Wealth Tax, Service Tax, Excise Duty, Cess and any other statutory dues were outstanding, as at the balance sheet date for a period of more than six months from the date they became payable.

(b) According to the records of the Company, there are no dues of Sales Tax, VAT, Income Tax, Customs Duty, Wealth Tax, Excise Duty, Cess and Service Tax which have not been deposited on account of any dispute, except:

Name of the Nature of dues Amount (Rs) Statute

Excise Duty Demand of penalty on reversal of Cenvat 1,844,000 Credit not made

Customs Duty Non compliance of conditions for availing 1,454,000 concessional rate of customs duty

Sales Tax Non- production of C Forms 102,000 56,831,414 12,207,000

Sales Tax Demand under Work Contract Tax 475,000

Income Tax Disallowance of certain expenditure 712,247

Name of the Period to which Forum Statute amount relates

Excise Duty FY 1997-98 to 2001-02 CESTAT, Delhi upto Feb-2002

Customs Duty FY 1997-98 Asst. Commissioner (Customs) Mumbai

Sales Tax FY 1992-93 Asst.Commissioner Appeal FY 2009-10 Jt.Commissioner Appeal FY 2010-11 Jt.Commissioner Appeal

Sales Tax AY 1985-86 to1987-88 Asst.Commissioner Appeal

Income Tax AY 1960-70 to High Court AY 1978-79

(c) The amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time.

8. The company has no accumulated losses as on the Balance Sheet date. The company has not incurred cash losses during the financial year covered by our audit nor during the immediately preceding financial year.

9. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

10. As informed to us, the company has not given any guarantee for loans taken by others from bank or financial institutions.

11. During the year, Term Loans have not been raised by the company.

12. Based upon the audit procedures performed and 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 M/S P G BHAGWAT Chartered Accountants Firm's Registration Number : 101118W

sd/- S S Athavale Partner Membership Number 83374 Place : Pune Date : 7 May, 2015


Mar 31, 2014

Report on the Financial Statements

We have audited the accompanying financial statements of Kirloskar Pneumatic Company Limited, which comprise the Balance Sheet as at March 31, 2014, 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 the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 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 entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

(b) in the case of the Profit and Loss Account, 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 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

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

d. in our opinion, the Balance Sheet, 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 March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE TO THE AUDITORS'' REPORT

(Referred to in our above report of even date)

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

(b) As explained to us, considering the nature of the Fixed Assets, the same have been physically verified by the management at reasonable intervals during the year as per the verification plan adopted by the company, which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanations given to us and the records produced to us for our verification, the discrepancies noticed during such physical verification were not material and the same have been properly dealt with in the books of account.

(c) During the year, the company has not disposed off major part of the Fixed Assets.

2. (a) The inventory has been physically verified during the year by the management, which, is in our opinion, at reasonable intervals.

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

(c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. No material discrepancies were noticed on verification between the physical stock and the book records.

3. (a) The Company has not granted any loans to companies, firms and other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, during the year. (b) The Company has not taken any loans from companies, firms and other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, during the year.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

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

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public with the provisions of Sections 58A and 58AA of the Companies Act, 1956, and the rules framed there under.

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

8. The Company is maintaining cost records as prescribed under Section 209 (1) (d) of the Companies Act, 1956. However, we have not verified the same for completeness or accuracy.

9. (a) According to the records of the Company, the Company is regular in depositing undisputed statutory dues with the appropriate authorities. There were no amounts payable in respect of the statutory dues outstanding, as at the Balance Sheet date for a period of more than six months from the date they became payable.

According to the information and explanations given to us, no undisputed amounts payable in respect of Sale Tax, Income Tax, Customs Tax / Wealth Tax, Excise Duty/Cess and Service Tax were outstanding, as at the balance sheet date for a period of more than six months from the date they became payable.

(b) According to the records of the Company, there are no dues of Sales Tax, Income Tax, Customs Duty/Wealth Tax, Excise Duty/Cess and Service Tax which have not been deposited on account of any dispute, except:

Name of the Nature of dues Amount (Rs) Period to which Forum Statute amount relates

Excise Duty Demand of penalty on reversal of 18,44,000 FY 1997-98 to 2001-02 CESTAT, Delhi Cenvat Credit not made upto Feb-2002

Service Tax Penalty 3,09,556 FY 2003-04 to 05-06 CESTAT, Mumbai

Penalty 2,47,316 FY 2007-08 to 2009-10 Comm. Appeals, Pune III

"Sales Tax Non- production of C Forms 83,000 AY 1992-93 Mumbai High Court, Mumbai Sales Tax Tribunal.

Appeal against incorrect 5,99,000 AY 2004-05 & Commissioner Appeal Assessment Order 2005-06

Demand under Works Contract Tax 1,88,000 AY 1985-86 "Tribunal

Demand under Works Contract Tax 2,87,000 AY 1985-86 & 1986-87 High Court & 1987-88

Income Tax Disallowance of certain expenditure 7,12,247 AY 1960-70 to High Court AY 1978-79

10. The company has no accumulated losses as on the Balance Sheet date. The company has not incurred cash losses during the financial year covered by our audit nor during the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

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

13. The provisions of any special statute applicable to chit funds are not applicable to the Company.

14. The company is not dealing or trading in shares, securities, debentures and other investments.

15. As informed to us, the company has not given any guarantee for loans taken by others from bank or financial institutions.

16. During the year, Term Loans have not been raised by the company.

17. The funds raised on short term basis have not been used for long term investment.

18. The company has not made preferential allotment of shares during the year.

19. No money has been raised by debenture issues during the year.

20. No money has been raised by public issues during the year.

21. Based upon the audit procedures performed and 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 M/S P. G. BHAGWAT

Chartered Accountants

Firm''s Registration Number : 101118W

Sanjay Athavale

Partner

Membership Number 83374

Place : Pune

Date : April 23, 2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Kirloskar Pneumatic Company Limited, which comprise the Balance Sheet as at March 31,2013, 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

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

(b) in the case of the Profit and Loss Account, of the profit forthe 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 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from ourexamination of those books;

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

d. in our opinion, the Balance Sheet, 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 March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing, the manner in which such cess is to be paid, no cess is due and payable by the Company.

(Referred to in our above report of even date)

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

(b) As explained to us, considering the nature of the Fixed Assets, the same have been physically verified by the management at reasonable intervals during the year as per the verification plan adopted by the company, which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanations given to us and the records produced to us for our verification, the discrepancies noticed during such physical verification were not material and the same have been properly dealt with in the books of account.

(c) During the year, the company has not disposed off major part of the Fixed Assets.

2. (a) The inventory has been physically verified during the year by the management, which, is in our opinion, at reasonable intervals.

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

(c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. No material discrepancies were noticed on verification between the physical stock and the book records.

3. (a) The Company has not granted any loans to companies, firms and other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, during the year. (b) The Company has not taken any loans from companies, firms and other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, during the year.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, no majorweakness has been noticed in the internal control system.

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

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public with the provisions of Sections 58Aand 58AAof the Companies Act, 1956, and the rules framed there under.

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

8. The Company is maintaining cost records as prescribed under Section 209 (1) (d) of the Companies Act, 1956. However, we have not verified the same for completeness or accuracyA

9. (a) According to the records of the Company, the Company is regular in depositing undisputed statutory dues with the appropriate authorities. There were no amounts payable in respect of the statutory dues outstanding, as at the Balance Sheet date for a period of more than six months from the date they became payable.

According to the information and explanations given to us, no undisputed amounts payable in respect of

Sale Tax, Income Tax.Tlustoms Tax/Wealth Tax, Excise Duty/Cess and Service Tax were outstanding, as at

the balance sheet date for a period of more than six months from the date they became payable. 10. The company has no accumulated losses as on the Balance Sheet date. The company has not incurred cash losses during the financial year covered by our audit nor during the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

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

13. The provisions of any special statute applicable to chit funds are not applicable to the Company.

14. The company is not dealing or trading in shares, securities, debentures and other investments.

15. As informed to us, the company has not given any guarantee for loans taken by others from bank or financial institutions.

16. During the year, Term Loans have not been raised by the company.

17. The funds raised on short term basis have not been used for long term investment.

18. The company has not made preferential allotment of shares during the year.

19. No money has been raised by debenture issues during the year.

20. No money has been raised by public issues during the year.

21. Based upon the audit procedures performed and 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 M/S P. G. BHAGWAT

Chartered Accountants

Firm''s Registration Number: 101118W

Sanjay Athavale

Partner

Membership Number 83374

Place : Pune

Date: April 24, 2013


Mar 31, 2012

1. We have audited the attached balance sheet of KIRLOSKAR PNEUMATIC COMPANY LIMITED, as at 31 st March, 2012, and also the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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.

The financial statements of the Company for the year ended 31 st March, 2011 were audited by other independent auditor whose report dated 27th April, 2011, expressed an unqualified opinion on those statements. The audited balances as on 31st March, 2011 have been considered as opening balances for the purpose of these financial statements.

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

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

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) 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;

(iii) The balance sheet and profit and loss account and the cash flow statement dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the balance sheet and profit and loss account and the cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

(b) in the case of the Profit and Loss Account, 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.

(Referred to in our above report of even date)

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

(b) All the Fixed Assets have been physically verified by the management during the year and there is a regular program of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. The discrepancies noticed during such verification have been properly dealt with in the books of account.

(c) During the year, the company has not disposed off major part of the Fixed Assets.

2. (a) The inventory has been physically verified during the year by the management, which, is in our opinion, at reasonable intervals.

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

(c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. No material discrepancies were noticed on verification between the physical stock and the book records.

3. (a) The Company has not granted any loans to companies, firms and other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, during the year.

(b) The Company has not taken any loans from companies, firms and other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, during the year.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system.

5. (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of five Lacs rupees in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public with the provisions of Sections 58A and 58AA of the Companies Act, 1956, and the rules framed there under.

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

8. The Company is maintaining cost records as prescribed under Section 209 (1) (d) of the Companies Act, 1956. However, we have not verified the same for completeness or accuracy.

9. (a) According to the records of the Company, the Company is regular in depositing undisputed statutory dues with the appropriate authorities. There were no amounts payable in respect of the statutory dues outstanding, as at 31.03.2012 for a period of more than six months from the date they became payable.

According to the information and explanations given to us, no undisputed amounts payable in respect of Sales Tax, Income Tax, Custom Duty / Wealth Tax, Excise Duty / Cess and Service Tax were outstanding, as at the balance sheet date for a period of more than six months from the date they became payable.

(b) According to the records of the Company, there are no dues of Sales Tax, Income Tax, Customs Duty/Wealth Tax, Excise Duty/Cess and Service Tax which have not been deposited on account of any dispute, except:

Name of the Nature of dues Amount Period to which Forum Statute (Rs.) amount relates

Excise Duty Demand of penalty 18,44,000 FY1997-98 to CESTAT, Delhi on reversal of Cenvat 2001-02 upto Credit not made Feb-2002

Service Tax Penalty 3,09,556 FY 2003-04 to 2005-06 CESTAT, Mumbai

Sales Tax Non-production of 83,000 AY 1992-93 Mumbai High C Forms Court, Mumbai Sales Tax Tribunal

Appeal against incorrect 5,99,000 AY 2004-05 and Commissioner Assessment Order 2005-06 Appeal

Demand under 1,88,000 AY 1985-86 Tribunal Works Contract Tax

Demand underwork 2,87,000 AY 1985-86, High Court Contract Tax 1986-87 and 1987-88

Income Tax Disallowance of certain 7,12,247 AY 1960-70 to High Court expenditure AY 1978-79

10. The Company has no accumulated losses as on the Balance Sheet date. The Company has not incurred cash losses during the financial year covered by our audit nor during the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to any financial institution, bank or debenture holders.

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

13. The provisions of any special statute applicable to chit funds are not applicable to the Company.

14. The Company is not dealing or trading in shares, securities, debentures and other investments.

15. As informed to us, the company has not given any guarantee for loans taken by others from bank or financial institutions.

16. During the year, Term Loans have not been raised by the company.

17. The funds raised on short term basis have not been used for long term investment.

18. The Company has not made preferential allotment of shares during the year.

19. No money has been raised by debenture issues during the year.

20. No money has been raised by public issues during the year.

21. Based upon the audit procedures performed and 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 M/S P G BHAGWAT

Chartered Accountants

Firm Registration Number: 101118W

Sanjay Athavale

Partner

Membership Number: 83374

Pune

April 24,2012


Mar 31, 2011

1. We have audited the attached Balance Sheet of Kirloskar Pneumatic Company Limited (the "Company") as at 31 March 2011, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements base 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(Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together the "Order") issued by the Central Government of India in terms of sub- section(4A) of Section 227 of The Companies Act, 1956 of India (the Act) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

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

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

(e) On the basis of written representations received from the directors, as on 31st March 2011 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto give, in the prescribed manner, the information required by the Act, 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 31st March 2011;

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

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

ANNEXURE TO AUDITORS REPORT

Referred to in paragraph 3 of the Auditors Report of even date to the members of Kirloskar Pneumatic Company Limited on the financial statements for the year ended 31sl March 2011

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

(b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items over a period of five years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year.

2. (a) The inventory (excluding stocks with third parties) has been physically verified by the Management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

(b) In our opinion, 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) On the basis of our examination of the inventory records , in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

3. (a) The Company has not granted any loans, secured or unsecured, to companies, fims or other parties covered in the register maintained under Section 301 of the Act.

(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.

4. 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, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, no major weakness have been noticed or reported.

5. (a) Our opinion and acording to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

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

8. The Company has made a representation to the Central Government stating that provisions under Section 209(1)(d) of the Companies Act, 1956, are not applicable to the Company as the products manufactured by the Company are not covered under the said section and the rules made there under viz: Cost Accounting records (Engineering Industries) Rules, 1984, Consequently, the cost records have not been made and maintained.

9. (a) According to the information and explanations given to us and the records of the Company examined by Us, in our opinion, the Company is regular in depositing the undisputed statutory dues including providend fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth- tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income-tax, sales-tax, wealth-tax, service-tax, customs duty, excise duty and cess as at 31sl March 2011 which have not been deposited on account of a dispute are as follows:

Name of the Nature of statue dues Amount Period to which Forum where (Rs.) the amount the disputes relates pending

Sales Tax Non production of C 83,000 AY 1992-93 Commissioner Forms Appeal

Appeal against 599,000 AY 2004-05 & Commissioner incorrect 2005-06 Appeal Assessment order

Demand under 188,000 AY 1985-86 Tribunal Works Contract Tax

Demand under 287,000 AY 1985-86, High Court Works Contract 1986-87 & Tax 1987-88

Income Tax Disallo wance of 712,247 AY 1960-70 to High Court certain AY 1978-79 expenditure

Service Tax Additional Demand 1,706,145 PY 2004-05 to Commissioner for Payment of PY 2007-08 Appeal service tax gross value of Inovice

Demand for 420,557 PY 2003-04 to Tribunal Payment of service PY 2005-06 tax on gross value of Invoice

Excise Demands received 1,844,000 PY 2002-03, Tribunal 2005-07.

10. The Company has no accumulated losses as at 31st March 2011 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or banks or debenture holders as at the balance sheet date.

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

13. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

14. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

15. In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained.

16. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis which have been used for long term investment.

17. 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 during the year.

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

19. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

20. The other clauses, iii (b), (c), (d), (f) and (g), xiii and xix of paragraph 4 of the Companies (Auditors Report) Order 2003, as amended by the Companies (Auditors Report)(Amendment) Order 2004, are not applicable in the case of the Company for the year, since in our opinion there is no matter which arises to be reported in the aforesaid Order.

For Dalai & Shah

Firm Registration Number: 102021W Chartered Accountants

AnishAmin

Partner

Membership Number40451

Mumbai

April 27,2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of KIRLOSKAR PNEUMATIC COMPANY LIMITED, as at 31 st March 2010 and the related Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto, which we have signed under reference to this report These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our Audit.

2. We conducted our audit in accordance with auditing 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 misstatements. An Audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management.as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together the "Order") issued by the Central Government of India in terms of sub section (4A) of Section 227 ofthe Companies Act, 1956 of India (the Act), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us we give in the Annexure a Statement on the matters specified in paragraph 4 and 5 of the Order;

4. Further to our comments in paragraph 3 above, we report that:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by the report are in agreement with the books of account;

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

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

(f) In our opinion and to the best of our information and according to the explanations given to us, the said Financial Statements together with the notes thereon and attached thereto give, in the prescribed manner, the information required by the Act, 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 the affairs of the Company as at 31 st March, 2010, (ii) In the case of the Profit and Loss Account, of the Profit for the year ended on that date, and (iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

Referred to in Paragraph 3 of the Auditors Report of even date to the Members of KIRLOSKAR PNEUMATIC COMPANY LIMITED on the Financial Statements for the year ended 31st March, 2010.

On the basis of the records produced to us for our verification / perusal, such checks as we considered appropriate, and in terms of information and explanations given to us on our enquiries, we state that:

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

(b) As explained to us, considering the nature of the Fixed Assets, the same have been physically verified by the management at reasonable intervals during the year as per the verification plan adopted by the Company, which is reasonable having regard to the size of the company and nature of its assets. According to the information and explanations given to us and the records produced to us for our verification, discrepancies noticed on such physical verification were not material and the same have been properly dealt with in the Books of Account;

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year;

(ii) (a) The inventories (excluding stocks with third parties) has been physically verified by the management during the year. In respect of inventories lying with third parties, these have substantially confirmed by them. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management as explained to us are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business

(c) According to the records produced to us for our verification, we are of the opinion that the Company is maintaining proper records of its inventory. Further, the discrepancies noticed on physical verification of inventories referred to above, as compared to book records, though not material, have been properly dealt with in the books of account;

(iii) (a) As per the information and explanation given to us and the records produced to us for our verification the company has not granted, secured or unsecured, loans to companies, firms and other parties covered in the register maintained under section 301 oftheAct.

(b) As per the information and explanation given to us and the records produced to us for our verification the company has not taken, secured or unsecured, loans from companies, firms and other parties covered in the register maintained under section 301 oftheAct.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to the purchase of inventory and fixed assets and also for the sale of goods and services. As per the information given to us, no major weaknesses in the internal controls have been identified by the management or the internal auditor of the company. During the course of our audit, nothing had come to our notice that may suggest a major weakness in internal control systems of the company;

(v) (a) On the basis of the audit procedures applied by us, and according to the information and explanations given to us on our enquiries on this behalf and the records produced to us for our verification, the transactions required to be entered into the register in pursuance of section 301 of the Companies Act, 1956, have been so entered;

(b) The transactions so entered, aggregating in excess of Rs. 500,000/- in respect of each party during the year, have been in our opinion, as per the information and explanation given to us, made at prices, which are reasonable, having regard to the prevailing market prices available with the Company for such transactions or prices at which transaction for similar goods have been made with other parties at the relevant time.

(vi) The Company has not accepted any deposits from public in terms of Section 58A and 58AA of the Act and the rules framed there under.

(vii) On the basis of the internal audit reports broadly reviewed by us, we are of the opinion that, the Company has an adequate internal audit system commensurate with the size and nature of its business;

(viii) The Company has made a representation to the Central Government stating that provisions under Section 209(1 )(d) of the Companies Act, 1956,are not applicable to the Company as the products manufactured by the Company are not covered under the said section and the rules made there under viz: Cost Accounting Records (Engineering Industries) Rules, 1984, Consequently, the cost records have not been made and maintained;

(ix) (a) According to the records of the Company, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise duty, Cess and other Statutory dues with the appropriate authorities;

(b) On the basis of our examination of the documents and records of the Company and the information and explanations given to us upon our enquiries in this regards, disputed amounts payable in respect of Sales Tax, Income Tax, Wealth Tax, Service Tax, Customs Duty and Excise Duty/ Cess not deposited with the appropriate authorities are as follows:

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

Sales Tax Non production of C 83,000 Forms

Appeal against 752,000 incorrect Assessment order

Demand under 188,000 Works Contract Tax

Demand under 287,000 Works Contract Tax

Income Tax Disallowance of 712,000 certain expenditure

Service Tax Additional Demand 2,235,848 for non Payment of service tax on export commission

Demand for 308,620 Payment of service tax on gross value of Invoice

Excise Demands received 7,725,957



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

Sales Tax AY 1992-93 Commissioner Appeal

A Y 2004-05 & Commissioner 2005-06 Appeal

AY 1985-86 Tribunal

AY 1985-86, High Court 1986-87 & 1987-88

Income Tax AY 1969-70 to High Court AY 1978-79

Service Tax P Y 2004-08 Commissioner Appeal

P Y 2003-06 Tribunal

Excise P Y 2002-03, Tribunal 2005-07.

x) The Company has no accumulated losses as at 31 st March 2010 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

xi) The Company has not defaulted in repayment of dues to banks. The Company has not borrowed any sums fromFinancial Institutions nor through Debentures as at the balance sheet date.

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.

xiii) The Company has maintained proper records of transaction and contracts in respect of investments in securities and timely entries have been made therein. Further, such securities have been held by the company in its own name.

xiv) The terms and conditions at which guarantees have been given by the company for loans taken from financial institutions and/ or banks by others are, in our opinion, not prejudicial to the interest of the company.

xv) As per the information and explanations given to us, term loans obtained by the company, in our opinion, have been applied for the purpose for which they were obtained;

xvi) On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us upon our enquiries in this regards, the funds raised on short term basis have not been used for long term investment;

xvii) 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 during the year.

xviii) The Company has not issued any debentures and hence the company has not created any security or charge in respect thereof.

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

xx) During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the company, noticed or reported during the year, nor have we been informed of such case by the management;

In view of the nature of activities carried on by the Company clause no (xiii) of paragraph 4 of the Companies (Auditors Report) Order 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004, are not applicable in the case of the Company for the current year, since in our opinion there is no matter which arises to be reported in the aforesaid order.

For DALAL & SHAH

Firm Registration Number: 102021W Chartered Accountants

SHISHIR DALAL

Partner MUMBAI : April, 28 2010 Membership No: 37310



 
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