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Auditor Report of Rane Brake Lining Ltd.

Mar 31, 2016

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

Management''s Responsibility for the 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 judgements 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 there under.

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.

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 March 31, 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 ("the Order") 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 the paragraph 3 and 4 of the Order, to the extent applicable.

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 Profit and Loss Statement and the Cash flow Statement dealt with by this Report are in agreement with the books of account;

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

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

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

(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-23 to the standalone financial statements;

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

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 Paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our Independent Audit Report of even date on the Standalone Financial Statements of Rane Brake Lining Limited for the year ended March 31, 2016

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

b. We are informed that fixed assets have been physically verified by the Management at reasonable intervals and that no material discrepancies were noticed on such verification.

c. According to the information and explanations given to us and based on the examination of the records of the company and also having regard to the confirmation received from banks in respect of title deeds deposited with them wherever applicable and also legal opinion received in a case, we report that the title deeds of immovable properties are held in the name of the company.

(ii) We are informed that the physical verification of inventory has been conducted by the management at reasonable intervals and no material discrepancies were noticed on such verification.

(iii) The Company has not granted any loans, secured or unsecured, to companies/firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. In respect of an interest free unsecured loan given to a party in the earlier years(and repaid during the year); we report that:

a. Since no fresh loan was granted or renewed during the year, the reporting requirements of clause 3(iii) (a) of the Order are not commented upon;

b. In our opinion, the party has been regular in repayment of the principal amount as per the revised terms; and

c. Since the loan has been repaid in full during the year, there are no overdue amounts as at the year end.

(iv) According to the information and explanations given to us and based on the records of the company examined by us, the company has not made any investments, granted any loans or given any security for which the provisions of section 185 and 186 of the Act are applicable.

(v) The company has not accepted any deposit from the public during the year. In respect of deposits accepted by the company in the earlier years, the company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 73 to 76 or any other relevant provisions of the Act and the rules framed thereunder.

(vi) To the best of our knowledge and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under Section 148(1) of the Act for the company.

(vii) a. As per the information and explanations furnished to us, and according to our examination of the records of the Company, the Company has been regular in depositing the 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 other material statutory dues, as applicable to the Company with the appropriate authorities during the year and no undisputed amounts in respect of material statutory dues were in arrears as at March 31, 2016 for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us and based on the records of the Company examined by us, the particulars of dues of income tax, sales tax, service tax, duty of customs, duty of excise and value added tax that have not been deposited on account of any dispute as at March 31, 2016 are as follows:

Amount Period to which the amount Forum where the dispute is Statute Nature of dues (Rs.in Cr) relates pending

Income Tax Act, 1961 Income Tax 1.20 April 2000 to March 2002, Income Tax Appellate

April 2004 to March 2005 and Tribunal, Chennai April 2006 to March 2007

Income Tax Act, 1961 Income Tax 0.02 April 2003 to March 2004 High Court of Judicature, Madras

Amount Period to which the amount Forum where the dispute is Statute Nature of dues (Rs.in Cr) relates pending

Income Tax Act, 1961 Income Tax 1.74 April 2010 to March 2012 Commissioner of Income Tax (Appeals), Chennai

Central Sales Tax Act, 1956 Sales Tax 0.15 April 2005 to March 2007 The Appellate Deputy Commissioner of Commercial Taxes, Chennai

Central Sales Tax Act, 1956 Sales Tax 0.37 April 2004 to March 2005, Sales Tax Appellate Tribunal, April 2008 to March 2011 Hyderabad

Puducherry Value Added Sales Tax 0.01 April 2008 to March 2010 and Puducherry Value Added Tax Act, 2007 April 2011 to March 2012 Tax Appellate Tribunal, Puducherry

Central Sales Tax Act, 1956 Sales Tax 0.36 April 2008 to March 2010 and Puducherry Value Added April 2011 to March 2012 Tax Appellate Tribunal, Puducherry

Kerala Value Added Tax, Sales Tax 0.01 April 2010 to March 2011 The Deputy Commissioner 2003 (Appeals-I), Ernakulam

Maharashtra Value Added Sales Tax 0.03 April 2008 to March 2009 The Joint Commissioner of Tax Act, 2002 Sales Tax (Appeal), Pune

Central Sales Tax Act, 1956 Sales Tax 0.16 April 2008 to March 2009 and The Joint Commissioner of April 2010 to March 2011 Sales Tax (Appeal), Pune

Central Excise Act , 1944 Interest and 0.03 December 2011 Commissioner of Central penalty Excise (Appeals), Chennai

Central Excise Act , 1944 Excise Duty 0.80 April 2001 to March 2005, Customs, Excise And Service (including March 2009 to April 2010 Tax Appellate Tribunal, interest and Chennai penalty)

Finance Act, 1994 Service Tax 1.12 August 2002 to March 2004, Customs, Excise And Service (including September 2004 to May 2008 Tax Appellate Tribunal, interest and and April 2010 to March 2011 Chennai penalty)

Finance Act, 1994 Service Tax 0.74 August 2012, April 2013 to Commissioner of Central (including March 2015 Excise (Appeals), Chennai interest and penalty)

(viii) In our opinion and according to the information and explanations given to us and based on the records of the Company examined by us, the Company has not defaulted in repayment of loans to the banks and government. The Company has neither taken any loans or borrowings from any financial institution nor has issued any debentures.

(ix) According to the information and explanations given to us and based on the records of the Company examined by us, no monies were raised by way of initial public offer or further public offer (including debt instruments) or by way of term loans during the year and hence relative reporting requirement under clause 3(ix) of the Order are not commented upon.

(x) During the course of our examination of the books and records of the company carried out in accordance with generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instances of material fraud by the company or on the company by its officers or employees which has been, noticed or reported during the year, nor have we been informed of any such case by the management.

(xi) According to the information and explanations given to us and based on the records of the Company examined by us, managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act, having regard to the fact stated in note No.40.

(xii) The Company is not a Nidhi Company. Accordingly, the reporting requirements under clause 3 (xii) of the Order are not applicable.

(xiii) According to the information and explanations given to us and based on the records of the Company examined by us, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and the details thereon have been duly disclosed in Note-38 to the standalone financial statements as required by the applicable accounting standard.

(xiv) According to the information and explanations given to us and based on the records of the Company examined by us, the company has not made any preferential allotment/private placement of shares or fully or partially convertible debentures during the year under review and hence the requirements of Section 42 of the Act are not applicable.

(xv) According to the information and explanation given to us and based on the records of the company examined by us, the company has not entered into any non-cash transactions with directors or persons connected with the directors. Accordingly, the reporting requirement under clause 3 (xv) of the Order is not applicable.

(xvi) According to the information and explanations given to us and the records of the Company examined by us, the company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the reporting requirement under clause 3 (xvi) of the Order is not applicable.

For Varma & Varma Chartered Accountants

Firm Registration Number : 004532S





P R PRASANNA VARMA

Place: Chennai Partner

Date : May 23, 2016 Membership Number : 025854


Mar 31, 2014

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

The Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th 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.

Auditor''s Responsibility

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

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

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

Opinion

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

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

(b) in the case of the Profit and Loss Statement, 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 & Regulatory Requirements

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

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

a. we have obtained all the information and explanation 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, Profit and Loss Statement, 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 Statement, and Cash Flow Statement comply with the notified under the Act read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

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 are 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.

1. a. The company is maintaining records showing full particulars, including quantitative details of fixed assets.

b. The fixed assets of the company have been physically verified during the year by the management, in accordance with a phased programme designed to cover all the assets over a period of 3 years, which in our opinion is reasonable having regard to the size of the company and the nature of assets. According to the information and explanations given to us, no material discrepancies have been noticed on such verification.

c. There has not been disposal of any substantial portion of fixed assets of the company during the year, which would affect the status of the company as a going concern.

2. a. According to the explanation given to us, the inventories of the company at all its locations have been physically verified by the management, at reasonable intervals.

b. In our opinion and according to the explanations given to us, the procedures followed by the management with regard to physical verification of inventories are reasonable and adequate in relation to the size of the company and nature of its business.

c. In our opinion, the company is maintaining proper records of inventory. The discrepancies noted on physical verification as compared to the books and records maintained by the company were not material and have been properly dealt with in the books of account by the management.

3. a. 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, except an interest free unsecured loan, given to a party covered in the register maintained under section 301 of the Act. The maximum amount involved during the year and the year end balance of the loan is Rs.0.75 crores.

b. In our opinion, the terms and conditions of such loan are not prima facie prejudicial to the interest of the company considering the purpose for which the above loan has been given.

c. Having regard to the revised terms, in our opinion, no principal amount is due for repayment in respect of the above loan as at the Balance Sheet date.

d. The company has not taken any loans, secured or unsecured, from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956, except for public deposits accepted from 9 parties. The maximum involved during the year is Rs.0.91 crores and the year end balance of the loan is Rs.0.61 crores.

e. The rate of interest and other terms and conditions of such loans taken are, in our opinion, not prejudicial to the interest of the company.

f. The company is regular in payment of principal and interest on the above said loans.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased / services availed are of special nature and suitable alternatives sources are not readily available for obtaining comparable quotations, the internal control systems for the purchase of inventory and fixed assets and for the sale of goods and services are generally commensurate with the size of the company and nature of its business. There are no major weaknesses in internal control of a continuing nature.

5. a. According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b. In our opinion and according to the information and explanations given to us, in respect of each of such transactions made in pursuance to contracts and arrangements that exceed value of Rupees Five Lakhs in respect of the above parties during the year, the prices / rates are comparable with similar transactions entered into with other parties or no comparable market prices are available as the related goods/services are proprietary in nature.

6. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of Section 58A, 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules 1975 and other rules framed there under with regard to deposits accepted from public.

7. The company has an adequate internal audit system which is commensurate with the size of the Company and nature of its business.

8. We have broadly reviewed the Cost records maintained by the company pursuant to the Companies (Cost Accounting Record) Rules, 2011 prescribed by the Central Govt u/s 209(1)(d) of the Companies Act, and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate and complete.

9. a. According to the information and explanations given to us, 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 and other material statutory dues as applicable to it with the appropriate authorities during the year. According to the information and explanations given to us, there were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection fund, Employees'' State Insurance, Income-Tax, Wealth tax, Service tax, Sales tax, Excise duty, Customs duty and other statutory dues which were outstanding at the year end for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us and as per our verification of records of the company, there are no disputed amounts of tax/duty that have not been deposited with appropriate authorities as at March 31, 2014, on account of a dispute, except as follows;

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

Income Tax Act, 1961 Income Tax 10.67 April 2000 to March 2002, Commissioner of Income April 2004 to March 2007 Tax(Appeals), Chennai & April 2009 to March 2011

Income Tax Act, 1961 Income Tax 0.02 April 2003 to High Court of Judicature, March 2004 Madras

Central Excise Excise Duty 0.05 April 2003 to March 2004 Commissioner of Central Act , 1944 (including interest & April 2009 to Excise (Appeals), Chennai and penalty) March 2010

Central Excise Excise Duty 0.68 April 2001 to March 2005 Customs, Excise And Act , 1944 (including interest Service Tax Appellate and penalty) Tribunal, Chennai

Finance Act, 1994 Service Tax 0.50 April 2006 to May 2008, Commissioner of Central (including interest April 2010 to March 2011 Excise (Appeals), Chennai and penalty) & August 2012

Finance Act, 1994 Service Tax 1.28 August 2002 to April 2008 Customs, Excise And (including interest Service Tax Appellate and penalty) Tribunal, Chennai

Central Sales Tax Sales Tax 0.03 April 2004 to March 2005 Sales Tax Appellate Act, 1956 Tribunal, Hyderabad

Central Sales Tax Sales Tax 0.15 April 2005 to March 2007 The Appellate Deputy Act, 1956 Commissioner of Commercial Taxes, Chennai

Central Sales Tax Sales Tax 0.09 April 2008 to March 2010 The Appellate Deputy Act, 1956 Commissioner of Commercial Taxes, Hyderabad

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

Central Sales Tax Sales Tax 0.12 April 2008 to March 2009 The Joint Commissioner Act, 1956 of Sales Tax (Appeal), Pune

Maharashtra Value Sales Tax 0.03 April 2008 to March 2009 The Joint Commissioner Added Tax Act, 2002 of Sales Tax (Appeal), Pune

Maharashtra Value Sales Tax 0.27 April 2009 to March 2010 The Deputy Commissioner Added Tax Act, 2002 of Sales Tax, Pune

Kerala Value Sales Tax 0.01 April 2010 to March 2011 The Deputy Commissioner Added Tax, 2003 (Appeals-I), Ernakulam

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

11. According to the information and explanations given to us, the Company has not defaulted in repayment of dues to any banks or financial institution.

12. In our opinion and according to the information and explanations given to us, and based on the documents and records produced to us, the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanations given to us, the nature of activities of the company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fund/ societies.

14. In our opinion, the company is not dealing or trading in shares, securities, debentures or other investments, and accordingly, the relative reporting requirements of the order are not applicable to the company.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from bank or financial institutions.

16. According to the information and explanations given to us, the term loans have been applied, for the purpose for which they were obtained.

17. According to the information and explanations given to us and on an overall verification of the attached balance sheet of the company, we report that the funds raised by the company on short-term basis have not been used to finance long-term assets.

18. 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 Companies Act.

19. The company has not issued any debentures during the year and accordingly the reporting requirement under clause 4 (xix) of the Order is not applicable to the company.

20. The company has not raised any money by public issues during the year and accordingly the reporting requirement under clause 4 (xx) of the Order is not applicable to the company.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the Generally Accepted Auditing Practice in India, and according to the information and explanation given to us, we have neither come across any instances of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such cases by the management.

For Varma & Varma Chartered Accountants

Firm Registration Number : 004532S

P R PRASANNA VARMA

Place: Chennai Partner

Date : May 21, 2014 Membership Number : 025854


Mar 31, 2013

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards 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 judgement, 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 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 March 31, 2013;

(b) in the case of the Profit and Loss Statement, 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 & Regulatory Requirements

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

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

a. we have obtained all the information and explanation 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, Profit and Loss Statement 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 Statement and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e. on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors are 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.

1. a. The company is maintaining records showing full particulars, including quantitative details of fixed assets.

b. The fixed assets of the company have been physically verified during the year by the management, in accordance with a phased programme designed to cover all the assets over a period of 3 years, which in our opinion is reasonable having regard to the size of the company and the nature of assets. According to the information and explanations given to us, no material discrepancies have been noticed on such verification.

c. There has not been disposal of any substantial portion of fixed assets of the company during the year, which would affect the status of the company as a going concern.

2. a. According to the explanation given to us, the inventories of the company at all its locations have been physically verified by the management, at reasonable intervals.

b. In our opinion and according to the explanations given to us, the procedures followed by the management with regard to physical verification of inventories are reasonable and adequate in relation to the size of the company and nature of its business.

c. In our opinion, the company is maintaining proper records of inventory. As per the information and explanation furnished to us, no material discrepancies were found on such physical verification as compared to the books and records maintained by the company.

3. a. 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, except an interest free unsecured loan given to a party covered in the register maintained under section 301 of the Act. The maximum amount involved during the year and the year end balance of the loan is Rs. 0.75 crores.

b. In our opinion, the terms and conditions of such loan are not prima facie prejudicial to the interest of the company considering the purpose for which the above loan has been given.

c. Having regard to the revised terms, in our opinion, no amount is due for repayment in respect of the above loan as at the Balance Sheet date.

d. In respect of the above loan, there is no principal overdue amount as at the Balance Sheet date.

e. The company has not taken any loans, secured or unsecured, from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956, except public deposits accepted from the directors and their relatives. Such deposits have been accepted from 8 parties and maximum involved during the year is Rs. 1.14 crores and the year end balance of the loan is Rs. 0.91 crores.

f. The rate of interest and other terms and conditions of such loans taken are, in our opinion, not prejudicial to the interest of the company.

g. The company is regular in payment of principal and interest on the above said loans.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased / services availed are of special nature and suitable alternatives sources are not readily available for obtaining comparable quotations, the internal control systems for the purchase of inventory and fixed assets and for the sale of goods and services are generally commensurate with the size of the company and nature of its business. There are no major weaknesses in internal control of a continuing nature.

5. a. According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b. In our opinion and according to the information and explanations given to us, in respect of each of such transactions made in pursuance to contracts and arrangements that exceed value of Rupees Five Lakhs with the above parties during the year, the prices / rates are comparable with similar transactions entered into with other parties or no comparable market prices are available as the related goods / services are proprietary in nature.

6. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of Section 58A, 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules 1975 with regard to deposits accepted from public. According to the information and explanation given to us, no order has been passed by the Company Law Board, or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal in this regard.

7. The company has an adequate internal audit system which is commensurate with the size of the Company and nature of its business.

8. We have broadly reviewed the Cost records maintained by the company pursuant to the Companies (Cost Accounting Record) Rules, 2011 prescribed by the Central Government u/s 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 made a detailed examination of the cost records with a view to determine ''whether they are accurate and complete.

9. a. According to the information and explanations given to us, 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 and other material statutory dues as applicable to it with the appropriate authorities during the year. According to the information and explanations given to us, there were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection fund, Employees'' State Insurance Income Tax, Wealth tax, Service tax, Sales tax, Excise duty, Customs Duty and other statutory dues which were outstanding at the yearend for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us and as per our verification of records of the company, there are no disputed amounts of tax / duty that have not been deposited with appropriate authorities as at March 31, 2013, on account of a dispute, except as follows:

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

Income Tax Act, 1961 Income Tax 0.46

Income Tax Act, 1961 Income Tax 0.25

Income Tax Act, 1961 Income Tax 0.02

Income Tax Act, 1961 Income Tax 6.06

Income Tax Act, 1961 Income Tax 0.17

Income Tax Act, 1961 Income Tax 0.40

Income Tax Act, 1961 Income Tax 0.58

Central Sales Tax Sales Tax 0.03 Act, 1956

Central Sales Sales Tax 0.08 Tax Act, 1956

Central Sales Sales Tax 0.03 Tax Act, 1956

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

Income Tax Act, 1961 April 2000 to Commissioner of Income March 2001 Tax (Appeals), Chennai

Income Tax Act, 1961 April 2001 to Commissioner of Income March 2002 Tax (Appeals), Chennai

Income Tax Act, 1961 April 2003 to High Court of Judicature, March 2004 Madras

Income Tax Act, 1961 April 2004 to Commissioner of Income March 2005 Tax (Appeals), Chennai

Income Tax Act, 1961 April 2005 to Commissioner of Income March 2006 Tax (Appeals), Chennai

Income Tax Act, 1961 April 2006 to Commissioner of Income March 2007 Tax (Appeals), Chennai

Income Tax Act, 1961 April 2009 to Commissioner of Income March 2010 Tax (Appeals), Chennai

Income Tax Act, 1961 April 2004 to Sales Tax Appellate March 2005 Tribunal, Hyderabad

Income Tax Act, 1961 April 2005 to The Appellate Deputy March 2006 Commissioner of Commercial Taxes, Hyderabad

Income Tax Act, 1961 April 2008 to The Appellate Deputy March 2009 Commissioner of Commercial Taxes, Hyderabad

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

11. According to the information and explanations given to us, the Company has not defaulted in repayment of dues to any banks or financial institution.

12. In our opinion and according to the information and explanations given to us, and based on the documents and records produced to us, the company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanations given to us, the nature of activities of the company does not attract any special statute applicable to chit fund and nidhi / mutual benefit fund / societies.

14. In our opinion, the company is not dealing or trading in shares, securities, debentures or other investments and accordingly, the relative reporting requirements of the order are not applicable to the company.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from bank or financial institutions.

16. According to the information and explanations given to us, the term loans have been applied, for the purpose for which they were obtained.

17. According to the information and explanations given to us and on an overall verification of the attached balance sheet of the company, we report that the funds raised by the company on short-term basis have not been used to finance long-term assets.

18. 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 Companies Act.

19. The company does not have any outstanding debentures as at the year-end.

20. The company has not raised any money by way of public issues during the year.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the Generally Accepted Auditing Practice in India, and according to the information and explanation given to us, we have neither come across any instances of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such cases by the management.

For Varma & Varma

Chartered Accountants Firm Registration Number: 004532S

P R Prasanna Varma

Place: Chennai Partner

Date : May 20, 2013 Membership Number: 025854


Mar 31, 2012

1. We have audited the attached Balance Sheet of Rane Brake Lining Limited (the "Company") as at March 31, 2012, and the related Statement of Profit and Loss 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 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, as amended by the Companies (Auditor's 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. Long term foreign currency monetary liability aggregating 10,951,645 USD is being stated at Rs. 512,027,070 at previously reported exchange rates as per the related currency swap agreements instead of being reinstated at the exchange rates prevailing at the year end as required by Accounting Standard (AS) 11 The Effects of Changes in Foreign Exchange Rates resulting in non recognition of exchange differences arising there from in the Statement of profit and loss. Had the aforesaid foreign currency monetary liability been reinstated as at the rates prevailing on March 31,2012, the reported "Profit for the year would have been lower by Rs.46,287,793, Reserves and Surplus would have been lower by Rs.46,287,793 and the reported Earnings per share for the year ended March 31,2012 (including and excluding extraordinary items) would have been lower by Rs.5.85 per share and Term Loan (including repayable within one year under Other Current Liabilities) as at March 31, 2012 would have been higher by Rs. 46,287,793.

5. 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, except for the effect of the matter referred in paragraph 4 above 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 effect of the matter referred in paragraph 4 above, in our opinion, the Balance Sheet, Statement of Profit and Loss 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 March 31, 2012 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2012 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, except for the effect of the matter referred in paragraph 4 above, give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

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 three 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 granted interest free unsecured loans, to one party covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year and the year-end balance of such loans aggregated to Rs.7, 500,000 and Rs.7, 500,000, respectively.

(b) In our opinion, the terms and conditions of such loans are not prima facie prejudicial to the interest of the Company.

(c) No amount is due for repayment in respect of the above loan as at the balance sheet date.

(d) In respect of the aforesaid loans, there is no overdue amount more than Rupees One Lakh.

(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.

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 and fixed assets and for the sale of goods. 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) In our opinion, and according 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, in respect of the transactions made in pursuance to contracts and arrangements that exceeds in the value of Rupees Five Lakhs in respect of certain parties during the year, no comparable market prices are available as the related goods/ services are proprietary in nature.

6. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of Sections 58A and 58AA or any other relevant provisions of the Act and the "Companies (Acceptance of Deposits) Rules, 1975, with regard to the deposits accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

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

8. We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not however made a detailed examination of the records with a view to determine whether they are accurate or complete.

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 generally regular in depositing the 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 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 and excise duty as at March 31, 2012, which have not been deposited on account of a dispute, are as follows:

Name of Nature of dues Amount Period to which Forum where the statute (Rs.) the amount relates dispute is pending Finance Act, 1994 Service Tax (including 24,09,774 August 2002 to Customs, Excise and

interest and penalty) March 2004 Service Tax Appellate

Tribunal, Chennai

Finance Act, 1994 Service Tax (including 16,69,756 September 2004 to Customs, Excise And interest and penalty) September 2006 Service Tax Appellate

Tribunal, Chennai

Finance Act, 1994 Service Tax (including 74,10,847 May 2008 to Commissioner of Central

interest and penalty) September 2008 Excise (Appeals),

Chennai

Uttar Pradesh Trade Sales Tax 91,875 April 2007 to Joint Commissioner

Tax Act,1948 June 2007 (Appeal), Kanpur

Central Sales Tax Sales Tax 2,84,999 April 2004 to Sales Tax Appellate

Act, 1956 March 2005 Tribunal, Hyderabad Central Sales Tax Sales Tax 7,63,347 April 2005 to The Appellate Deputy

Act, 1956 March 2006 Commissioner of

Commercial Taxes,

Hyderabad

Andhra Pradesh Sales Tax 4,41,711 April 2006 to The Appellate Deputy

Value Added Tax March 2010 Commissioner of

Act, 2005 Commercial Taxes,

Hyderabad

Central Excise Excise Duty 1,52,816 April 2003 to Commissioner of Central

Act,1944 March 2004 Excise (Appeals),

Chennai

Central Excise Excise Duty (including 61,75,344 April 2001 to Customs, Excise And

Act, 1944 interest and penalty) March 2005 Service Tax Appellate

Tribunal, Chennai

Income Tax Act, 1961 Income Tax 95,94,808 April 1998 to Commissioner

March 1999 of Income Tax (Appeals), Chennai

Income Tax Act, 1961 Income Tax 45,58,320 April 2000 to Commissioner

March 2001 of Income Tax (Appeals),

Chennai

Income Tax Act, 1961 Income Tax 25,42,902 April 2001 to Commissioner

March 2002 of Income Tax (Appeals),

Chennai

Income Tax Act, 1961 Income Tax 1,74,517 April 2003 to High Court of

March 2004 Judicature, Madras

Income Tax Act, 1961 Income Tax 9,32,61,694 April 2004 to Commissioner of

March 2005 Income Tax (Appeals),

Chennai

Income Tax Act, 1961 Income Tax 16,66,627 April 2005 to Commissioner

March 2006 of Income Tax (Appeals),

Chennai

Income Tax Act, 1961 Income Tax 39,73,384 April 2006 to Commissioner

March 2007 of Income Tax (Appeals),

Chennai

Income Tax Act, 1961 Income Tax 1,30,33,140 April 2007 to Commissioner of

March 2008 Income Tax (Appeals),

Chennai

10. The Company has no accumulated losses.

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 bank 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. The provisions of any special statute applicable to chit fund / nidhi / mutual benefit fund/ societies are not applicable to the Company.

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

15. 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.

16. In our opinion, and according to the information and explanations given to us, the term loans have been applied, on an overall basis, for the purposes for which they were obtained having regard to the explanation that certain loan funds were temporarily placed in short term fixed deposits pending utilisation for the stated purpose.

17. 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.

18.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.

19. The Company has not issued any debentures during the year; and does not have any debentures outstanding as at the year end.

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

21. 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 any such case by the Management.

For Price Waterhouse & Co.

Firm Registration Number: 007567S

Chartered Accountants

Subramanian Vivek

Place: Chennai Partner

Date : May 23, 2012 Membership Number : 100332


Mar 31, 2011

1. We have audited the attached Balance Sheet of RANE BRAKE LINING LIMITED (the "Company") as at March 31, 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 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 (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together the "Order"), issued by the Government of India in terms of Section 227 (4A) 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 set out in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to 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, in all material respects, with the applicable accounting standards referred to in Section 211 (3C) of the Act;

(e) on the basis of written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of Section 274 (1) (g) 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 also give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph 3 of the Auditors Report of even date to the members of RANE BRAKE LINING LIMITED on the financial statements for the year ended March 31, 2011)

(i) (a) The Company has maintained proper records to show full particulars including quantitative details and situation of its 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 three 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 physical verification was carried out by the management and no material discrepancies between the book records and the physical inventory have been noticed.

(c) No substantial part of fixed assets of the Company has been disposed of during the year.

(ii) (a) The inventories of the Company at all its location have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. In respect of inventories lying with third parties confirmation has been obtained from the sub-contractors.

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

(c) The Company has maintained proper records in respect of inventories and the discrepancies between the physical inventories and the book records, which have been properly dealt with in the books of account, were not material.

(iii) (a) The Company has granted an interest free unsecured loan to a party covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year and the year-end balance of such loan aggregates to Rs.5,000 thousands. In our opinion, the terms and conditions of such loan are not prima facie prejudicial to the interest of the Company. No amount is due for repayment in respect

of the above loan as at the balance sheet date.

(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.

(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 inventories and fixed assets and for the sale of goods. We have not observed any major weaknesses in the aforesaid internal control system during the course of our audit.

(v) (a) In our opinion, 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) With regard to transactions made in pursuance of such contracts or arrangements there are no comparable market prices as the related goods/services are considered to be of special nature as explained by the management of the Company.

(vi) In our opinion, the Company has complied

with the provisions of Sections 58A and 58AA of the Act and the rules framed thereunder with regard to the deposits accepted from the public and no Order under the aforesaid Sections has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company.

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

(viii) On the basis of the records produced, we are of the opinion that, prima facie, the cost records and accounts prescribed by the Government of India under Section 209 (1)(d) of the Act have been maintained. However, we are not required to and have not carried out any detailed examination of such accounts and records.

(ix) (a) The Company has generally been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues as applicable with the appropriate authorities in India.

(b) According to the records produced, at the year end there were no dues of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute except as follows

Name of the Nature of Amount Forum where statute dues (Rs. 000) the dispute is pending

Tamilnadu General Sales 1,770 Assistant Sales Tax Act, 1959 Tax Commissioner

Central Sales Sales 1,406 Assistant Tax Act, 1956 Tax Commissioner

Central Sales Sales 1,167 Appellate Tax Act,1956 Tax Deputy Commissioner

Andhra Pradesh Sales 442 Appellate Value Added Tax Tax Deputy Act, 2005 Commissioner

Uttar Pradesh Trade Sales 92 Appellate Joint Tax Act, 1948 Tax Commissioner

Central Excise Act, Excise 12,398 CESTAT 1944 Duty

Finance Act, 1994 Service 12,774 CESTAT Tax

Income Tax Act, Income 48,776 Commissioner 1961 Tax of Income Tax (Appeals)

(x) The Company has no accumulated losses as at March 31,2011 and it has not incurred

any cash losses during the financial year ended on that date or in the immediately preceding financial year.

(xi) According to the records produced, the Company has not defaulted in repayment of its dues to any financial institution or bank 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 not given any guarantee for loans taken by others from banks or financial institutions during the year.

(xiv) On the basis of review of utilisation of funds on an overall basis, in our opinion, the term loans taken by the Company were applied for the purposes for which the loans were obtained.

(xv) On the basis of review of utilisation of funds on an overall basis, in our opinion, the funds raised on a short term basis have not been used for long term investment.

(xvi) The Company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under Section 301 of the Act.

(xvii) The Company has not issued any debentures during the year.

(xviii) During the course of our examination of the books of account carried out in accordance with the generally accepted auditing practices in India, 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.

(xix) Clauses (xiii), (xiv), and (xx) of the aforesaid Order are not applicable to the Company.



For Price Waterhouse & Co. Firm Registration Number: 007567S Chartered Accountants

S Datta Partner (Membership No. F14128)

Place : Chennai Date : May 23, 2011







 
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