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Auditor Report of SKF India Ltd.

Dec 31, 2014

1. We have audited the accompanying financial statements of SKF India Limited (the "Company"), which comprise the Balance Sheet as at December 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, which we have signed under reference to this report.

Management''s Responsibility for the Financial Statements

2. The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (the "Act") read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider 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.

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

Opinion

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

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

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

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

Report on Other Legal and Regulatory Requirements

7. As required by ''the Companies (Auditor''s Report) Order, 2003'', as amended by ''the 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 Act (hereinafter referred to as the "Order"), 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.

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

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

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

(c) The 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 dealt with by this report comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013,

(e) On the basis of written representations received from the directors as on December 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on December 31, 2014, from being appointed as a director in terms of clause (g) of sub- section (1) of section 274 of the Act.

Annexure to Independent Auditors'' Report Referred to in paragraph 7 of the Independent Auditors'' Report of even date to the members of SKF India Limited on the financial statements as of and for the year ended December 31, 2014.

i. (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 3 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 have been noticed on such verification.

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

ii. (a) The inventory has been physically verified by the

Management during the year. 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.

iii. The Company has not granted/taken any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Therefore, the provisions of Clause 4(iii)[(b),(c) and (d)/(f) and (g)] of the said Order are not applicable to the Company.

iv. In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. 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, we have neither come across, nor have been informed of, any continuing failure to correct major weaknesses in the aforesaid internal control system.

v (a) According to the information and explanations given to us, we are of the opinion that the particulars of all 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, 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.

vi. 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.

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

viii. We have broadly reviewed the books of account maintained by the Company 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.

ix. (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 undisputed statutory dues in respect of TDS, Service Tax, VAT though there has been a slight delay in a few cases, and is regular in depositing undisputed statutory dues, including provident fund, employees'' state insurance, income tax, wealth tax, customs 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 December 31, 2014 which have not been deposited on account of a dispute, are as follows:

Name of the Statute Nature of Amount Amount paid Dues (INR Million) under protes (INR Million) Central Excise Act,1944 Excise Duty 142.20 21.50

Central Excise Act,1944 Excise Duty 7.1 -

Finance Act, 1994 Service Tax 5.34 0.5

Finance Act, 1994 Service Tax 2.42 -

Income Tax Act, 1961 Income Tax 39.98 37.77

Income Tax Act, 1961 Income Tax 7.14 -

West Bengal Value Added Value Added Tax & 25.3 2.63 Tax 2003 & The Central Central Sales Tax

Sales Tax Act, 1956 - West Bengal

West Bengal Value Added Value Added Tax & 2.4 - Tax 2003 & The Central Central Sales Tax Sales Tax Act, 1956 - West Bengal

West Bengal Value Added Value Added Tax & 32.1 - Tax 2003 & The Central Central Sales Tax Sales Tax Act, 1956 - West Bengal

The Central Sales Tax Act, Central Sales Tax 17.1 - 1956 - Delhi

The Central Sales Tax Act, Central Sales Tax 1.2 1.87 1956 - Tamil Nadu

Karnataka Value Added Tax Value Added Tax & 0.34 0.34 2003 & The Central Sales Central Sales Tax Tax Act, 1956 - Karnataka

Karnataka Value Added Tax Value Added Tax & 2.7 2.7 2003 & The Central Sales Central Sales Tax Tax Act, 1956 - Karnataka

Karnataka Value Added Tax Value Added Tax & 38.1 6.74 2003 & The Central Sales Central Sales Tax Tax Act, 1956 - Karnataka

The Central Sales Tax Act, Central Sales Tax 1.8 - 1956 - Maharashtra

Total 325.22 74.05

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

Central Excise Act, 1944 April 2006 to CESTAT, Mumbai March 2012,

February 2005

Central Excise Act, 1944 Financial Years CESTAT, Bangalore 1999-2000,

September 2009 to June 2011

Finance Act, 1994 Financial Years CESTAT, Mumbai July 2009 to March 2012

Finance Act, 1994 April 2011 to Commissioner (Appeals), September 2012 Pune

Income Tax Act, 1961 Financial Years Income Tax 1999-2000, 2001-2002, Appellate Tribunal 2003-2004, 2004-2005,

2006-2007, 2007-2008, 2008- 2009

Income Tax Act, 1961 Financial Year 2002-2003 Assessing Officer

West Bengal Value Added Tax 2003 & The Central Sales Tax Act, 1956 - West Bengal Financial Years 2007-2008, Senior Joint 2010-2011, 2011-2012 Commissioner Commercial Tax

West Bengal Value Added Tax 2003 & The Central Sales Tax Act, 1956 - West Bengal Financial Year 2006 - 2007 Additional Commissioner Commercial Tax

West Bengal Value Added Tax 2003 & The Central Sales Tax Act, 1956 - West Bengal Financial Years 2008 - 2009, Revision Board 2009 - 2010

The Central Sales Tax Act, 1956 - Delhi Financial Years 2005-2006, Objection Authority 2006-2007, 2007-2008, Department of 2008-2009, 2009-2010, Trade & Taxes, 2010- 2011 New Delhi

The Central Sales Tax Act, 1956 - Tamil Nadu Financial Year Commercial Tax 2005 - 2006 Officer

Karnataka Value Added Tax 2003 & The Central Sales Tax Act, 1956 - Karnataka Financial Year 2003-2004 Deputy Commissioner

Karnataka Value Added Tax 2003 & The Central Sales Tax Act, 1956 - Karnataka Financial Years 2007-2008, Tribunal 2009- 2010.

Karnataka Value Added Tax 2003 & The Central Sales Tax Act, 1956 - Karnataka Financial Years 2005-2006, Joint Commissioner 2006-2007, 2010-2011, (Appeals) 2011- 2012

The Central Sales Tax Act, 1956 - Maharashtra Financial Year 2010-2011 Joint Commissioner (Appeals)

Total

x. The Company has no accumulated losses as at the end of the financial year and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

xi. As the Company does not have any borrowings from any financial institution or bank nor has it issued any debentures as at the balance sheet date, the provisions of Clause 4(xi) of the Order are not applicable to the Company.

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. Therefore, the provisions of Clause 4(xii) of the Order are not applicable to the Company.

xiii. As the provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not applicable to the Company, the provisions of Clause 4(xiii) of the Order are not applicable to the Company.

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

xv. In our opinion, and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks or financial institutions during the year, are not prejudicial to the interest of the Company.

xvi. The Company has not raised any term loans. Accordingly, the provisions of Clause 4(xvi) of the Order are not applicable to the Company.

xvii. The Company has not raised any funds on short term basis. Accordingly, the provisions of Clause 4(xvii) of the Order are not applicable to the Company.

xviii. 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. Accordingly, the provisions of Clause 4(xviii) of the Order are not applicable to the Company.

xix. The Company has not issued any debentures during the year and does not have any debentures outstanding as at the beginning of the year and at the year end. Accordingly, the provisions of Clause 4(xix) of the Order are not applicable to the Company.

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

xxi. 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 material 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 Bangalore LLP

Firm Registration Number: 007567S/S-200012 Chartered Accountants

Jeetendra Mirchandani

Pune Partner

February 18, 2015 Membership Number: 48125


Dec 31, 2013

1. We have audited the accompanying financial statements of SKF India Limited (the ''Company'') which comprise the Balance Sheet as at December 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, which we have signed under reference to this report.

Management''s Responsibility for the Financial Statements

2. The Company''s 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'' of India (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.

Auditors'' Responsibility

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

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

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

Opinion

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

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

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

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

Other Matter

7. The financial statements of the Company as at December 31, 2012 and for the year then ended were audited by another firm of chartered accountants who, vide their report dated February 21, 2013, expressed an unmodified opinion on those financial statements.

Report on Other Legal and Regulatory Requirements

8. As required by ''the Companies (Auditor''s Report) Order, 2003'', as amended by ''the 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 Act (hereinafter referred to as the "Order"), 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 & 5 of the Order.

9. 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 accounts as required by law have been kept by the Company so for 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 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 December 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on December 31, 2013, from being appointed as a director in terms of clause (g) of sub- section (1) of section 274 of the Act.

Annexure to Independent Auditors'' Report

Referred to in paragraph 8 of the Independent Auditors'' Report of even date to the members of SKF India Limited on the financial statements as of and for the year ended December 31, 2013

(i) (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 program 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 program, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.

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

(ii) (a) The inventory has been physically verified by the Management during the year. 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.

(iii) (a) The Company has not granted/ taken any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Therefore, the provisions of Clause 4(iii) [(b),

(c) and (d) / (f) and (g)] of the said Order are not applicable to the Company.

(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. 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, we have neither come across, nor have been informed of, any continuing failure to correct major weaknesses in the aforesaid internal control system.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of all 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, 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.

(vi) 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.

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

(viii) We have broadly reviewed the books of account maintained by the Company 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.

(ix) (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 undisputed statutory dues in respect of TDS, service tax and VAT, though there has been a slight delay in a few cases, and is regular in depositing undisputed statutory dues, including provident fund, employees'' state insurance, income tax, wealth 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, service tax, and excise duty as at December 31, 2013 which have not been deposited on account of a dispute, are as follows:

Referred to in paragraph 8 of the Independent Auditors'' Report of even date to the members of SKF India Limited on the financial statements for the year ended December 31, 2013

Name of the Statute Nature of Amount Amount paid Dues (INR Million) under protest (INR Million)

Central Excise Excise Duty 146.97 21.50 Act, 1944

Central Excise Excise Duty 157.74 - Act, 1944

Central Excise Excise Duty 10.06 - Act, 1944

Central Excise Excise Duty 0.32 - Act, 1944

Finance Act, 1994 Service Tax 115.96 0.50

Finance Act, 1994 Service Tax 1.02 -

West Bengal Value Value Added Tax 101.48 2.63 Added Tax 2003 & & Central Sales Tax The Central Sales Tax Act 1956 - West Bengal

West Bengal Value Value Added Tax & 2.40 - Added Tax 2003 & Central Sales Tax The Central Sales Tax Act 1956 - West Bengal

Haryana State Value Value Added Tax & 0.67 - Added Tax, 2003 Central Sales Tax & The Central Sales Tax Act, 1956 - Haryana

Jharkhand Value Value Added Tax 6.12 - Tax Act, 2005

The Central Sales Tax Central Sales Tax 17.07 - Act, 1956- Delhi

The Central Sales Tax Central Sales Tax 1.25 1.87 Act, 1956- Tamil Nadu

Karnataka Value Value Added Tax & 8.48 8.48 Added Tax 2003 & Central Sales Tax The Central Sales Tax Act, 1956- Karnataka

Income Tax Income Tax 34.13 24.77 Act, 1962

Income Tax Act, 1962 Income Tax 12.99 12.99

Total 616.66 72.74



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

Central Excise October 1994 to CESTAT, Mumbai January 1995, Act, 1944 February 2005, January 2007 to March 2011

Central Excise FY 1999-2000, CESTAT, Bangalore January 2007 to March 2011 Act, 1944

Central Excise FY 1997-1998, Commissioner Act, 1944 September 2009 to (Appeals) - June 2011 Bangalore

Central Excise April 2010 to Commissioner Act, 1944 March 2012 (Appeals) - Pune

Finance Act, 1994 FY 2006 -07 CESTAT to FY 2010-11

Finance Act, 1994 FY 2011-2012, Commissioner April 2012 to (Appeals) September 2012

West Bengal Value FY 2007-08 to Senior Joint Added Tax 2003 & The Central Sales Tax Act 1956 - West Bengal FY 2010-11 Commissioner, Commercial Tax

West Bengal Value FY 2006-07 Additional Added Tax 2003 & The Central Sales Tax Act 1956 - West Bengal Commissioner, Commercial Tax

Haryana State Value FY 2009-10 Commercial Tax Added Tax, 2003 & The Central Sales Tax Act, 1956 - Haryana Officer

Jharkhand Value FY 2009-10 Joint Commissioner Commercial Tax Tax Act, 2005

The Central Sales Tax FY 2005-06 to Commissioner Act, 1956- Delhi FY 2010-11 (Appeals)

The Central Sales Tax FY 2005-06 Commercial Tax Act, 1956- Tamil Nadu Officer

Karnataka Value FY 2003-04, Deputy Added Tax 2003 & The Central Sales Tax Act, 1956- Karnataka FY 2005-06 to Commissioner FY 2007-08 FY 2009-10

Income Tax FY 1999-2000 ITAT Act, 1962 FY 2001-02 to FY 2004-05, FY 2006-07

Income Tax Act, 1962 FY 2007-08, Commissioner of FY 2008-09 Income Tax (Appeals)

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

(xi) As the Company does not have any borrowings from any financial institution or bank nor has it issued any debentures as at the balance sheet date, the provisions of Clause 4(xi) of the Order are not applicable to the Company.

(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. Therefore, the provisions of Clause 4(xii) of the Order are not applicable to the Company.

(xiii) As the provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not applicable to the Company, the provisions of Clause 4(xiii) of the Order are not applicable to the Company.

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

(xv) In our opinion, and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks or financial institutions during the year, are not prejudicial to the interest of the Company.

(xvi) The Company has not raised any term loans. Accordingly, the provisions of Clause 4(xvi) of the Order are not applicable to the Company.

(xvii) The Company has not raised any loans on short term basis. Accordingly, the provisions of Clause 4(xvii) of the Order are not applicable to the Company.

(xviii) 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. Accordingly, the provisions of Clause 4(xviii) of the Order are not applicable to the Company.

(xix) The Company has not issued any debentures during the year and does not have any debentures outstanding as at the beginning of the year and at the year end. Accordingly, the provisions of Clause 4(xix) of the Order are not applicable to the Company.

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

(xxi) 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., Bangalore

Firm Registration No.007567S

Chartered Accountants

Jeetendra Mirchandani

Pune Partner

February 21. 2014 Membership Number: 48125


Dec 31, 2012

1. We have audited the attached Balance Sheet of SKF India Limited (''the Company'') as at 31 December 2012, the Statement of Profit and Loss and the Cash Flow Statement of the Company 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 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 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:

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

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

(e) on the basis of written representations received from the directors of the Company as at 31 December 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified as at 31 December 2012 from being appointed as a director under clause (g) of sub-section (1) of section 274 of the Companies Act 1956; and

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

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

Annexure to the Auditors'' Report

(Referred to in our report of even date)

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

(b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. The discrepancies noticed on verification between the physical fixed assets and the book records were not material and were properly dealt in the books of account.

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

(ii) (a) The inventory, except goods-in-transit, has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable.

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

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

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of certain items of inventories and fixed assets are for the Company''s specialised requirements and similarly certain goods sold and services rendered are for the specialised requirements of the buyers and suitable alternative sources are not available to obtain comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods and services. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internal control system.

(v) (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 Companies Act, 1956 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 contracts and arrangements referred to in (a) above and exceeding the value of Rs. 5 lakh with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time, except for purchases of certain items of inventories and fixed assets which are for the Company''s specialised requirements and similarly for sale of certain goods and rendering of services which are for the specialised requirements of the buyers and for which suitable alternative sources are not available to obtain comparable quotations. However, on the basis of information and explanations provided, the same appear reasonable.

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

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of manufacture of bearings and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

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

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

(b) According to the information and explanations given to us, the following dues of Income-tax, Sales tax, Wealth tax, Service tax, Customs duty and Excise duty (as appropriate) have not been deposited by the Company on account of disputes:

Sr. No. Name of the Statute Nature of the Amount Dues (Rs. Million)

1 Income Tax Act, 1961 Income Tax 13.4

2 Income Tax Act, 1961 Income Tax 14.8

Name of the Statute Amount paid Period to Forum where under protest which the dispute is pending (Rs. Million) amount relates

Income Tax Act,1961 13.4 AY 2005 – 2006, & ITAT 2007 – 2008

Income Tax Act, 1961 7.6 AY 2002 – 03, CIT (Appeals) 2004 – 05 & 2008-2009

Sr. No. Name of the Statute Nature of the Amount Dues (Rs. Million)

3 Karnataka Value Central 8.0 Added Ta x Act – CST Sales Tax (The Central Sales Tax Act, 1956 – Karnataka)

4 The Central Sales Central 0.3 Tax Act, 1956 – Sales Tax Karnataka

5 Maharashtra Sales Sales Tax 1.7 Tax Act, 1958

6 The Central Sales Central 14.4 Tax Act, 1956 – Sales Tax Delhi

7 West Bengal Value Value Added 95.8 Added Tax 2003 & Tax & The Central Sales Central Sales Tax Act, 1956 Tax Act

8 Central Excise Act, Excise Duty 147.0 1944

9 Central Excise Act, Excise Duty 155.0 1944

10 Central Excise Act, Excise Duty 1.6 1944

11 Central Excise Act, Excise Duty 2.7 1944

12 Finance Act, 1994 Excise Duty 1.0

13 Finance Act, 1994 Service Tax 2.6

14 Finance Act, 1994 Service Tax 0.7

15 Finance Act, 1994 Service Tax 107.8

16 Finance Act, 1994 Service Tax 7.1

Name of the Statute Amount paid Period to Forum where under protest which the dispute is pending (Rs. Million) amount relates

Karnataka Value Added Tax Act 8.0 F.Y 2005 – 06, Joint Commissioner F.Y 2006 – 07 F.Y 2007 – 08 F.Y 2008 – 09 F.Y 2009 - 10

The Central Sales Tax Act, 1956 0.3 FY 2003-2004 Assessing Authority

Maharashtra Sales Tax Act, 1958 0.6 FY 2002 – 2003 Maharashtra Sales Tax Tribunal

The Central Sales Ta Act, 1956 - FY 2005 - 06 Objection authority FY 2006 – 07 Department of FY 2007 - 08 Trade & taxes

West Bengal Value Added Tax 2003 2.6 FY 2006 - 07 Senior Joint FY 2007 – 08 Commissioner, FY 2008 – 09 Sales Tax FY 2009 - 10

Central Excise Act, 1944 20.0 FY 1994-95, CESTAT, Mumbai FY 2006 -07 to January 2011, January 2009 to December 2009, February 2005, February 2011 to March 2011.

Central Excise Act, 1944 - January 2007- Appeal to be filed March 2011 with CESTAT Bangalore

Central Excise Act, 1944 - 1997-98 & Commissioner 1998 - 99 Appeals Bangalore

Central Excise Act, 1944 - 1999-2000 CESTAT, Bangalore

Finance Act, 1994 - 2007 – 2009 Appeal to be filed with CESTAT Mumbai

Finance Act, 1994 1.3 1997-2000 CESTAT, Mumbai

Finance Act, 1994 0.3 2002 – 2005 Commissioner Appeals, Mumbai

Finance Act, 1994 - April 2006 to CESTAT, Mumbai May 2008

Finance Act, 1994 - January 2009 to Commissioner March 2011 Appeals, Pune

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

(xi) The Company did not have any outstanding dues to any financial institution, banks or debenture holders during the year.

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

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

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

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

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

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

(xviii) The Company has not made any preferential allotment of shares to companies/firms/other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

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

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

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

For B S R & Associates

Chartered Accountants

Firm Registration No.-116231W

Shiraz Vastani

Pune Partner

21 February 2013 Membership No: 103334


Dec 31, 2010

1. We have audited the attached Balance Sheet of SKF India Limied (the Company) as a 31 December 2010, the Profit and Loss Account and the Cash Row Statement of the Company for the year ended on that date, annexed hereto. These financial statements are the responsibiliy 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 staements are free of material misstatement. An audit includes examining, on a test basis, evidence supporing the amouns and disclosures in the financial saemens. 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 (Audiors Repor) Order 2003 issued by the Central Government of India in terms of sub-secion (4A) of section 227 of the Companies Ac, 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:

(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 the Cash Flow Statement deal with by this report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement deal with by his report comply wih the accounting standards referred to in sub-secion (3C) of section 211 of the Companies Act, 1956;

(e) on the basis of written representations received from the Directors of the Company as a 31 December 2010 and taken on record by the Board of Directors, we report that none of the Directors are disqualified as at 31 December 2010 from being appointed as a Director under clause (g) of sub-section (1) of section 274 of the Companies Act 1956; and

(f) in our opinion, and to the best of our information and according to the explanations given to us, the said financial statements, read with the notes hereon, give the information required by the Act, in the manner so required and give a true and fair view in conformiy wih the accounting principles generally acceped in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 December 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 our report of even date)

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

(b) The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of three years. In our opinion, his periodicity of physical verification is reasonable having regard to the size of the Company and the naure of is assets. The discrepancies noticed on verification between the physical fixed assets and the book records were not material and were properly dealt in the books of account.

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

(ii) (a) The invenory, excep goods-in-ransi, has been physically verified by the managemen during the year. In our opinion, the frequency of such verification is reasonable.

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

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were no material and were properly dealt with in the books of accounts.

(iii) The Company has neiher granted nor taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, and having regard to the explanation that purchases of cerain items of inventories and fixed assets are for the Companys specialised requirements and similarly certain goods sold and services rendered are for the specialised requirements of the buyers and suitable alternative sources are no available to obtain comparable quotation, here is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and with regard to the sale of goods and services. In our opinion and according to the information and explanations given to us, here is no continuing failure to correct major weaknesses in internal control system.

(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in secion 301 of the Companies Act, 1956 have been entered in the register required to be mainained under that section.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs 5 lakh with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time, except for purchases of certain items of inventories, fixed assets and services which are for the Companys specialised requirements and similarly for sale of certain goods and rendering of services which are for the specialised requirements of the buyers and for which suitable alernative sources are not available to obtain comparable quotations. However on the basis of information and explanations provided, the same appear reasonable.

(vi) In our opinion, and according to the information and explanations given to us, the Company has complied wih the provisions of Section 58A, Section 58AA or other

relevant provisions of the Companies Act, 1956 and the rules framed here under/the directives issued by the Reserve Bank of India (as applicable) with regard to deposits accepted from the public. Accordingly, here have been no proceedings before the Company Law Board or National Company Law Tribunal (as applicable) or Reserve Bank of India or any Court or any other Tribunal in his matter and no order has been passed by any of the aforesaid authorities.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under secion 209(1) (d) of the Companies Act, 1956 in respect of manufacture of bearings, and are of the opinion that prima facie, the prescribed accounts and records have been made and mainained. However, we have no made a detailed examination of the records.

(ix) (a) According to the information and explanations given to us and on the basis of our examinaion of the records of the Company, amounts deduced / accrued in the books of account in respect of undisputed stautory dues including Provident Fund, Employees State Insurance, Income tax, Sales tax, Wealh tax, Service tax, Cusoms duty, Excise duty, Cess and other material stautory dues have generally been regularly deposited during the year by the Company wih the appropriate authorities. As explained to us, the Company did no have any dues on account of Investor Education and Protection Fund.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income tax, Sales tax, Wealh tax, Service tax, Customs duty, Excise duty, Cess and other material satutory dues were in arrears as a 31 December 2010 for a period of more than six months from the date they became payable.

There were no dues on account of cess under secion 441A of the Companies Act, 1956 since the date from which the aforesaid section comes into force has not yet been notified by the Central Government.

(b) According to the information and explanations given to us, the following dues of Incometax/Sales tax/ Wealth tax/Service tax/Customs duty/Excise duty/ Cess (as appropriate) have no been deposied by the Company on account of disputes:

Name of the Statute Nature of the Amount Period to Forum where Dues (Rs. Million) which the is pending amount relates

Income Tax Act,1961 Income Tax 5.1 AY 2006-2007 CIT(A)

Income Tax Act, 1961 Income Tax 9.3 AY 2007-2008 CIT(A)

Tamil Nadu Value Added Tax Act Value Added Tax 1.2 2005 - 2006 Commercial tax officer

Maharashtra Sales Tax Act, 1958 Sales Tax 1.1 2002 - 2003 Maharashtra Sales Tax Tribunal

Delhi Sales Tax Act Sales Tax 1.3 2005-2006 Objection Authority Deparment of Trade & Taxes, New Delhi

West Bengal Sales Tax Act Sales Tax 2.4 2006-2007 Commissi oner (Appeals)

Karnataka Sales Tax Sales Tax 0.3* 2003-2004 Karnataka Appellate Tribunal

Karnataka Value Added Tax Central Sales Tax 1.2* 2005-2006 Commissi oner Appeals

Karnataka Sales Tax Sales Tax 2.7* 2006-2007 Commissi oner Appeals

Karnataka Sales Tax Sales Tax 1.3* 2008-2009 Commissi oner Appeals

Karnataka Value Added Tax VAT 1.4* 2006-2007 Joint Commissi oner of Commercial Taxes (Appeals)

Central Excise Act, 1944 Excise Duty 2.6 1999-2000 CESTAT

Central Excise Act, 1944 Excise Duty 1.6 1997-1998 CESTAT

Central Excise Act, 1944 Excise Duty 4.9* 1995 CESTAT

Finance Act, 1994 Service tax 1.3 1997-2000 CESTAT

Finance Act, 1994 Service Tax 14.3 2006-2008 CESTAT

Finance Act, 1994 Service Tax 0.1 2008-2009 CESTAT

Finance Act, 1994 Service Tax 0.7 2005-2006 Commissi oner Appeals

* Amount paid under protest

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

(xi) The Company did not have any outstanding dues to any financial institution, banks or debenture holders during the year.

(xii) The Company has no granted any loans and advances on the basis of security by way of pledge of shares, debenures and other securities.

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

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

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

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

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of

the Company, we are of the opinion that the funds raised on shorterm basis have no been used for longterm investment.

(xviii) The Company has no made any preferential allotment of shares to companies/firms/parties coverted in the register maintained under Section 301 of the Companies Act, 1956.

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

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

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

For B S R & Associates Chartered Accountants Firm Regn. No.-116231W

Bhavesh Dhupelia Parner Membership No.: 042070

Pune February 23, 201

 
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