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Auditor Report of Sundram Fasteners Ltd.

Mar 31, 2016

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

Management''s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances.

An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

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

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;

a) of the state of affairs of the Company as at March 31, 2016;

b) of the Profit for the year ended on that date; and

c) of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 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 - 1 a statement on the matters specified in the paragraphs 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 Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

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

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

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure - 2".

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 no. 31(29) (A) (ii) to the financial statements;

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

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

Annexure referred to in our report under "Report on Other Legal and Regulatory requirements Para 1" of even date on the accounts for the year ended 31st March 2016.

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

(b) Fixed assets are verified physically by the management in accordance with a regular programme at reasonable intervals. In our opinion the interval is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) The title deeds of immovable properties of the Company are held in the name of the company based on the confirmation received from the Company.

2. The inventory has been physically verified at reasonable intervals during the year by the management. The discrepancies between the physical stocks and the books were not material and have been properly dealt with in the books of account.

3. During the year, the company has not granted any loan to a company, firm, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

4. During the year, the company has furnished guarantees to facilitate loans to subsidiaries amounting to Rs, 12,074.23 lakhs in compliance with Section 186 of the Companies Act, 2013.

5. The company has not accepted any deposits within the meaning of sections 73 to 76 of the Companies Act, 2013, during the year.

6. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government under section 148(1) of the Companies Act, 2013 for maintenance of cost records and are of the opinion that prima-facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7. (a) According to the records provided to us, the company is generally regular in depositing undisputed

statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and other statutory dues with the appropriate authorities. However we have observed instances of delay in remittance of Income tax deducted at source, Employees'' State Insurance remittance, service tax remittance and short remittance of Dividend Distribution Tax (which was later remitted)

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax and Cess were in arrears, as at 31st March 2016 for a period of more than six months from the date they became payable.

According to information and explanations furnished to us, the following are the details of the disputed dues that were not deposited with the concerned authorities: Nature of Amount Name of the statute Forum Where the dispute is pending dues In lakhs)

Central Excise Act, Excise Duty 0.31 The Honourable High Court of Judicature at 1944. Madras

166.72 Customs Excise and Service Tax Appellate Tribunal, Chennai

29.40 Commissioner (Appeals), Chennai

196.43

Finance Act, 1994 Service Tax 3.16 The Honourable High Court of Judicature at Madras

58.65 Customs Excise and Service Tax Appellate Tribunal, Chennai

25.42 Commissioner (Appeals), Chennai

87.23

Property Tax 25.10 The Honourable High Court of Judicature at Madras

Income Tax Act, 1961 Income tax 19.64 The Honourable High Court of Judicature at Madras

26.65 Commissioner of Income Tax (Appeals), Chennai

46.29

Tamilnadu Value Sales Tax 41.25 The Honourable High Court of Judicature at

Added Tax Act, 2006, Madras

Telangana Value 788.72 Joint/Deputy/ Assistant Commissioner

Added Tax Act, 2005 19.69 Commissioner (Appeals)

and Central Sales Tax 14.63 Sales Tax Appellate Tribunal Act, 1956 864.29

Customs Act, 1962 Customs duty 65.49 Commissioner of Customs (Appeals), Chennai

219.26 Customs Excise and Service Tax Appellate Tribunal, Chennai 284.75

8. Based on our verification and according to the information and explanations furnished by the management, the Company has not defaulted in repayment of dues to its banks. The Company has not issued debentures and hence question of reporting delay in repayment of dues does not arise.

9. (a) The company has not raised any money by way of initial public offer or further public offer (including

debt instruments) during the year. Hence reporting on utilization of such money does not arise.

(b) The company has availed term loan during the year and the proceeds of the loan were applied for the purpose for which they were availed.

10. Based on the audit procedures adopted and information and explanations furnished to us by the management, no fraud on or by the company has been noticed or reported during the course of our audit.

11. In our opinion and according to the information and explanations furnished to us, managerial remuneration has been paid and provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act,2013.

12. The Company is not a Nidhi company and as such this clause of the Order is not applicable.

13. (a) In our opinion and according to the information and explanations furnished to us, all transactions with

the related parties are in compliance with sections 177 and 188 of the Companies Act, 2013.

(b) The details of transactions during the year have been disclosed in the Financial Statements as required by the applicable accounting standards. Refer Note no – 31 (18) (III) to the Financial statements..

14. During the year, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures under section 42 of the Companies Act, 2013.

15. According to the information and explanations furnished to us, the company has not entered into any non- cash transactions with directors or persons connected with them.

16. The company is not required to register under section 45-IA of the Reserve Bank of India Act, 1934.

i. existing policies and procedures adopted by the Company for ensuring orderly and efficient conduct of business.

ii. continuous adherence to Company''s policies.

iii. existing procedures in relation to safeguarding of Company''s fixed assets, investments, inventories, receivables, loans and advances made and cash and bank balances.

iv. existing system to prevent and detect fraud and errors.

v. accuracy and completeness of Company''s accounting records; and

vi. existing capacity to prepare timely and reliable financial information.

For SUNDARAM & SRINIVASAN

Chartered Accountants

Regn. No. 004207S



Chennai M BALASUBRAMANIYAM

May 20, 2016 Partner

Membership No. F7945


Mar 31, 2015

We have audited the accompanying standalone financial statements of SUNDRAM FASTENERS LIMITED, Chennai - 600 004 ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

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

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the 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 financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

i. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2015;

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.

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

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

(e) On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the other matters to be included in the Auditors' 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 no. 31(29)(A) to the financial statements;

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

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

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SUNDRAM FASTENERS LIMITED, CHENNAI FOR THE YEAR ENDED 31ST MARCH 2015 Annexure referred to in our report of even date on the financial statements for the year ended 31st March 2015

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

(b) All the fixed assets have not been physically verified by the management during the year but there is a regular programme of physical verification at reasonable intervals, which, in our opinion is reasonable having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such verification.

(ii) (a) The inventory other than in transit has been physically verified at reasonable intervals during the year by the management. In our opinion, the frequency of such verification is adequate. In respect of inventories lying with third parties, which are not physically verified, there is a process of obtaining confirmation from such parties.

(b) In our opinion and according to the information and explanations given to us, the procedures for physical verification of inventory followed by the management were reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion, the company has maintained proper records of inventory. The discrepancies noticed between the physical stocks and the books were not material and have been properly dealt with in the books of account.

(iii) During the year, 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. The Company has waived interest due of Rs. 132.09 lakhs from a subsidiary Company viz. Peiner Umformtechnik GmbH, Peine, Germany for the period upto 31st December, 2014 on a loan granted upto 31st March, 2014. Interest has been charged on the loan granted on or after 1st April, 2014.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business, with regard to purchase of inventory, fixed assets and for the sale of goods. During the course of our audit, no minor or major continuing failure has been noticed in the internal control system.

(v) The Company has not accepted deposits within the meaning of sections 73 to 76 of the Companies Act, 2013, during the year.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government under section 148(1) of the Companies Act, 2013 for maintenance of cost records and are of the opinion that prima-facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) (a) According to the records provided to us, the Company is regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and other statutory dues with the appropriate authorities. However, certain delays were noticed in respect of remittance of service tax, employees' state insurance and Income tax into the Government. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax and Cess were in arrears, as at 31st March 2015 for a period of more than six months from the date they became payable.

According to information and explanations furnished to us, the following are the details of the disputed dues that were not deposited with the concerned authorities:

Nature of Amount Name of the statute Forum Where the dispute is pending dues (Rs.In lakhs)

Central Excise Act, Excise Duty 2.54 The Honourable High Court of Judicature at 1944. Madras

15.02 Customs Excise and Service Tax Appellate Tribunal, Chennai

61.95 Commissioner (Appeals)

50.22 Additional / Assistant Commissioner

Finance Act, 1994 Service Tax 66.56 Customs Excise and Service Tax Appellate Tribunal, Chennai

41.07 Commissioner (Appeals), Chennai

50.69 Joint / Deputy / Assistant Commissioner

Property Tax Property Tax 1.56 The Honourable High Court of Judicature at Madras

Income Tax Act, Income tax 19.64 The Honourable High Court of Judicature at 1961 Madras

331.72 Commissioner of Income Tax (Appeals), Chennai

Customs Act, 1962 Customs duty 229.25 Customs Excise and Service Tax Appellate Tribunal, Chennai

(c) During the year, the Company has transferred the amount required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and Rules made thereunder within time.

(viii) The Company neither has accumulated losses as at the end of the financial year nor has incurred cash losses during the financial year and in the immediately preceding financial year.

(ix) Based on our verification and according to the information and explanations given by the management, the Company has not defaulted in repayment of dues to its banks.

(x) The Company has furnished guarantee to banks and financial institution for loans availed by subsidiary companies. The terms and conditions of such guarantees are not prejudicial to the interests of the Company.

(xi) The term loans were applied for the purpose for which the loans were obtained.

(xii) Based on the audit procedures adopted and information and explanations given to us by the management, no fraud on or by the Company has been noticed or reported during the course of our audit.

For SUNDARAM & SRINIVASAN

Chartered Accountants Regn. No. 004207S

M BALASUBRAMANIYAM

Chennai Partner

May 29, 2015 Membership No. F7945




Mar 31, 2014

We have audited the accompanying financial statements of Sundram Fasteners Limited, Chennai ("the Company"), which comprise of Balance Sheet as at 31st March 2014, and the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date along with Notes to financial statements.

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 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 furnished 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 31st March 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

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.

INDEPENDENT AUDITORS'' REPORT (Contd.)

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

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

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

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

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors as on 31st March 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure referred to in para 1 of our report on other legal requirements of even date

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

(b) All the assets have not been physically verified by the management during the year but there is a regular programme of verification at reasonable intervals, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) The Company has not disposed off substantial part of its fixed assets, which will affect the going concern status of the Company.

(ii) (a) The inventory other than in transit has been physically verified at reasonable intervals during the year by the management. In our opinion, the frequency of such verification is adequate. In respect of inventory lying with third parties which have not been physically verified, there is a process of obtaining confirmation from such parties.

(b) In our opinion and according to the information and explanations furnished to us, the procedures for 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) In our opinion, the Company has maintained proper records of inventory. The discrepancies between the physical stocks and book stocks were not material and have been properly dealt with in the books of account.

(iii) (a) During the year, the Company has not granted any loan to Company, firms or parties covered in the register maintained under Section 301 of the Act. However, the Company has received repayments amounting to Rs 670 lakhs towards loan balance due from a wholly owned subsidiary Company covered in the register maintained under Section 301 of the Act. The balance due at the year end after the repayment amounts to Rs 1180 lakhs.

The Company has waived interest due from subsidiary companies viz., Peiner Umformtechnik Germany and TVS Peiner Services, Germany amounting to Rs 363.49 lakhs and Rs 24.52 lakhs respectively.

(b) In our opinion, the rate of interest and other terms and conditions on which such loan is made is not prima facie prejudicial to the interest of the Company.

(c) The recovery of principal amount and interest thereon are in accordance with the terms of loan.

(d) As on the date of Balance Sheet there was no overdue amount recoverable on the said loan.

(e) The Company has not availed any loan secured or unsecured from Companies, firms or other parties covered in the Register maintained under Section 301 of the Act and accordingly paragraphs 4 (iii) (e), (f) and (g) are not applicable.

(iv) In our opinion and according to the information and explanations furnished to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and for the sale of goods. During the course of our audit, no minor or major continuing failure has been noticed in the internal control procedures.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered in the register maintained in pursuance of Section 301 of the Act have been properly entered in the said register;

Annexure referred to in para 1 of our report on other legal requirements of even date (Contd.)

(b) In our opinion and according to the information and explanations furnished to us, the transactions entered in the Register maintained under Section 301 of the Act and exceeding Rupees five Lakhs during the year in respect of each party have been made at prices which are reasonable having regard to prevailing market prices at the relevant time;

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

(vii) The Company has an internal audit system which, in our opinion, is commensurate with the size and nature of its business;

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government under Section 209 (1) (d) of the Act for maintenance of cost records 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 records with a view to determining whether they are accurate or complete.

(ix) (a) According to the records provided to us, the Company is regular in depositing undisputed statutory dues including Provident Fund, Employees'' State Insurance, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities. However, few delays were noticed in respect of remittance of Employees'' State Insurance, Employees'' Provident Fund, Income Tax Collected at Source, Income Tax Deducted at Source, Customs Duty, Works Contract Tax and Service Tax into Government and contribution to Tamilnadu Labour Welfare Fund.

(b) According to the information and explanations furnished to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March 2014 for a period of more than six months from the date they became payable.

(c) According to the information and explanations furnished to us, the following are the details of the disputed Income Tax, Customs Duty, Sales Tax, Service Tax and Excise Duty that was not paid to the concerned authorities.

Nature of demand Amount Forum where the dispute is pending (Rslakhs) Income Tax 19.64 High Court of Judicature at Madras

Income Tax 359.41 Commissioner of Income Tax (Appeals)

Excise Duty 70.39 Customs, Excise & Service Tax Appellate Tribunal

Excise Duty 81.02 Commissioner (Appeals)

Excise Duty 2.54 High Court of Judicature at Madras

Property Tax 1.56 High Court of Judicature at Madras

Sales Tax/VAT 76.90 Joint Commissioner (Appeals) - Commercial Tax

Central Sales Tax 106.69 Sales Tax Appellate Tribunal

Service Tax 0.04 Assistant Commissioner

Service Tax 61.50 Customs, Excise & Service Tax Appellate Tribunal

Service Tax 59.45 Commissioner (Appeals)

Customs Duty 229.25 Customs, Excise & Service Tax Appellate Tribunal

Annexure referred to in para 1 of our report on other legal requirements of even date (Contd.)

(x) The Company neither has accumulated losses as at the end of the financial year nor has incurred cash losses during the financial year and in the immediately preceding year.

(xi) According to the records of the Company examined by us and the information and explanations furnished to us by the management, the Company has not defaulted in repayment of dues to any financial institution or bank as at the balance sheet date.

(xii) Based on our examination and according to the information and explanations furnished to us, 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 is not a chit fund/nidhi/ mutual benefit fund/ society and clause (xiii) of the Order is not applicable.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments other than in the units of mutual funds. Proper records have been maintained in respect of these transactions and contracts and timely entries have been made therein.

The investments have been held by the Company in its own name except to the extent of exemption granted under Section 49 of the Act, in respect of shares held in subsidiary companies through the nominees.

(xv) The Company has furnished guarantee to banks and financial institution for loans taken by Subsidiary Companies and also housing loans availed by its employees. The terms and conditions of such guarantees are not prejudicial to the interests of the Company.

(xvi) In our opinion and according to the information and explanations furnished to us, the term loans have been applied for the purposes for which they have been obtained.

(xvii) On the basis of our examination of the Balance sheet of the Company and according to the explanations furnished to us, in our opinion, funds raised on short term basis have not been used for long term investment.

(xviii) The Company has not allotted any shares on preferential basis to parties and companies covered in the Register maintained under section 301 of the Act.

(xix) The Company has not issued any secured debentures;

(xx) The Company has not raised any money by issue of shares to the public.

(xxi) During the course of 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 furnished to us by the management, no fraud on or by the Company has been noticed or reported during the course of audit.



For SUNDARAM & SRINIVASAN Chartered Accountants Regn. No. 004207S

Chennai M BALASUBRAMANIYAM May 30, 2014 Partner Membership No. F7945


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Sundram Fasteners Limited, Chennai ("the Company"), which comprise of Balance Sheet as at 31st March 2013, and the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date along with Notes to financial statements.

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 judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the 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 31st March 2013;

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors as on 31st March 2013, and taken on record by the Board of Directors, none of the directors are disqualified as on 31st March 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Levy and Collection of cess on turnover or gross receipts

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

Annexure referred to in para 1 of our report on other legal requirements of even date

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

(b) All the assets have not been physically verified by the management during the year but there is a regular programme of verification at reasonable intervals, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) The Company has not disposed off substantial part of its fixed assets, which will affect the going concern status of the company.

(ii) (a) The inventory other than in transit has been physically verified at reasonable intervals during the year by the management. In our opinion, the frequency of such verification is adequate. In respect of inventory lying with third parties which have not been physically verified, there is a process of obtaining confirmation from such parties.

(b) In our opinion and according to the information and explanations given to us, the procedures for 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) In our opinion, the Company has maintained proper records of inventory. The discrepancies between the physical stocks and book stocks were not material and have been properly dealt with in the books of account.

(iii) (a) During the year, the Company has granted unsecured loan to a wholly-owned subsidiary company covered in the register maintained under Section 301 of the Act amounting to Rs 250 Lakhs (Balance due as at the year end is Rs 1,850 Lakhs from one company). The Company has waived interest due from subsidiary companies viz., Peiner Umformtechnik GmbH and TVS Peiner Services, GmbH amounting to Rs 212.04 lakhs and Rs 13.77 lakhs respectively.

(b) In our opinion, the rate of interest and other terms and conditions on which such loan is made is not prima facie prejudicial to the interest of the company.

(c) The recovery of principal amount and interest thereon are in accordance with the terms of loan.

(d) As on the date of Balance Sheet there was no overdue amount recoverable on the said loan.

(e) The Company has not taken any loan secured or unsecured from Companies, firms or other parties covered in the Register maintained under Section 301 of the Act and accordingly paragraphs 4 (iii) (e), (f) and (g) are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and for the sale of goods. During the course of our audit, no minor or major continuing failure has been noticed in the internal control procedures.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered in the register maintained in pursuance of Section 301 of the Act have been properly entered in the said register;

(b) In our opinion and according to the information and explanations given to us, the transactions entered in the Register maintained under Section 301 of the Act and exceeding Rupees five Lakhs during the year in respect of each party have been made at prices which are reasonable having regard to prevailing market prices at the relevant time;

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

(vii) The Company has an internal audit system which, in our opinion, is commensurate with the size and nature of its business;

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government under Section 209 (1) (d) of the Act for maintenance of cost records and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) According to the records provided to us, the Company is regular in depositing undisputed statutory dues including Provident Fund, Employees'' State Insurance, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities. However, certain marginal delays were noticed in respect of remittance of Employees'' State Insurance, Income Tax Deducted at Source on sub contract payments and professional services, Works Contract Tax and Service Tax into Government and contribution to Tamilnadu Labour Welfare Fund.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March 2013 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, the following are the details of the disputed Income Tax, Customs Duty, Service Tax, Excise Duty and Property Tax that was not paid to the concerned authorities.

Nature of demand Amount (Rs lakhs) Forum where the dispute is pending

Income Tax 19.64 High Court of Judicature at Madras

Income Tax 346.12 Commissioner of Income Tax (Appeals)

Excise Duty 48.22 Central Excise & Service Tax Appellate Tribunal

Excise Duty 51.48 Commissioner (Appeals)

Excise Duty 2.23 High Court of Judicature at Madras

Property Tax 50.67 Commissioner & Secretary to Govt of Tamilnadu

Sales Tax/VAT 812.17 Joint Commissioner (Appeals) - Commercial Tax

Central Sales Tax 33.33 Commercial Tax Officer

Service Tax 42.36 Central Excise & Service Tax Appellate Tribunal

Service Tax 45.85 Commissioner (Appeals)

(x) The Company neither has accumulated losses as at the end of the financial year nor has incurred cash losses during the financial year and in the immediately preceding year.

(xi) According to the records of the Company examined by us and the information and explanations given to us by the management, the Company has not defaulted in repayment of dues to any financial institution or bank as at the balance sheet date.

(xii) Based on our examination and according to the information and explanations given to us, 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 is not a chit fund / nidhi / mutual benefit fund / society and clause (xiii) of the Order is not applicable.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments other than in the units of mutual funds. Proper records have been maintained in respect of these transactions and contracts and timely entries have been made therein. The investments have been held by the Company in its own name except to the extent of exemption granted under Section 49 of the Act, in respect of shares held in subsidiary companies through the nominees.

(xv) The Company has given guarantee to banks and financial institution for loans taken by Subsidiary Companies and also housing loans availed by its employees. The terms and conditions of such guarantees are not prejudicial to the interests of the Company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they have been obtained.

(xvii) On the basis of our examination of the Balance sheet of the Company and according to the explanations given to us, in our opinion, funds raised on short term basis have not been used for long term investment.

(xviii) The Company has not allotted any shares on preferential basis to parties and companies covered in the Register maintained under section 301 of the Act.

(xix) The Company has not issued any secured debentures;

(xx) The Company has not raised any money by issue of shares to the public.

(xxi) During the course of 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 by the management, no fraud on or by the Company has been noticed or reported during the course of audit.

For SUNDARAM & SRINIVASAN

Chartered Accountants

Regn. No. 004207S

Chennai M BALASUBRAMANIYAM

May 30, 2013 Partner

Membership No. F7945


Mar 31, 2012

1. We have audited the attached Balance Sheet of M/s Sundram Fasteners Limited, Chennai 600 004 as at 31st March 2012, the Statement of Profit & Loss and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted the audit in accordance with auditing standards generally accepted in India. These 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 in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (the Act), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order to the extent applicable.

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

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

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

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

(iv) 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;

(v) On the basis of written representations received from directors of the Company, as on 31st March 2012 and taken on record by the Board of Directors, we report that no director is disqualified from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act as on the said date;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Significant Accounting Policies, and other 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:

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

(b) In the case of the Statement of Profit & 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.

Annexure referred to in para 3 of 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) All the assets have not been physically verified by the management during the year but there is a regular programme of verification at reasonable intervals, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) The Company has not disposed off substantial part of its fixed assets, which will affect the going concern status of the company.

(ii) (a) The inventory other than in transit have been physically verified at reasonable intervals during the year by the management. In our opinion, the frequency of such verification is adequate. In respect of inventory lying with third parties which have not been physically verified, there is a process of obtaining confirmation from such parties.

(b) In our opinion and according to the information and explanations given to us, the procedures for 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) In our opinion, the Company has maintained proper records of inventory. The discrepancies between the physical stocks and book stocks were not material and have been properly dealt with in the books of account.

(iii) (a) The Company has granted unsecured loan to wholly-owned subsidiary company covered in the Register maintained under Section 301 of the Act. The maximum amount involved during the year and at the end of the year was Rs.2267.30 lakhs. The terms and conditions of such loans are, prima facie, not prejudicial to the interests of the company.

(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, 1956 and accordingly paragraphs 4 (iii) (b), (c), (d), (e), (f) and (g) are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and for the sale of goods. During the course of our audit, no major continuing failure has been noticed in the internal control procedures.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered in the register maintained in pursuance of Section 301 of the Act have been properly entered in the said register;

(b) In our opinion and according to the information and explanations given to us, the transactions entered in the Register maintained under Section 301 of the Act and exceeding Rupees five lakhs during the year in respect of each party have been made at prices which are reasonable having regard to prevailing market prices at the relevant time;

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

(vii) The Company has an internal audit system which, in our opinion, is commensurate with the size and nature of its business;

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government under Section 209 (1)(d) of the Act for maintenance of cost records and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) According to the records provided to us, the Company is regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities. However, certain delays were noticed in respect of remittance of Employees' State Insurance and tax deducted at source on salary and sub-contract payments into government.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March 2012 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, the following are the details of the disputed Income Tax, Customs Duty, Service Tax, Excise Duty and Property Tax that was not paid to the concerned authorities.

Nature of demand Amount (Rs lakhs) Forum where the dispute is pending

Income Tax 19.64 High Court of Judicature at Madras

Income Tax 20.38 Income Tax Appellate Tribunal

Income Tax 1.38 Commissioner of Income Tax (Appeals)

Income Tax 0.95 Assessing Officer

Excise Duty 505.11 Central Excise & Service Tax Appellate Tribunal

Excise Duty 92.16 Commissioner Appeals

Excise Duty 2.23 High Court of Judicature at Madras

Property Tax 50.67 Commissioner & Secretary to Govt of Tamil Nadu

Central Sales Tax 0.03 Commercial Tax Officer

Sales Tax / VAT 657.74 Joint Commissioner - Commercial Tax

Central Sales Tax 33.30 Sales Tax Appellate Tribunal

Service Tax 40.17 Central Excise & Service Tax Appellate Tribunal

Service Tax 16.27 Commissioner Appeals

(x) The Company neither has accumulated losses as at the end of the financial year nor has incurred cash losses during the financial year and in the immediately preceding year.

(xi) According to the records of the Company examined by us and the information and explanations given to us by the management, the Company has not defaulted in repayment of dues to any financial institution or bank as at the balance sheet date.

(xii) Based on our examination and according to the information and explanations given to us, 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 is not a chit fund/nidhi/mutual benefit fund/society and clause (xiii) of the Order is not applicable.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments other than in the units of mutual funds in respect of which the Company is maintaining adequate and proper records.

(xv) The Company has given guarantee to banks and financial institutions for loans taken by Subsidiary Companies and also housing loans availed by its employees. The terms and conditions of such guarantees are not prejudicial to the interests of the Company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they have been obtained.

(xvii) On the basis of our examination of the Balance sheet of the Company and according to the explanations given to us, in our opinion, funds raised on short term basis have not been used for long term investment.

(xviii) The Company has not allotted any shares on preferential basis to parties and companies covered in the Register maintained under section 301 of the Act.

(xix) The Company has not issued any secured debentures;

(xx) The Company has not raised any money by issue of shares to the public.

(xxi) During the course of 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 not come across any instance of fraud by the Company. As regards fraud on the Company reference may be made to Note 22A to the financial statements.

For SUNDARAM & SRINIVASAN

Regn. No. 004207S

Chartered Accountants

Chennai M BALASUBRAMANIYAM

May 28, 2012 Partner

Membership No. F7945


Mar 31, 2011

1. We have audited the attached Balance Sheet of M/s Sundram Fasteners Limited, Chennai 600 004 as at 31st March 2011, the Profit & Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted the audit in accordance with auditing standards generally accepted in India. These 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 in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 (the Act), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order to the extent applicable.

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

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

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

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

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

(v) On the basis of written representations received from directors of the Company, as on 31st March 2011 and taken on record by the Board of Directors, we report that no director is disqualified from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act as on the said date;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Significant Accounting Policies, and other 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:

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

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

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

Annexure referred to in para 3 of 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) All the assets have not been physically verified by the management during the year but there is a regular programme of verification at reasonable intervals, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) The Company has not disposed off substantial part of its fixed assets, which will affect the going concern status of the company.

(ii) (a) The inventory other than in transit have been physically verified at reasonable intervals during the year by the management. In our opinion, the frequency of such verification is adequate. In respect of inventory lying with third parties which have not been physically verified, there is a process of obtaining confirmation from such parties.

(b) In our opinion and according to the information and explanations given to us, the procedures for 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) In our opinion, the Company has maintained proper records of inventory. The discrepancies between the physical stocks and book stocks were not material and have been properly dealt with in the books of account.

(iii) (a) The Company has granted unsecured loan to wholly-owned subsidiary company covered in the Register maintained under Section 301 of the Act. The maximum amount involved during the year and at the end of the year was Rs.2227.30 lakhs. The terms and conditions of such loans are, prima facie, not prejudicial to the interests of the company.

(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, 1956 and accordingly paragraphs 4 (iii) (b), (c), (d), (e), (f) and (g) are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and for the sale of goods. During the course of our audit, no major continuing failure has been noticed in the internal control procedures.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered in the register maintained in pursuance of Section 301 of the Act have been properly entered in the said register;

(b) In our opinion and according to the information and explanations given to us, the transactions entered in the Register maintained under Section 301 of the Act and exceeding Rupees five lakhs during the year in respect of each party have been made at prices which are reasonable having regard to prevailing market prices at the relevant time;

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

(vii) The Company has an internal audit system which, in our opinion, is commensurate with the size and nature of its business;

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government under Section 209 (1)(d) of the Act for maintenance of cost records and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) According to the records provided to us, the Company is regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears, as at 31st March 2011 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, the following are the details of the disputed Income Tax, Customs Duty, Service Tax, Excise Duty and Property Tax that was not paid to the concerned authorities.

Nature of demand Amount (Rs lakhs) Forum where the dispute is pending

Income Tax 19.64 Madras High Court

Income Tax 20.38 Income Tax Appelate Tribunal

Income Tax 1.38 Commissioner (Appeals)

Income Tax 0.95 Assessing Officer

Excise Duty 418.46 CESTAT

Excise Duty 165.49 Commissioner Appeals

Property Tax 6.87 Commissioner & Secretary to Govt of TamilNadu

Central Sales Tax 0.03 Commercial Tax Officer

Central Sales Tax 33.30 Sales Tax Appellate Tribunal

Service Tax 2.14 Commissioner Appeals

(x) The Company neither has accumulated losses as at the end of the financial year nor has incurred cash losses during the financial year and in the immediately preceding year.

(xi) According to the records of the Company examined by us and the information and explanations given to us by the management, the Company has not defaulted in repayment of dues to any financial institution or bank as at the balance sheet date.

(xii) Based on our examination and according to the information and explanations given to us, 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 is not a chit fund/n id hi/mutual benefit fund/society and clause (xiii) of the Order is not applicable.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments other than in the units of mutual funds in respect of which the Company is maintaining adequate and proper records.

(xv) The Company has given guarantee to banks and financial institutions for loans taken by Subsidiary Companies and also housing loans availed by its employees. The terms and conditions of such guarantees are not prejudicial to the interests of the Company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they have been obtained.

(xvii) On the basis of our examination of the Balance sheet of the Company and according to the explanations given to us, in our opinion, funds raised on short term basis have not been used for long term investment.

(xviii) The Company has not allotted any shares on preferential basis to parties and companies covered in the Register maintained under section 301 of the Act.

(xix) The Company has not issued any secured debentures;

(xx) The Company has not raised any money by issue of shares to the public.

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

For SUNDARAM & SRINIVASAN Regd No. 004207S Chartered Accountants

M BALASUBRAMANIYAM Chennai Partner May 30, 2011 Membership No. F7945

 
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