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Auditor Report of Welspun India Ltd.

Mar 31, 2015

1. We have audited the accompanying standalone financial statements of Welspun India Limited ("the Company"), which comprise the Balance Sheet as at March 31,2015, 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

2. 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 to 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 and Accounting Standard 30, Financial Instruments: Recognition and Measurement issued by the Institute of Chartered Accountants of India to the extent it does not contradict any other accounting standard referred to in Section 133 of the Act read with Rule 7 of 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

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

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

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards and pronouncements 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.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial 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.

7 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

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

Emphasis of Matter

9. We draw your attention to Note 38, matter relating to utilisation of deferred tax assets recognised in earlier period aggregating Rs. 310.70 million on the incremental unabsorbed Income-tax depreciation arising out of the Company's treatment of certain excise and value added tax incentives as 'capital receipts' for income tax purposes. The income tax authorities have passed orders treating these incentives as revenue in nature which are liable to income-tax. The Company has preferred appeals with the Commissioner of Income Tax (Appeals) against these orders. If the final decision in the matter is eventually decided against the Company, the tax expense for the year ended March 31,2015 would be higher by Rs. 310.70 million. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

10. As required by 'the Companies (Auditor's Report) Order, 2015', issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act (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 3 and 4 of the Order.

11. 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 March 31, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 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 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 knowledge and belief and according to the information and explanations given to us:

i) The Company has disclosed the impact of pending litigations as at March 31, 2015, on its financial position in its standalone financial statements.

ii) The Company has long-term contracts as at March 31, 2015 for which there were no material foreseeable losses. The Company does not have long-term derivative contracts as at March 31,2015.

iii) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended March 31, 2015.

Annexure to Independent Auditors' Report

Referred to in paragraph 10 of the Independent Auditors' Report of even date to the members of Welspun India Limited on the standalone financial statements as of and for the year ended March 31,2015

i. (a) The Company is maintaining proper records showing

full particulars, including quantitative details and situation, of fixed assets.

(b) The fixed assets of the Company have been physically verified by the Management during the year and no material discrepancies have been noticed on such verification. In our opinion, the frequency of verification is reasonable.

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

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

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

iii. The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 189 of the Act. Therefore, the provisions of Clause 3(iii), (iii)(a) and (iii) (b) 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. 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. The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the rules framed there under to the extent notified.

vi. 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 specified under sub-section (1) of Section 148 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.

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

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of wealth-tax, service-tax, duty of custom and cess which have not been deposited on account of any dispute. The particulars of dues of income tax, sales tax, duty of excise and value added tax as at March 31,2015 which have not been deposited on account of a dispute, are as follows.

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

Income Tax demand Income Tax Act, 1961 157.00 including interest

Sales Tax including Gujarat Sales Tax Act, 1969 5.84 penalty and interest

Central Excise Act, 1944 Excise Duty 17.07 Central Sales Tax

Central Sales Tax Act, 1958 including penalty and 2.37 interest

Value added Tax Gujarat Value Added Tax, 20O3 including penalty and 21.05 interest

Central Excise Act, 1944 CENVAT 0.17

CENVAT including Central Excise Act, 1944 185.41** penalty

CENVAT including Central Excise Act, 1944 7.48 penalty

Central Excise Act, 1944 CENVAT 7.04

Central Excise Act, 1944 CENVAT 1.37

Central Excise Act, 1944 CENVAT 10.56

Central Excise Act, 1944 CENVAT 1.08

Value Added Tax Maharashtra VAT Act including interest and 11.43 penalty

Central Sales Tax

Central Sales Tax Act, 1958 including penalty and 7.52 interest



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

Income Tax Act, 1961 AY 2005-06 to Commissioner of Income AY 2011-12 Tax (Appeal)

Gujarat Sales Tax Act, 1969 Joint Commissioner of 2000-01,2003- Sales Tax (Appeals - 2), 04 and 2004-05 Vadodara

Joint Secretary, Ministry Central Excise Act, 1944 September 2005 of Finance, Department of to July 2006 Revenue

Central Sales Tax Act, 1958 2006-07 to 2007- Joint Commissioner of 08 Commercial Taxes, Rajkot

Gujarat Value Added Tax, 2003 2006-07 to 2007- Joint Commissioner of 08 Commercial Taxes, Rajkot

Central Excise Act, 1944 March 2010 to CESTAT, Ahmedabad August 2010

Central Excise Act, 1944 Appellant Tribunal, 2007-08 Ahmedabad

Central Excise Act, 1944 Joint Commissioner of March 2005 Commercial Taxes, Rajkot

Central Excise Act, 1944 October 2007 to Appellant Tribunal, March 2008 Ahmedabad

Central Excise Act, 1944 2008-2010 and CESTAT, Ahmedabad 2010-2011

Central Excise Act, 1944 2004 CESTAT, Ahmedabad

Central Excise Act, 1944 Commissioner Appeal, 2012 Daman.

Maharashtra VAT Act Deputy Commissioner 2005-06 (Sales Tax)

Central Sales Tax Act, 1958 Deputy Commissioner 2005-06 (Sales Tax)

* Net of amounts paid under protest ** Stay order has been obtained

(c) There are no amounts required to be transferred by the Company to the Investor Education and Protection Fund in accordance with the provisions of the Companies Act, 1956 and the rules made thereunder.

viii. 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.

ix. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the Balance Sheet date.

x. 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.

xi. 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 were obtained.

xii. 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 Chartered Accountant LLP

Firm Registration Number 012574N/N500016

Mehul Desai

Partner

Membership No. 103211

Place: Mumbai

Date: April 29,2015


Mar 31, 2014

1. We have audited the accompanying financial statements of Welspun India Limited (the "Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information, 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, 2013and Accounting Standard 30, Financial Instruments: Recognition and Measurement issued by the Institute of Chartered Accountants of India to the extent it does not contradict any other accounting standard referred to in sub-section (3C) of Section 211 of 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'' 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 March 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.

Emphasis of Matter

7. We draw your attention to:

a) Note 38, regarding utilization of deferred tax assets recognised in earlier period aggregating Rs. 310.70 million by the Company on the incremental unabsorbed Income-tax depreciation arising out of its treatment of certain excise and value added tax incentives as ''capital receipts'' for income tax purposes. The income tax authorities have passed orders treating these incentives as revenue in nature which are liable to income-tax. The Company has preferred appeals with the Commissioner of Income Tax (Appeals) against these orders. If the final decision in the matter is eventually decided against the Company, then the current tax expense for the year ended March 31, 2014 would be higher by Rs. 310.70 million with a consequential impact on profit after tax for the year.

b) Note 37,regarding re-assessment of the method of depreciation, based on which the Company has changed the method of depreciation on plant and machinery (other than electrical installations) from straight-line method to reducing balance method. Accordingly, on account of this change, depreciation and amortisation expense for the year is higher by Rs. 4,738.09 million and profit before tax for the year is lower by an equivalent amount, with a consequential impact on profit after tax for the year.

Our opinion is not qualified in respect of these matters.

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 and 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 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 and Accounting Standard 30, Financial Instruments: Recognition and Measurement issued by the Institute of Chartered Accountants of India to the extent it does not contradict any other accounting standard referred to in sub-section (3C) of Section 211 of the Act;

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

ANNEXURE TO INDEPENDENT AUDITORS'' REPORT

Referred to in paragraph 8 of the Independent Auditors'' Report of even date to the members of Welspun India Limited on the financial statements as of and for the year ended March 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 of the Company have been physically verified by the Management during the year and no material discrepancies have been noticed on such verification. In our opinion, the frequency of verification is reasonable.

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

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

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

iii. (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act. Therefore, the provisions of Clause 4(iii)(b), 4(iii)(c) and 4(iii)(d) of the said Order are not applicable to 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. Therefore, the provisions of Clause 4(iii)(f) and 4(iii)(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. The Company''s operations for the year do not involve sale of 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. According to the information and explanations given to us, there have been no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Act.

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 provident fund, sales tax, income tax and service tax, though there has been a slight delay in a few cases, and is regular in depositing undisputed statutory dues, including investor education and protection fund, employees'' state insurance, 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, there are no dues of wealth-tax, service-tax and customs duty which have not been deposited on account of any dispute. The particulars of dues of income tax, sales tax and excise duty as at March 31, 2014 which have not been deposited on account of a dispute, are as follows:

Name of the statute Nature of dues Amount Period to the (Rs.in amount relates million)*

IncomeTax Act,1961 Income Tax 157.00 AY2005-06 to demand including AY 2011-12 interest

Gujarat Sales Tax Sales Tax including 5.84 2000-01,2003 Act, 1969 penalty and interest 04and 2004-05

Central Excise Act, Excise Duty 17.07 September 2005 1944 to July 2006 Central Sales Tax Central Sales Tax Act 1956 including penalty and 2.37 2006-07 to interest 2007-06 Gujarat Value Added Value added Tax including Tax, 20O3 penalty and interest 21.05 2006-07 to 2007-08 Central ExciseAct, 1944 CENVAT including penalty and interest 0.17 March 2010 to August 2010 Central Excise Act, CENVAT including 1944 penalty interest 185.41** 2007-08 Central ExciseAct CENVAT including 1944 penalty interest 7.48 March 2005 Central Excise Act, 1944 CENVAT 7.04 October 2007 to March 2008

Central Excise Act, CENVAT including 1944 penalty and interest 1.37 2008-2010and 2010-2011 Central Excise Act, CENVAT including 10.56 2004 1944 penalty and interest

Central Excise Act CENVAT including 1944 . penalty and interest 1.08 2012



Name of the statute form where the disputes is pending

IncomeTax Act,1961 Commissioner of income tax(appeal)

Gujarat Sales Tax Joint Commissioner of Sales (appeal-2) Act, 1969 vadodara

Central Excise Act, Joint Secretary, Ministry of Finance 1944 Department of Revenue Central Sales Tax Joint Commissioner of Commercial Taxes Act 1956 Rajkot Gujarat Value Added Joint Commissioner of Commercial Taxes Tax, 20O3 Rajkot Central ExciseAct, CESTAT,Ahmedabad 1944 Central Excise Act, Appellant Tribunal Ahmedabad 1944 Central ExciseAct Joint Commissioner of Commercial Taxes 1944 Rajkot Central Excise Act, Appellant Tribunal Ahmedabad 1944

Central Excise Act, CENVAT, Ahmedabad 1944 Central Excise Act, CENVAT, Ahmedabad 1944

Central Excise Act Commissioner Appeal 1944 . Daman.

* Net of amounts paid under protest ** Stay Order has been obtained

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

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. 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 were obtained.

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that the no funds raised on short-term basis have been used for long-term investment.

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 Firm Registration Number: 012754N Chartered Accountants

Mehul Desai

Place : Mumbai Partner

Date : May 20, 2014 Membership Number: 103211


Mar 31, 2013

Report on the Financial Statements

1. We have audited the accompanying fnancial statements of Welspun India Limited (the "Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Proft and Loss and Cash Flow Statement for the year then ended, and a summary of signifcant accountng policies and other explanatory informaton, which we have signed under reference to this report.

Management''s Responsibility for the Financial Statements

2. The Company''s Managment is responsible for the preparaton of these fnancial statements that give a true and fair view of the fnancial positon, fnancial performance and cash fows of the Company in accordance with the Accountng Standards referred to in sub-secton (3C) of secton 211 of ''the Companies Act, 1956'' of India (the "Act"). This responsibility includes the design, implementaton and maintenance of internal control relevant to the preparaton and presentaton of the fnancial 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 fnancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditng issued by the Insttute 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 fnancial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence, about the amounts and disclosures in the fnancial statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the fnancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Company''s preparaton and fair presentaton of the fnancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluatng the appropriateness of accountng policies used and the reasonableness of the accountng estmates made by Management, as well as evaluatng the overall presentaton of the fnancial statements.

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

Opinion

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

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

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

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

Emphasis of Mater

7. Without qualifying our opinion, we draw your atenton to:

(a) Note 36, regarding the recogniton of deferred tax assets aggregatng Rs. 296.58 million on the incremental unabsorbed Income-tax depreciaton by the company arising out of its treatment of certain excise and Value Added Tax incentves as ''capital receipts'' for income tax purposes. The income tax authorites have passed orders treatng these incentves as revenue in nature which are liable to income-tax. The Company has preferred appeals against these orders. If the fnal decision in the mater is eventually decided against the Company, then the carrying value of the Minimum Alternate Tax Credit Enttlement assets at the year-end could be signifcantly impacted.

(b) Note 39, regarding certain investments aggregatng Rs. 1,197.29 million made in the previous year without obtaining the prior approval of shareholders by a special resoluton passed in a general meetng as required by Secton 372A of the Act. The Company had fled an applicaton for compounding of the ofence with the Company Law Board and impact, if any, on the fnancial statements can be ascertained only on fnal adjudicaton of the said mater.

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-secton (4A) of secton 227 of the Act (hereinafer 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 informaton and explanatons given to us, we give in the Annexure a statement on the maters specifed in paragraphs 4 and 5 of the Order.

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

(a) We have obtained all the informaton and explanatons 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 examinaton of those books;

(c) The Balance Sheet, Statement of Proft 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 Proft and Loss and Cash Flow Statement dealt with by this report comply with the Accountng Standards referred to in sub-secton (3C) of secton 211 of the Act;

(e) On the basis of writen representatons received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualifed as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-secton (1) of secton 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 Welspun India Limited on the fnancial statements as of and for the year ended March 31, 2013

i. (a) The Company is maintaining proper records showing full partculars, including quanttatve details and situaton, of fxed assets.

(b) The fxed assets of the Company have been physically verifed by the Management during the year and no material discrepancies have been notced on such verifcaton. In our opinion, the frequency of verifcaton is reasonable.

(c) In our opinion, and according to the informaton and explanatons given to us, a substantal part of fxed assets has not been disposed of by the Company during the year.

ii. (a) The inventory, excluding stocks with third partes and material in transit, has been physically verifed by the Management during the year. In respect of inventory lying with third partes, these have substantally been confrmed by them. In our opinion, the frequency of verifcaton is reasonable.

(b) In our opinion, the procedures of physical verifcaton of inventory followed by the Management are reasonable and adequate in relaton to the size of the Company and the nature of its business.

(c) On the basis of our examinaton of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies notced on physical verifcaton of inventory as compared to book records were not material.

iii. (a) The Company has not granted any loans, secured or unsecured, to companies, frms or other partes covered in the register maintained under Secton 301 of the Act. Therefore, the provisions of Clause 4(iii)(b), 4(iii)(c) and 4(iii)(d) of the said Order are not applicable to the Company.

(b) The Company has not taken any loans, secured or unsecured, from companies, frms or other partes covered in the register maintained under Secton 301 of the Act. Therefore, the provisions of Clause 4(iii)(f) and 4(iii)(g) of the said Order are not applicable to the Company.

iv. In our opinion, and according to the informaton and explanatons 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 fxed assets and for the sale of goods. The company''s operatons do not involve sale of services. Further, on the basis of our examinaton of the books and records of the Company, and according to the informaton and explanatons given to us, we have neither come across, nor have been informed of, any contnuing failure to correct major weaknesses in the aforesaid internal control system.

v. According to the informaton and explanatons given to us, there have been no contracts or arrangements that need to be entered in the register maintained under Secton 301 of the Act.

vi. The Company has not accepted any deposits from the public within the meaning of Sectons 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-secton (1) of Secton 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 examinaton of the records with a view to determine whether they are accurate or complete.

ix. (a) According to the informaton and explanatons given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositng the undisputed statutory dues in respect of sales-tax though there has been slight delay in a few cases and is regular in depositng undisputed statutory dues, including provident fund, investor educaton and protecton fund, employees'' state insurance, income-tax, service-tax, wealth tax, customs duty, excise duty and other material statutory dues, as applicable, with the appropriate authorites.

(b) According to the informaton and explanatons given to us and the records of the Company examined by us, there are no dues of wealth-tax, service-tax, and customs duty which have not been deposited on account of any dispute. The partculars of dues of income-tax, sales-tax and excise duty as at March 31, 2013 which have not been deposited on account of dispute are as follows :

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

Income tax demand Income Tax Act, 1961 305 70 including interest

Gujarat Sales Tax Act, Sales Tax including 11 69 1969 penalty and interest

Central Excise Act, 1944 Excise Duty 69.57

Central Sales Tax Central Sales Tax Act, including penalty and 2 54 1956 interest

Value added Tax Gujarat Value Added Including penalty and 21 05 Tax, 2003 interest CENVAT including Central Excise Act, 1944 0 41 penalty and interest

CENVAT including Central Excise Act, 1944 185 41** penalty and interest

CENVAT including Central Excise Act, 1944 318 58** penalty and interest

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

Income tax demand AY 2005-06 to Commissioner of AY 2011-12 Income Tax (Appeal)

Income tax demand 2000-01, Joint Commissioner of 2003-04 and Sales Tax (Appeals - 2), 2004-05 Vadodara

Income tax demand September 2005 Joint Secretary, Ministry to of Finance, Department July 2006 of Revenue

Joint Commissioner 2006-07 to 2007-08 of Commercial Taxes, Rajkot

Joint Commissioner 2006-07 to 2007-08 of Commercial Taxes, Rajkot Commissioner March 2010 to of Central Excise August 2010 (Appeals), Daman

Income tax demand Appellant Tribunal, 2007-08 Ahmadabad

Commissioner February 2006 to of Central Excise September 2007 (Appeals), Rajkot

* Net of amounts paid under protest ** Stay Order has been obtained

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

xi. According to the records of the Company examined by us and the informaton and explanaton given to us, the Company has not defaulted in repayment of dues to any fnancial insttuton or bank as at the balance sheet date. The Company has not issued any debenture.

xii. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securites. 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 beneft fund/ societes 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, securites, 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 informaton and explanatons given to us, the terms and conditons of the guarantees given by the Company for loans taken by others from banks or fnancial insttutons during the year, are not prejudicial to the interest of the Company.

xvi. In our opinion, and according to the informaton and explanatons given to us, the term loans have been applied for the purposes for which they were obtained.

xvii. According to the informaton and explanatons given to us and on an overall examinaton of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

xviii. The Company has not made any preferental allotment of shares to partes and companies covered in the register maintained under Secton 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 examinaton of the books and records of the Company, carried out in accordance with the generally accepted auditng practces in India, and according to the informaton and explanatons given to us, we have neither come across any instance of material fraud on or by the Company, notced or reported during the year, nor have we been informed of any such case by the Management.

For Price Waterhouse Firm Registraton Number: 012754N

Chartered Accountants

Mehul Desai

Place : Mumbai Partner

Date : May 15, 2013 Membership Number: 103211


Mar 31, 2011

1. We have audited the attached Balance Sheet of Welspun India Limited (the "Company") as at March 31, 2011, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and signifcant estimates made by Management, as well as evaluating the overall financial statement presentaton. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) Order, 2004 (together the "Order"), issued by the Central Government of India in terms of sub-secton (4A) of Secton 227 of ‘The Companies Act, 1956' of India (the ‘Act') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the maters specified in paragraphs 4 and 5 of the Order.

4. We draw your attention to Note 7(b) to the financial statements, regarding the accounts receivables balance of Rs. 696.02 million (March 31, 2010: Rs. 475.93 million) that is due from Welspun Retail Limited ("WRL"), a group company, as at March 31, 2011, in relaton to which no valuaton allowance has been estimated and adjusted in these financial statements which, in our view, does not meet the requirement to consider prudence in selecton of accounting policies, as set out in Accounting Standard 1 – Disclosure of Accounting Policies, as WRL has been incurring significant losses (Rs.199.73 million for the year ended March 31, 2011 and Rs. 1,205.96 million as at March 31, 2011 basis its audited financial statements as of and for the year ended March 31, 2011) and has also been unable to achieve its projected financial results in the previous and current financial reporting periods.

5. Without qualifying our opinion, we draw your atention to:

(a) Note 8 on Schedule 19, regarding the Company's dependence on Welspun Global Brands Limited (‘WGBL') and WRL for selling its products consequent to the demerger of the marketing arm of the Company efective April 1, 2009. If the arrangement between the Company, WGBL and WRL are discontinued, the business of the Company could be adversely impacted.

(b) Note 9 on Schedule 19, regarding corporate guarantees, aggregating Rs. 3,593 million at the year end, issued consequent to the demerger of the marketing arm of the Company referred to in paragraph 5 (a) above, to the bankers of WGBL in relation to the debt facilities provided by them to WGBL, and other corporate guarantees disclosed in Note 3 on Schedule 19, aggregating Rs. 5,145.52 million at the year end, issued on behalf of WGBL, Welspun USA Inc. (‘WUSA'), Welspun Captive Power Generaton Limited (WCPGL), Welspun Mexico SA de CV (WELMEX) and Welspun Home Textiles UK limited (‘WHTL'). If WGBL, WUSA, WCPGL and WHTL are unable to meet their obligation as they fall due, the financial conditon and cash flows of the Company could be adversely impacted.

(c) Note 4 on Schedule 19, regarding the recognition of deferred tax assets during the year, aggregating Rs. 303.64 million, on the incremental unabsorbed Income-tax depreciation arising out of its treatment of certain excise and Value Added Tax incentives as ‘capital receipts' for income tax purposes based on the judgement in re Commissioner of Income Tax, Mumbai v/s. Reliance Industries Limited of the Honourable High Court of Judicature at Bombay. However, this case has not attained finality as the judgement has been challenged by the tax authorities in the apex court. If the final decision in the mater is eventually decided against the Company, then the carrying value of the deferred tax assets at the period end could be significantly impacted.

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

(a) Except for the indeterminate effects of the mater referred to paragraph 4 above, we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit;

(b) In our opinion, except for the indeterminate effects of the mater referred to paragraph 4 above, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

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

(d) In our opinion, except for the mater referred to paragraph 4 above, the Balance Sheet, Proft and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub- section (3C) of Section 211 of the Act;

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

(f) In our opinion and to the best of our information and according to the explanations given to us, except for the indeterminate effects of the mater referred to in paragraph 4 above, the said financial statements together with the notes thereon and attached thereto give, in the prescribed manner, the information required by the Act, and give, a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

ANNEXURE TO AUDITORS' REPORT

Referred to in paragraph 3 of the Auditors' Report of even date to the members of Welspun India Limited on the financial statements for the year ended March 31, 2011

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

(b) The fixed assets of the Company have been physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verification is reasonable.

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

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

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

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

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

(b) The Company has not taken any loans, secured or unsecured, from companies, firms or other partes covered in the register maintained under Section 301 of the Act.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, no major weakness have been noticed or reported.

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

(b) In our opinion and according to the information and explanations given to us, there are no 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, which have been made at prices which are not reasonable having regard to the prevailing market prices at the relevant time.

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

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

8. 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-secton (1) of Secton 209 of the Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

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

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

Name of the Nature of dues Amounts Period to which Statute (Rs. in the amount relates million)*

Gujarat Sales Sales Tax 10.52 2000-01,2003-04 Tax Act, 1969 including penalty and 2004-05 and interest

Central Excise Excise Duty 1.31 March 2004 to July Act, 1944 including penalty 2006 and interest

Central Excise Excise Duty 69.57 September 2005 Act, 1944 to July 2006



Name of the Forum where the Statute dispute is pending

Gujarat Sales Joint Commissioner Tax Act, 1969 of Sales Tax (Appeals - 2), Vadodara

Central Excise Commissioner of Act, 1944 Central Excise and Custom (Appeals), Daman

Central Excise Joint Secretary, Act, 1944 Ministry of Finance, Department of Revenue

* Net of amounts paid under protest

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

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

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

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

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

15. In our opinion and according to the information and explanations given to us, the 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.

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

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

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

19. The Company has not issued any debentures during the year.

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

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

For Price Waterhouse & Co.

Firm Registraton Number: 007567S Chartered Accountants

Neeraj Gupta Partner Membership Number F055158

Place: Mumbai Date: May 30, 2011


Mar 31, 2010

1. We have audited the attached Balance Sheet of Welspun India Limited (the "Company") as at March 31, 2010, and the related Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. Without qualifying our opinion, we draw your attention to:

(a) Note 8 (a) on Schedule 19, regarding the year end investments of Rs. 739.12 million in, loans of Rs. 476.57 million to, and other receivables of Rs. 42 million due from Welspun AG, a wholly owned subsidiary whose net-worth has been completely eroded, for which no provisions have been made in these financial statements for the reasons stated therein which, however, are susceptible to inherent uncertainties around the performance of Welspun AG in the environment in which it operates. If Welspun AG does not achieve its projected financial results, the carrying value of investments in, loans to and other receivable from, Welspun AG at the year end could be significantly impacted.

(b) Note 8 (b) on Schedule 19, regarding the year-end receivables of Rs. 475.93 million due from Welspun Retail Limited (WRL), a related company which has incurred significant losses up to the year-end, for which no provisions have been made in these financial statements for the reasons stated therein which, however, are susceptible to inherent uncertainties around the performance of WRL in the environment in which it operates. If WRL does not achieve its projected financial results, the receivable from WRL at the year end could be significantly impacted.

(c) Note 9 (d) on Schedule 19, regarding the Companys dependence on Welspun Global Brands Limited (WGBL) and WRL for selling its products consequent to the demerger of the marketing and investment and treasury arms of the Company effective April 1, 2009 as described in Note 9 (a) and 9(b) on Schedule 19. If the arrangement between the Company, WGBL and WRL are discontinued, the business of the Company could be adversely impacted.

(d) Notes 9 (e) and 3 on Schedule 19, regarding corporate guarantees, aggregating Rs. 3,593 million at the year end,

issued consequent to the demerger of the marketing and investment and treasury arms of the Company referred to in paragraph 4 (c) above, to the bankers of WGBL in relation to the debt facilities provided by them to WGBL, and other corporate guarantees disclosed in Note 3 on Schedule 9, aggregating Rs. 2,084.8 million at the year end, issued on behalf of WGBL, Welspun USA Inc. (WUSA) and Welspun Home Textiles UK limited (WHTL). If WGBL, WUSA and WHTL are unable to meet their obligation as they fall due, the financial condition and cash flows of the Company could be adversely impacted.

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

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

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

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

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

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

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

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 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 AUDITORS REPORT Referred to in paragraph 3 of the Auditors Report of even date to the members of Welspun India Limited on the financial statements for the year ended March 31, 2010

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

(b) The fixed assets of the Company have been physically verified by the Management during the year and no material discrepancies between the book records and the physical inventory have been noticed. In our opinion, the frequency of verification is reasonable.

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

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

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

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

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

(b) The Company has not taken any loans, secured or unsecured, from companies, firms or other Parties covered in the register maintained under Section 301 of the Act.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, no major weakness have been noticed or reported.

5. According to the information and explanations given to us, there have been no contracts or arrangements referred to in Section 301 of the Act during the year to be entered in the register required to be maintained under that Section. Accordingly, the question of commenting on transactions made in pursuance of such contracts or arrangements does not arise.

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

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

8. 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.

Referred to in paragraph 3 of the Auditors Report of even date to the members of Welspun India Limited on the financial statements for the year ended March 31, 2010

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

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of sales-tax, excise duty and service tax as at March 31, 2010 which have not been deposited on account of any dispute, are as follows:

Name of the Nature of dues Amounts

Statute (Rs. In million)*

Gujarat Sales Tax Sales Tax 9.44

Act, 1969 including penalty

and interest

Central Excise Act, Excise Duty 1.21

1944 including penalty

and interest

Central Excise Act, Excise Duty 69.28

1944

Central Excise Act, Service Tax 0.16

1944

Name of the Statute Period to which Forum where the

the amount relates dispute is pending

Gujarat Sales Tax 2001-02, 2003-04 Joint Act,1969 and 2004-05 Commissioner of

Sales Tax , Vadodara



Central Excise Act, March 2004 to July Commissioner of

1944 2006 Central Excise and

Custom (Appeals), Daman Central Excise Act, September 2005 Joint Secretary,

1944 to July 2006 Ministry of

Finance, Department of Revenue Central Excise Act, April 2004 to May Commissioner of

1944 2005 Central Excise and Custom (Appeals)



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

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

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

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

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

15. In our opinion, and according to the information and explanations given to us, the 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.

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

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

Referred to in paragraph 3 of the Auditors Report of even date to the members of Welspun India Limited on the financial statements for the year ended March 31, 2010

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

19. The Company has not issued any debentures during the year.

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

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



For Price Waterhouse & Co.

Firm Registration Number: 007567S

Chartered Accountants

Neeraj Gupta

Partner Membership Number F055158

Place: Mumbai

Date: May 12, 2010

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