Auditor Report of Enkei Wheels (India) Ltd.

Mar 31, 2019

Report on the audit of Ind AS Financial Statements Opinion

We have audited the accompanying Ind AS financial statements of Enkei Wheels (India) Limited (“the Company”) which comprise the Balance Sheetas at March 31, 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flow and for the year then ended and a summary of the significant accounting policies and other explanatory information (herein after referred to as “Ind AS financial statements”).

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS financial statements give the information required by the Companies Act, 2013 (‘the Act) in the manner so required and give a true and fair view in conformity with Indian Accounting Standards prescribed under section 133 of the Act, read with the Companies (‘Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and the accounting principles generally accepted in India of the state of affairs of the Company as at March 31, 2019, its profit and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (“SAs”) specified under section 143(10) of Act. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the attached Ind AS financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Ind AS financial statements of the current period. These matters were addressed in the context of our audit of these Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be key audit matters to be communicated in our report.

a) Assessment of Impairment

During the year ended March 31, 2019, the Company, as a prudent measure, has carried out impairment testing, on an extensive basis, of its Property Plant & Equipment, though as per past assessments, there was no indication of impairment of any of its assets /Group of assets to which assets belong.

The Company has concluded that, the value in use calculated as per the impairment testing / procedures laid down under IND AS 36, “ Impairment of Assets” is more than carrying value of assets listed in the Fixed Asset Register for impairment testing and therefore no impairment loss is to be recognised in respect of assets considered for impairment testing.

For calculation of value in use for assets or cash generating units, the management has made cash flow projections with incremental borrowing rate as discount rate, Assumptions are made for the proportion of variable cost in relation to the product revenue. Assumptions are also made for the amount of increase in fixed costs over the future period. Land has not been considered for impairment for obvious reasons. Impact of working capital changes and currency fluctuations on future cash flows have been ignored.

Fixed costs have been allocated to the cash generating unit in proportion to the estimated future revenue of the cash generating unit to the total estimated future revenue.

We, as the auditors, evaluated the appropriateness of management identification of the cash generating units. Our procedures included discussion with management personnel on the reasonableness of the assumptions and projections. We have also tested the mathematical accuracy of cash flow projections, which we understandingly found to be on a conservative basis.

b) Inventory reconciliation and valuation

The Company is in the process of implementing the system of bar codes / tagging all kinds of inventories held at its plant and warehouses. At present, tagging / bar codes is prevalent at its plant, but for the selected items of inventories. Further, currently movement of finished goods in tracked manually and thus the Company has planned for its system upgradaton for tracking slow-moving and non-moving items of finished goods in the current financial year.

The inventory of finished goods maintained by the Company at its plant and warehouses is quite substantial, which has not always been the case in earlier years. The customers have not been prompt enough to place /confirm the delivery schedules because of slight recession in the automobile industry at that point of time. Post March 31, 2019, the significant part of the year-end inventories has been liquidated.

Establishing product costing requires many instances of management judgment with effect on the reported values. This includes considering normal production levels, foreign currency, prices of raw materials and allocation of other direct and indirect costs. Currently, the allocation of direct overheads and fixed costs to the inventory is on the basis of fair estimates and reasonable judgments. The Company is in the process of developing systems to allocate the overheads on actual and real time basis. The significant accounting policies (note 2.4 (i) include principles for inventory valuation and cost composition and note 10 provides the break of total inventories

Our audit covered the following in respect of inventories and its valuation.

- Participation in physical stock takes by the Company at its plant and warehouses and tested the cut-off of deliveries in an out of inventories including the inventories which were in transit as at close of the financial year.

- Comparison of book stock with physical stock of finished goods, on a test-check basis. The shortage of 581 units (with value Rs. 7,47,968/- in aggregate) noticed at one of its warehouses, has been written off as a loss to the statement of profit and loss by the Company. Further, stores & spares of Rs. 8,79,314/have also been written off as expenses, in the absence of corresponding units in the system.

- Checking of inventory reconciliation - (both in terms of quantity and value) manually in co-ordination with the Company and found satisfactory.

- Testing, on a sample basis, inventory of raw materials and consumables to the landed cost workings which are prepared on monthly basis by the Company.

- NRV Testing, on a sample basis to ensure inventory is not overvalued. i.e. over and above the cost and we found it satisfactory.

- Relied on management representations that there are no inventories of slow /non-moving nature and estimates and assumptions used in allocation of indirect and fixed overheads.

Information Other than the Financial Statements and Auditors Report Thereon

The Company’s Board of Directors is responsible for the preparation of the other information. The other information comprises the [information included in the Management Discussion and Analysis. Board’ Report including Annexures to Board’s Report, Corporate Governance and Shareholder’s Information, but does not include the Ind AS financial statements and our auditor’s report thereon.

Our opinion on the Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Ind AS financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements.

The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. 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.

In preparing the Ind AS financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Company’s Board of Directors is also responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the Ind As financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Ind As financial statements

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

- Identify and assess the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3) (i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Company’s management

- Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

- Evaluate the overall presentation, structure and content of the Ind AS financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in Ind AS financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work ; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

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

(a) Except for the matters otherwise described in the report, 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 including Other Comprehensive Income, the Statement of Cash Flow and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid the Ind AS financial statements comply, in all material respects, with the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) On the basis of written representations received from the Directors, as on March 31,2019 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 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 A’.

(g) With respect to other matters to be included in the Auditor’s Report in accordance with the requirements of section 197 (16) of the Act, as amended: In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is within the limits laid down under section 197 of the Act. However, the remuneration paid by the Company to its Managing Director is excess of the amount as approved by the shareholders in the Annual General Meeting held on 29^th July 2016. As explained to us, Company is in process of obtaining requisite approval of the board of directors and shareholders as required under section 197 read with Schedule V of the Companies Act, 2013 in the ensuing annual general meeting.

(h) With respect to other matters to be included in the Auditors’ Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014, as amended, 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 Ind AS financial statements. Refer Note 36 (i) to Ind AS the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses under the applicable law or accounting or accounting standards.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

2. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government in terms of Section143 (11) of the Act, we give in “Annexure B”, a statement on the matters specified in paragraphs 3 and 4 of the Order.

(Referred to in paragraph 1(f) under Report on ‘Other Legal and Regulatory Requirements’ section of our report of even date on the Ind AS financial statements to the members of Enkei Wheels (India) Limited)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Enkei Wheels (India) Limited (“the Company”‘) as of March 31, 2019 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(‘the Guidance Note”).issued by the Institute of Chartered Accountants of India.

These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act,2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(‘the Guidance Note’’)and the Standards on Auditing, prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls over financial reporting, both applicable to an audit of Internal Financial Controls and both issued by the Institute of Chartered Accountants of India Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting of the Company.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that,

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

There is scope of improvement in the system by Company by automation of few of its processes which, currently, are being done manually - for e.g. material planning, material scheduling, tracking of movement in finished goods, inventory valuation, etc. The Company needs to strengthen IT controls and document IT policies.

Further, the Company needs to strengthen and update its frequency of physical verification and related documentation in respect of its fixed assets which prima facie should cover, capex polices, technical certifications in respect of commissioning of plant, useful lives asset tagging, fixed asset register etc to safeguard the losses.

Opinion

In our opinion and to the best of our information and according to the explanation given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2019, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

(Referred to in Paragraph 2 under Report on Other Legal and Regulatory Requirements section of our report of even date on the Ind AS financial statements to the members of Enkei Wheels (India) Limited)

Report on Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government in terms of Section 143 (11) of the Companies Act, 2013 (‘the Act)

On the basis of such checks, as we considered appropriate and according to the information and explanations given to us during the course of our audit, we state that:

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

(b) According to the information and explanations given to us, some portion of the fixed assets of the Company have been physically verified by the Company’s management during the year. We are informed that no material discrepancies were noticed on such verification. We have relied upon management representations for the same. evidence.

(c) According to the information and explanations given to us and on the basis our examination of the records of the Company, the title deeds of immovable properties as appearing in “Note 3-Property, Plant and Equipment” of the financial statements are held in the name of the Company as at the balance sheet date.

(ii) The inventories comprising semi-finished goods, raw materials, stores and spares etc. have been physically verified by the Company’s management during the year. In our opinion, the frequency of verification is reasonable. The discrepancies noticed on physical verification of inventory as compared to book records were not material and have been properly dealt with in the books of account. We have relied on management representations for the same.

(iii) I n our opinion and according to the information and explanations given to us, the Company has not granted any loan, secured or unsecured, to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the reporting requirements under clause (iii) (a), (b) & (c) of paragraph 3 of the Order are not applicable to the Company.

(iv) I n our opinion and according to the information and explanations given to us, the Company does not have any transactions to which the provisions of section 185 of the Act apply. There are no loans, investments, guarantees and security by a company to any person or other body corporate contemplated by the provisions section 186 of the Act. Accordingly, the provisions of clause (iv) of paragraph 3 of the Order are not applicable to the Company.

(v) The Company has not accepted any deposits from the public during the year within the meaning of provisions of section 73 to 76 or any other relevant provision of the Act and rules framed there under and does not have unclaimed deposits as at March 31,2019. Accordingly, the provisions of clause (v) of paragraph3 of the Order are not applicable to the Company.

(vi) According to the information and explanations given to us and in our opinion, maintenance of cost records has not been specified by the Central Government under sub section (1) of section 148 (1) of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014 for the business activities carried out by the Company. Accordingly, the reporting under clause (vi) of paragraph 3 of the Order are not applicable to the Company.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company is generally regular in depositing of the amounts deducted / accrued in its books of account in respect of undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, goods and services tax, service tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues as applicable to it with the appropriate authorities.

According to the records of the Company made available to us, and according to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues referred in para

(vii) (a) above were in arrears as at March 31, 2019 for a period of more than six months from the date those became payable.

(b) According to the information and explanations given to us, there are no dues of income-tax, service tax, duty of customs, duty of excise, sales-tax, value added tax, goods and service tax, cess which have not been deposited on account of any dispute other than those mentioned below.

Name of the statue / nature ofdues	Period to which the amount relates	Amount involved (Rs.)	Forum where dispute is pending
Income Tax	2015-16	3,85,59,302/-	The Commissioner of Income Tax (Appeals) -Pune
Value Added Tax	2013-14	12,54,879/-	Joint Commissioner of Sales Tax (Appeals) 2, Pune
Central Sales Tax	2013-14	10,82,231/-	Joint Commissioner of Sales Tax (Appeals) 2, Pune

(viii) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not defaulted in repayment of loans or borrowing to banks. There are no loans or borrowings from financial institutions or government and has not issued any debentures. Accordingly, the reporting under the paragraph 3 (viii) of the Order is not applicable to the Company.

(ix) I n our opinion and according to the information and explanations given to us, moneys raised by way of term loans by the Company, have, prima-facie, been applied for the purposes for which those were raised. The Company has not raised moneys by way of initial public offer or further public offer.

(x) According to the information and explanations given to us and to the best of our knowledge, no fraud by the Company or no material fraud on the Company by its officers or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanations given to us and on the basis of our examination of the records, the Company has paid / provided the managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V of the Act. However, the remuneration paid by the Company to its Managing Director is excess of the amount as approved by the shareholders in the Annual General Meeting held on 29^th July 2016. As explained to us, Company is in process of obtaining requisite approval of the board of directors and shareholders as required under section 197 read with Schedule V of the Companies Act, 2013 in the ensuing annual general meeting.

(xii) The Company is not the Nidhi Company and therefore the provisions of clause (xii) of paragraph 3 of the Order are not applicable to the Company.

(xiii) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of the Company, all transactions with the related parties are in compliance of with section 177 and 188 of the Act where applicable and the details of which have been disclosed in the financial statements etc. as required by the applicable accounting standards.

(xiv) The Company has made preferential allotment during the year under audit which is in compliance of the requirement of section 42 of Act and the amount raised have, prima- facie, been used for the purpose for which the funds were raised.

(xv) In our opinion an according to the information and explanations given to us, the Company has not entered into any non-cash transactions with its directors or persons connected with them and therefore the provisions of section 192 of the Companies Act, 2013 and reporting requirements under paragraph 3 (xv)of the Order are not applicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of clause (xvi) of paragraph 3 of the Order are not applicable to the Company.

For Asit Mehta & Associates

Chartered Accountants

Firm Registration No. 100733W

Sanjay S. Rane

Place: Pune Partner

Date: May 28^th, 2019 Membership No.100374

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Mar 31, 2018

Report on the Financial Statements

1. We have audited the accompanying Ind AS financial statements of Enkei Wheels (India) Limited (“the Company”) which comprise the Balance Sheetas at March 31, 2018, the Statement of Profit and Loss (including statement of Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equityfor the year then ended and a summary of the significant accounting policies and other explanatory information (herein after referred to as “Ind AS financial statements”).

Management’s Responsibility for the 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 Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and the statement of changes in equity of the Company in accordance with the accounting principles generally accepted in India including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with the Companies (‘Indian Accounting Standards 2015, as amended.

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 the 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 Ind AS 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 Ind AS 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 and Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government in terms of sub-section (11) of Section 143 of the Act.

We conducted our audit Ind AS financial statements in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as 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 Ind AS financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls relevant to the Company’s preparation of the Ind AS financial statements that give true and fair view 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 the Company’s Directors as well as evaluating the overall presentation of the Ind AS financial statements.

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

Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS 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, 2018, and its Profit including Other Comprehensive Income, its Cash Flows and the Statement of Changes in Equity for the year ended on that date.

Report on Other Legal and Regulatory Requirements

7. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government in terms of sub-section (11) of Section143 of the Act, we give in the “Annexure A”, a statement on the matters specified in paragraphs 3 and 4 of the Order.

8. 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 including Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid the Ind AS financial statements comply, in all material respects, with the Indian Accounting Standards prescribed under section 133 of the Act read with Companies (‘Indian Accounting Standards) Rules, 2015, as amended.

(e) On the basis of written representations received from the Directors, as on March 31,2018 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018 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 B’

(g) With respect to 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 Ind AS financial statements. Refer Note 32 (k) to Ind AS the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses under the applicable law or accounting or accounting standards.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

(Referred to in Paragraph 7 under the heading ‘Report on Other Legal and Regulatory Requirements’ of our report of even date on the financial statements of Enkei Wheels (India) Limited (‘the Company’) for the year ended March 31, 2018)

Report on Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government in terms of Section 143 (11) of the Companies Act, 2013 (‘the Act)

On the basis of such checks, as we considered appropriate and according to the information and explanations given to us during the course of our audit, we state that:

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

(b) In our opinion and according to the information and explanations given to us,some of the fixed assets have been physically verified by the Company’s management as a part of the Company’s plan of verification of all its fixed assets over a period three years. We are informed that no material discrepancies were noticed, on physical verification. We have relied on management representations for the same.

(c) According to the information and explanations given to us and on the basis our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.

(ii) The inventories comprising semi-finished goods, raw materials, stores and spares etc. have been physically verified by the Company’s management during the year. In our opinion, the frequency of verification is reasonable. The discrepancies noticed on physical verification of inventory as compared to book records were not material and have been properly dealt with in the books of account. We have relied on management representations for the same.

(iii) In our opinion and according to the information and explanations given to us, the Company has not granted any loan, secured or unsecured, to companies, firms, limited liability partnerships or other parties covered in the register maintained under section189 of the Companies Act, 2013. Accordingly, the provisions of clause (iii) (a),(b)&(c) of paragraph 3 of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, the Company does not have any transactions to which the provisions of section 185 of the Act apply. There are no loans, investments, guarantees and security by a company to any person or other body corporate contemplated by the provisions section 186 of the Act. Accordingly, the provisions of clause (iv) of paragraph 3 of the Order are not applicable to the Company.

(v) The Company has not accepted any deposits from the public and does not have unclaimed deposits within the meaning of the provisions of section 73 to 76 of the Companies Act, 2013 Act and rules framed thereunder. Accordingly, the provisions of clause (v) of paragraph3 of the Order are not applicable to the Company.

(vi) According to the information and explanations given to us and in our opinion, maintenance of cost records has not been specified by the Central Government under sub section (1) of section 148 (1) of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014. Accordingly, the provisions of clause (vi) paragraph 3 of the Order are not applicable to the Company.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company,the Company is generally regular in depositing of the amounts deducted / accrued in its books of account in respect of undisputed statutory dues including provident fund,employees’ state insurance, income-tax,sales-tax, goods and services tax, service tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues as applicable to it with the appropriate authorities.

According to the records of the Company and according to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues referred above were in arrears as at March31, 2018 for a period of more than six months from the date those became payable.

(b) According to the information and explanations given to us, there are no dues of income-tax, service tax,

duty of customs, duty of excise, sales-tax, value added tax, cess which have not been deposited on account of any dispute other than those mentioned below.

Name of	Period to	Amount	Forum where
the statue	which the	involved	dispute is
/ nature	amount	(Rs.)	pending
of dues	relates
Value	2010-11	5,34,28,525/-	Joint Commissioner
Added Tax			of Sales Tax
			(Appeals) 2,Pune

(viii) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not defaulted in repayment of loans or borrowing to banks. There are no loans or borrowings from financial institutions or government and has not issued any debentures.

(ix) In our opinion and according to the information and explanations given to us, money raised by way of term loans by the Company, have, prima-facie, been applied for the purposes for which those were raised. The Company has not raised moneys by way of initial public offer or further public offer.

(x) According to the information and explanations given to us and to the best of our knowledge, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanations given to us and on the basis of our examination of the records, the Company has paid / provided the managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V of the Act.

(xii) The Company is not the Nidhi Company and therefore the provisions of clause (xii) of paragraph 3 of the Order are not applicable to the Company.

(xiii) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of the Company, transactions with the related parties are in compliance of with section 177 and 188 of the Act where applicable and the details of which have been disclosed in the financial statements etc as required by the applicable accounting standards.

(xiv) The Company has made preferential allotment during the year under audit which is in compliance of the requirement of section 42 of Act and the amount raised have, prima- facie, been used for the purpose for which the funds were raised.

(xv) In our opinion an according to the information and explanations given to us, the Company has not entered into any non-cash transactions with its directors or persons connected with them and therefore the provisions of section 192 of the Companies Act, 2013 are not applicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of clause (xvi) of paragraph 3 of the Order are not applicable to the Company.

(Referred to in Paragraph 8 (f) of our report of even date on the Ind AS financial statements of Enkei Wheels (India) Limited (‘the Company’)for the year ended March 31, 2018)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Enkei Wheels (India) Limited (“the Company”‘) as of March 31, 2018 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(‘the Guidance Note’’).issued by the Institute of Chartered Accountants of India.

These responsibilities include the design,implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, prescribed under section 143(10) of the Act,to the extent applicable to an audit of internal financial controls over financial reporting, both applicable to an audit of Internal Financial Controls and both issued by the Institute of Chartered Accountants of India Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that,

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

According to the information and explanations given to us, the Company is in the process of documenting and strengthening some of its policies and business processes so as to cover all components and facets of internal control environment and risk assessment framework.

Opinion

In our opinion and to the best of our information and according to the explanation given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note.

For Asit Mehta & Associates

Chartered Accountants

Registration No. 100733W

Sanjay S. Rane

Place: Pune Partner

Date: May 25, 2018 Membership No.100374

---

Mar 31, 2017

To,

The Members

Enkei Wheels (India) Limited.

Report on the Financial Statements

1. We have audited the accompanying financial statements of Enkei Wheels (India) Limited ("the Company") which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements.

2. The Company''s Board of Directors and management are responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to 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 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 the Companies (Accounting Standards) Amendment Rules, 2016 ("the Rules").

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 regularities; 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.

Auditors Responsibility

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

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under and the Order under section 143(11) of the Act.

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.

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 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 controls relevant to the Company''s preparation of the financial statements that give true and fair view 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 the Company''s Directors and 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 on the financial statements.

Emphasis of Matter:

6. a) The Company has followed the useful lives of the assets prescribed under Part C of Schedule II to the Companies Act, 2013, for calculation of depreciation in respect of its fixed assets(s). It has neither reviewed useful lives of all its assets nor determined useful lives of significant components of all its principal assets separately as required under amended Accounting Standard (AS) -10, ''Property, Plant and Equipment'' notified and duly amended under the Companies (Accounting Standard), Amendment Rules, 2016, in its entirety, as useful lives of only some of its assets /components have been reviewed and depreciation has been provided accordingly.

b) The Company has not tested its fixed assets for impairment as required under - Accounting Standard (AS) -28, "Impairment of Assets" read with amended Accounting Standard (AS) -10. The Company''s management believes that there is no indication of potential impairment loss as of the March 31, 2017.

Opinion

7. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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, 2017, and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

8. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government in terms of sub-section (11) of Section 143 of the Act, we give in "Annexure A", a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

(a) Except for the matters described under ''Emphasis of Matter'' paragraph above, and for the reasons stated therein, 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, in all material respects, with the Accounting Standards specified under section 133 of the Act, read with the Rules, as applicable except and to the extent referred under ''Emphasis of Matter'' paragraph above.

(e) On the basis of written representations received from the Directors, as on March 31,2017 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017 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 B .

(g) With respect to 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 33(k) 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 under the applicable law or accounting or accounting standards.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

iv. The Company has provided requisite disclosures in its financial statements as to holdings as well as dealings in Specified Bank Notes (SBN) during the period from November 08, 2016 to December 30, 2016 and these are in accordance with the books of account maintained by the Company. Refer Note 33(m) to the financial statements;

ANNEXURE- A TO THE INDEPENDENT AUDITORS'' REPORT

(Referred to in Paragraph 8 under the heading ''Report on Other Legal and Regulatory Requirements of our report of even date on the financial statements of Enkei Wheels (India) Limited (''the Company'') for the year ended March 31, 2017).

Report on Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government in terms of

Section 143 (11) of the Companies Act, 2013 (''the Act)

On the basis of such checks, as we considered appropriate and according to the information and explanations given to us during the course of our audit, we state that:

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

(b) In our opinion and according to the information and explanations given to us, some of the fixed assets have been physically verified by the Company''s management as a part of the Company''s plan of verification of all its fixed assets over a period three years. We are informed that discrepancies noticed, on physical verification have been properly dealt with in the books of account.

(c) According to the information and explanations given to us and on the basis our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.

(ii) The inventories comprising semi-finished goods, raw materials, stores and spares etc. have been physically verified by the Company''s management during the year. In our opinion, the frequency of verification is reasonable. The discrepancies noticed on physical verification of inventory as compared to book records were not material and have been properly dealt with in the account.

(iii) In our opinion and according to the information and explanations given to us, the Company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause (iii) (a), (b) & (c) of paragraph 3 of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, the Company does not have any transactions to which the provisions of section 185 of the Act apply. There are no loans, investments, guarantees and security by a company to any person or other body corporate contemplated by the provisions section 186 of the Act. Accordingly, the provisions of clause (iv) of paragraph 3 of the Order are not applicable to the Company.

(v) The Company has not accepted any deposits from the public and does not have unclaimed deposits within the meaning of the provisions of section 73 to 76 of the Companies Act, 2013 Act and rules framed there under. Accordingly, the provisions of clause (v) of paragraph 3 of the Order are not applicable to the Company.

(vi) According to the information and explanations given to us and in our opinion, maintenance of cost records has not been specified by the Central Government under sub section (1) of section 148 (1) of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014. Accordingly, the provisions of clause (vi) paragraph 3 of the Order are not applicable to the Company.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company is generally regular in depositing of the amounts deducted / accrued in its books of account in respect of undisputed statutory dues including provident fund, employees'' state insurance, income-tax, service tax, duty of customs, duty of excise, sales-tax, value added tax, cess and other material statutory dues as applicable to it to the appropriate authorities.

According to the records of the Company and according to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues referred above were in arrears as at March 31, 2017 for a period of more than six months from the date those became payable.

(b) According to the information and explanations given to us, there are no dues of income-tax, service tax, duty of customs, duty of excise, sales-tax, value added tax, cess which have not been deposited on account of any dispute other than those mentioned below.

Name of the Statue/nature of Dues	Period to which the amount relates	Amount involved (Rs.)	Forum where dispute is pending
Value Added Tax	2010-11	53,428,525/-	Joint Commissioner of Sales Tax (Appeals) 2, Pune

(viii) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not defaulted in repayment of loans or borrowing to banks. There are no loans or borrowings from financial institutions or government and has not issued any debentures.

(ix) In our opinion and according to the information and explanations given to us, moneys raised by way of term loans by the Company, have, prima-facie, been applied for the purposes for which those were raised. The Company has not raised moneys by way of initial public offer or further public offer.

(x) According to the information and explanations given to us and to the best of our knowledge, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanations given to us and on the basis of our examination of the records of the Company has paid / provided the managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V of the Act.

(xii) The Company is not the Nidhi Company and therefore the provisions of clause (xii) of paragraph 3 of the Order are not applicable to the Company.

(xiii) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of the Company, transactions with the related parties are in compliance of with section 177 and 188 of the Act where applicable and the details of which have been disclosed in the financial statements etc as required by the applicable accounting standards.

(xiv) The Company has made preferential allotment during the year under audit which is in compliance of the requirement of section 42 of Act and the amount raised have, prima- facie, been used for the purpose for which the funds were raised.

(xv) In our opinion an according to the information and explanations given to us, the Company has not entered into any non-cash transactions with its directors or persons connected with the and therefore the provisions of section 192 of the Companies Act, 2013 are not applicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of clause (xvi) of paragraph 3 of the Order are not applicable to the Company.

ANNEXURE- B TO THE INDEPENDENT AUDITORS'' REPORT

(Referred to in Paragraph 8 (f) of our report of even date on the financial statements of Enkei Wheels (India) Limited (''the Company'') for the year ended March 31, 2017)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Enkei Wheels (India) Limited ("the Company"'') as of March 31, 2017 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (''the Guidance Note'''').

These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safe guarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors'' Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls over financial reporting, both applicable to an audit of Internal Financial Controls and both issued by the Institute of Chartered Accountants of India Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that,

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

According to the information and explanations given to us and based on our audit, the following deficiencies & weaknesses have been identified in internal financial controls over financial reporting as at March 31, 2017.

a) The existing rules, policies, and some of its key business processes including that in respect of assets and related expenditure have remained to be documented, updated and strengthened to cover all components and facets of internal control.

The Company needs to improve upon the policy documentation and related controls to ensure proper accounting, classification and the safeguarding of all its properties and assets from loss, damage, misappropriation etc.

We have been advised that the Company''s management has already initiated some steps in this regard.

b) The Company does not have risk assessment framewok & mitigation plan at present, to address the risks - both current and potential. The Company, inter alia, has been incurring foreign exchange losses which are quite substantial and which have eroded sizable part of the Company''s net worth.

The Company needs to ensure of its sustainability, business continuity and overall financial health of the Company in the medium term.

We have been advised that the Company''s management has already initiated some steps in this regard.

Opinion

In our opinion and to the best of our information and according to the explanation given to us, the Company has, except for the matters stated above, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note.

For Asit Mehta & Associates

Chartered Accountants

Registration No. 100733W

Sanjay S. Rane

Partner

Membership No.100374

Place : Pune

Date : May 25, 2017

---

Mar 31, 2015

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

Management's Responsibility for the Financial Statements.

2. The Company's Board of Directors & Company's management are responsible for the matters stated in section 134(5) of the Companies Act, 2013 ('the Act') with respect to 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 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 Act for safeguarding of the assets of the Company and for prevention and detection of fraud and other regularities, selection and application of appropriate accounting policies, making judgments and estimates that are reasonable and prudent and design, implementation and maintenance of 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.

Auditors' Responsibility

3. Our responsibility is to express an opinion on these 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.

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 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 controls relevant to the Company's preparation of the financial statements that give true and fair view in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control system over financial reporting and operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's Board of Directors & Company's 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 on the financial statements.

Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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

7. We draw attention to note 2.16 of the attached financial statements, "Assets/facilities retired from active use and held for re-work/disposal are classified separately as 'Assets held for Disposal'. In such situations, impairment loss is charged to the statement of Profit and Loss, in the year in which the loss is crystalised and quantified with ease.''

During the year, the management of Company has physically verified its fixed assets. However, the exercise of comparison & reconciliation of assets with its book records, the technical documentation in respect of their useful lives etc. has been

stated to be under process.

The Company's management is of the view that the above would not result in any additional amount of provision (over and above the amount of depreciation already provided) either on account of impairment or otherwise, in the financial statements for the year ended March 31, 2015.

In the absence of the details, we have relied upon management representations.

Our opinion is not modified respect of these matters.

Report on Other Legal and Regulatory Requirements

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

9) As required by section 143 (3) of the Act, we report that:

(a) Except for the matter described under 'Emphasis of Matter' in paragraph above and for the reasons stated therein we have sought and 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 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, in all material aspects, 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 written representations received from the directors, as on March 31,2015 and taken on record by the Board of Directors, none of the directors of the Company 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 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 in accordance with the generally accepted accounting practice disclosed the impact of pending litigations on its financial position in its financial statements. Also refer Note 32(k) of 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. The provisions as to transferability of amount to the Investor Educator and Protection Fund are not applicable to the Company for the year under audit.

Referred to in Paragraph 8 under the heading 'Report on Other Legal and Regulatory Requirements of our report of even date on the financial statements of Enkei Wheels (India) Limited('the Company') for the year ended March 31, 2015)

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 state that:

(i) (a) The Company is maintaining records showing particulars including quantitative details and situation of fixed assets

However, the asset numbering exercise, documentation / certification of useful lives of assets etc. are stated to be under process.

(b) As informed to us, the management of the Company has physically verified its fixed assets during the year. However, comparison and reconciliation of the assets with its book records are stated to be under process and therefore we are unable to comment on whether material discrepancies, if any have been noticed on such physical verification of fixed assets.

(ii) (a) The inventories comprising semi-finished goods, raw materials, stores and spares etc. have been physically verified

by the Company's management during the year. In our opinion, the frequency of verification is reasonable.

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

(c) In our opinion and on the basis of our examination of records, the Company has maintained proper records of its inventories. The discrepancies noticed on physical verification of inventory as compared to book records were not material and have been properly dealt with in the accounts.

(iii) In our opinion and according to the information and explanations given to us, 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. Hence, the provisions of clause (iii) (a) & (b) of paragraph 3 of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us and having regaurd to special nature of some capital goods which are imported and for which comparable alternative quptations are not available, there exists internal control system commensurate with the size of Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. However, in our opinion, the existing internal control system needs to be strengthened in respect of fixed assets. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system of the Company.

(v) In our opinion and according to the information and explanations given to us, the Company, has not accepted any deposit within the meaning of Provisions of section 73 to 76 of the Act and rules framed there under and does not have any unclaimed deposits. Hence, the provisions of clause (v) of paragraph 3 of the Order are not applicable to the Company.

(vi) In our opinion and according to the information and explanations given to us, the requirement for maintenance of cost records pursuant to the Companies (Cost Records and Audit) Rules, 2014 specified by the Central Government of India under section 148 of the Companies Act, 2013 are not applicable to the Company year under audit, though Company has voluntarily made and maintained cost records.

(vii) (a) According to the information and explanations given to us and as per records of the Company, the Company is

generally regular in depositing undisputed statutory dues including provident fund, income-tax, wealth-tax, service tax, duty of customs, duty of excise, sales-tax, value added tax, cess and other material statutory dues as applicable to it with the appropriate authorities during the year.

(b) According to the records of the Company and according to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues referred above were in arrears as at 31st March 2015 for a period of more than six months from the date on which those became payable.

(c) According to the information and explanations given to us, there are no dues of income-tax, wealth-tax, service tax, duty of customs, duty of excise, sales-tax, value added tax, cess which have not been deposited on account of any dispute other than reported below.

Particulars : Value Added Tax

Period to which the amount relates : 2010-11

Amount involved (Rs.) : 53,428,525/-

Forum where dispute : Joint Commr.of Sales Tax (Appeals) 2, Pune

d) The provisions as to transferring the amount to Investor Education and Protection Fund under the Companies Act, 1956 (1 of 1956) are not applicable to the Company for the year under audit.

(viii) The Company has accumulated losses as at the end of the financial year, which in our opinion and according to information and explanations given to us, are not more than fifty percent of its net worth. However, the Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to the banks during the year and did not have any amount default outstanding to the financial institutions or debenture holders.

(x) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions during the year. Therefore, the provisions of clause (x) of paragraph 3 of the Order are not applicable to the Company.

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

(xii) During the course of our examination of books and records of the Company carried out in accordance with auditing standards generally accepted in India, and to the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

For Asit Mehta & Associates Chartered Accountants Registration No. 100733W

Sanjay S. Rane Partner Membership No.100374

Place : Pune Date : May 23, 2015

---

Mar 31, 2014

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

Management''s Responsibility for the Financial Statements.

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India including the accounting standards notified under the Companies Act, 1956 (''the Act'') and accounting standards issued by the Institute of Chartered Accountants of India to the extent it does not contradict any other accounting standard notified under the Act, read with the General Circular 15/2013 dated 13.09.2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

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

1) In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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, 2014;

(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.

Emphasis of Matter

2) (a) We draw attention to sub-note under Note 17 to the financial statements: ''''the balances reported in respect of trade receivables are subject to confirmations /reconciliations from the customers. In the absence of party confirmations, and reconciliations, we have relied upon management confirmation to the effect that all receivable are good and realisable in the ordinary course of the Company''s business.

(b) We draw attention to sub-note 2.16 of Note1 to the financial statements: ''''Impairment loss is charged to the statement of Profit and Loss, in the year in which the loss is crystallised and quantified with ease. Further, exercise the asset verification, determination of their useful lives, impairement etc., if any has remained to be carried out by the Company on an extensive basis covering all its assets.In context we have relied upon management confIrmation to the effect there is no loss of material amount which has remain to be provided for over and above the loss accounted during the year under audit.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

3) As required by the Companies (Auditor''s Report) Order, 2003, (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act (here in after referred to as "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.

4) 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, 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement read with statement of accounting policies dealt with by this report comply in all material respects, with the accounting standards notified under the Companies Act, 1956 (''the Act'') and accountings standerd issued by the institute of Chartered Accountants of India to the extent it does not contradict any other accounting standard notified under the Act read with the General Circular 15/2013 dated 13.09.2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

(e) On the basis of written representations received from the directors, as on March 31,2014 and taken on record by the Board of Directors, none of the directors of the Company 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 AUDITOR''S REPORT

(Referred to in Paragraph 3 under the heading ''Report on Other Legal and Regulatory Requirements of our report of even date on the financial statements of Enkei Wheels (India) Limited (''the Company'') for the year ended March 31, 2014).

(i) (a) The Company is maintaining records showing particulars including quantitative details and situation of fixed assets.

However, the asset numbering exercise and determination of useful lives of assets have remained to be certified and documented by the Company.

(b) As informed to us, some part of the fixed assets has been physically verified by the management during the year. However, in our opinion, the Company needs to undertake a comprehensive programme of physical verification covering all fixed assets. As per information given to us, no material discrepancies were noticed on physical verification of some part of the fixed assets. We have relied upon management confirmation in the absence of specific details.

(c) The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.

(ii) (a) The inventories comprising semi-finished goods, raw materials, stores and spares etc. have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) According to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and on the basis of our examination of records, the Company has maintained proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material and have been properly dealt with in the accounts.

(iii) (a) In our opinion and according to the information and explanations given to us, during the year, the Company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (a) (b) (c) (d) the Order are not applicable to the Company.

(b) In our opinion and according to the information and explanations given to us, during the year, 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. However, unsecured loans taken in the earlier years from its overseas holding & promoter company are outstanding as at the end of the year. The maximum amount involved during the year and the year-end balance of such loans aggregated to Rs. 62,35,98,001/-.

(c) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of unsecured loans taken by the Company from its overseas holding & promoter company in earlier years are prima facie not prejudicial to the interest of the Company.

(d) In our opinion and according to the information and explanations given to us, the principal amount/s of unsecured loans taken by the Company from its overseas holding & promoter company are not fallen due for repayment by the end of the financial year. The payment of interest is regular.

(iv) In our opinion and according to the information and explanations given to us, there exists internal control system commensurate with the size of Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. However, in our opinion, the existing internal control system needs to be further strengthened particularly in respect of the fixed assets. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system of the Company.

(v) (a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements that need to be entered in the register maintained under section 301 of the Act have been entered.

(b) In our opinion and according to the information and explanations given to us having regard to special nature of some Capital goods imported for which comparable quotations are not available, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under section 301 of the Act and exceeding the value of rupees five lakhs in respect of each party during the year have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of sections 58A, 58AA of the Act and rulesframed there under.

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

(viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under section 209(1) (d) of the Act and are of the opinion that prima facie, the prescribed cost records have been made and maintained. We, however, have not made detailed examination of the records with a view to determine whether they are accurate and complete.

(ix) (a) According to the records of the Company, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Profession Tax, Income-tax, Wealth-tax, Sales-tax, Value Added Tax, Service Tax, Custom Duty, Excise Duty, cess and other material statutory dues as applicable to it.

(b) According to the information and explanation given to us, there are no dues payable by the Company under Employees'' State Insurance Scheme and Investor Education and Protection Fund

(c) According to the records of the Company and according to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid statutory dues were in arrears and outstanding as at March 31, 2014 for a period of more than six months from the date those became payable.

(d) According to the information and explanations given to us, there are no dues, to the extent applicable, of Income- tax, Sales-tax, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and cess which have not been deposited on account of any dispute.

(x) Post-demerger, the financial year March 31, 2014 is the fifth year of operations of the Company. The Company has accumulated losses as at the end of the financial year, which in our opinion, are not more than fifty percent of its net worth. However, the Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

(xi) Based on our examination of records and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any of the banks or financial institutions or debenture holders during the year.

(xii) Based on our examination of records and according to the information and explanations given to us, the Company has not granted 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) The Company is not a chit fund or nidhi/mutual benefit fund/society and therefore provisions of clause 4 (xiii) of the Order are not applicable to the Company.

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

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions during the year. Accordingly, the provisions of clause 4 (xv) of the Order are not applicable to the Company.

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

(xvii) According to the information and explanations given to us and on overall examination of the balance sheet of the Company, in our opinion, no funds raised on short-term basis have prima facie been used for long-term investment.

(xviii) During the year, 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. 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 and as at end the year. 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 way of public issues during the year. Accordingly, the provisions of clause 4 (xx) of the Order are not applicable to the Company.

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

For Asit Mehta & Associates Chartered Accountants Registration No. 100733W

Sanjay S. Rane (Partner) Membership No. 100374

Place : Pune Date : 26th May, 2014

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Mar 31, 2013

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements.

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India including the Accounting Standards referred to in Section 211 (3C) 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

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

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

(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.

Emphasis of Matter

2) (a) We draw attention to sub-note under Note 17 to the financial statements:The balances reported in respect of trade receivables are subject to confirmations /reconciliations from the customers at large. We are informed that all receivables are good and realisable in the ordinary course of the Company''s business. In the absence of party confirmations, we have relied upon management confirmation in respect of the same.

(b) We draw attention to Note 2.7 of statement of accounting policies: Fixed assets/facilities retired from active use and held for re-work/disposal have been classified separately as ''Assets held for disposal'' in the Balance Sheet and depreciation has not been charged on the same. The Company has not worked out deterioriation, if any, in the values of those assets and thus are stated at the values appearing in the books. We have relied upon management confirmation in respect of the same.

Our opinion is not qualified in respect of these matters.

3) As required by the Companies (Auditor''s Report) Order, 2003, (as amended) (''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 said Order.

4) 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, 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act;

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

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

(Referred to in Paragraph 3 under the heading ''Report on Other Legal and Regulatory Requirements of our report of even date on the financial statements of Enkei Wheels (India) Limited (''the Company'') .for the year ended March 31, 2013).

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 state that:

(i) (a) The Company is maintaining records showing quantitative details and situation of fixed assets. However, asset numbering exercise has remained to be completed. The liability in case of stamp duty, conveyances etc. in respect of immovable properties received on demerger from Alicon Castalloy Ltd. (erstwhile Enkei Castalloy Ltd.) on 01.04.2009, has now been crystallized and as informed to us, will be paid shortly before its due date.

(b) As informed to us, some part of the fixed assets has been physically verified by the management during the year. However, in our opinion, the Company needs to undertake a comprehensive programme of physical verification thereby book values of all its fixed assets could be compared and reconciled with the results of physical verification. We are informed that the discrepancies noticed on physical verification of the fixed assets have been properly dealt with in the books of account.

(c) The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.

(ii) (a) The inventories comprising semi-finished goods, raw materials, stores and spares etc. have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) According to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company needs to improve its inventory records so as to cover all details of each transaction and for each item of the stock. The closing inventory is established only on the basis of year-end physical verification.

(iii) (a) In our opinion and according to the information and explanations given to us, during the year, the Company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence, the provisions of clause (iii) (a) (b) (c) (d) of paragraph 4 of the Order are not applicable to the Company.

(b) In our opinion and according to the information and explanations given to us, during the year, 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 Companies Act, 1956. However, unsecured loans taken in the earlier years from its overseas holding & promoter company are outstanding as at the end of the year. The maximum amount involved and the year-end balance outstanding was Rs. 61,22,56,001/-.

(c) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of unsecured loans taken by the Company from its overseas holding & promoter company in earlier years are prima facie not prejudicial to the interest of the Company.

(d) In our opinion and according to the information and explanations given to us, the principal amount/s of unsecured loans taken by the Company from its overseas holding & promoter company are not fallen due for repayment by the end of the financial year. The payment of interest is regular.

(iv) In our opinion and according to the information and explanations given to us, there exists internal control system commensurate with the size of Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. However, in our opinion, the existing internal control system needs to be suitably strengthened particularly in respect of its fixed assets including capital work-in-process. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system of the Company.

(v) (a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of each party during the year have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time, to the extent information available with the Company.

(vi) The Company has not accepted any deposits from the public. Therefore, the provisions of clause (vi) of paragraph 4 of the Order are not applicable to the Company

(vii) The Company has internal audit system commensurate with its size and nature of its business which needs to be suitably strengthened as a part of its overall internal control system.

(viii) In our opinion and according to the information and explanations given to us, the cost records required to be maintained under section 209(l)(d) of the Companies Act, 1956 have been made and maintained. We, however, have not made detailed examination of the records.

(ix) (a) According to the records of the Company, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Profession Tax, Workmen Compensation, Income- tax, Wealth-tax, Sales-tax, Value Added Tax, Service Tax, Custom Duty, Excise Duty, cess and other material statutory dues as applicable to it.

During the year, the Company has admitted custom duty liability including interest as worked out by the DGCEI, Regional Unit, Pune in respect raw material imported under Advance Authorisation Licences received at the time of de-merger. Of the total liability, custom duty of Rs.77,50,691/- and interest of Rs.7,85,20,569/- have remained to be paid to the government authorities as at close of the financial year.

(b) According to the information and explanation given to us, there are no dues payable by the Company under Employees'' State Insurance Scheme and Investor Education and Protection Fund

(c) According to the records of the Company and according to the information and explanations given to us, no

undisputed amounts payable in respect of the aforesaid statutory dues were in arrears and outstanding as at March 31, 2013 for a period of more than six months from the date those became payable other than custom duty of Rs.77,50,691/- and interest of f''7,85,20,569/- as referred in para (a) above.

(d) According to the information and explanations given to us, there are no dues, to the extent applicable, of Income- tax, Sales-tax, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and cess which have not been deposited on account of any dispute.

(x) Post-demerger, the year ended March 31, 2013 is the fourth year of operations of the Company. The Company has accumulated losses as at the end of the financial year. However, the Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

(xi) Based on our audit procedures and according to the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to the banks and financial institutions. The Company has not borrowed money in the form of debentures.

(xii) Based on our examination of records and according to the information and explanations given to us, the Company has not granted 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 or nidhi/mutual benefit fund/society and therefore provisions of clause (xiii) of paragraph 4 of the Companies (Auditor''s Report) Order, 2003, as amended are not applicable to the Company.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of paragraph 4 of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. Therefore, the provisions of clause (xv) of paragraph 4 of the Order are not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us and on overall examination of the Balance Sheet read with notes thereon of the Company, the term loans have prima-facie been applied for the purposes for which they were obtained.

(xvii) In our opinion and according to the information and explanation given to us and on overall examination of the Balance Sheet read with notes thereon of the Company, no funds raised on short-term basis have prima facie been used for long-term investment.

(xviii) During the year, the Company has made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act, on conversion of 39,13,950 compulsorily convertible preference shares into equity shares, earlier issued on preferential basis. Accordingly, 5,21,860 equity shares of face value of Rs. 5/- each at a premium of Rs. 70/- each have been allotted to the overseas holding/promoter company, viz. Enkei Corporation, Japan. The said allotment is in compliance with SEBI Regulations and listing Agreement. In our opinion and according to the information and explanation given to us, the price at which shares have been issued is not prejudicial to the interest of the Company.

xix) The Company has not issued debentures during the year. The Company also did not have any debentures outstanding as at the end the year.

(xx) The Company has not raised any money by way of public issue during the year.

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



For Asit Mehta & Associates

Chartered Accountants

Registration No. 100733W





Sanjay S. Rane

(Partner)

Membership No. 100374

Place : Pune

Date : May 21, 2013

---

Mar 31, 2012

1. We have audited the attached Balance Sheet of Enkei Wheels (India) Limited (the Company) as at March 31, 2012, the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure 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 statements presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, (as amended by DCA Notification G.S.R. 766(E), dated November 25, 2004) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to 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, 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards (AS) referred to in sub-section (3C) of Section 211 of the Companies Act,1956, except AS-ll-'The Effects of changes in Foreign Exchange Rates'.

Foreign currency monetary liabilities including loans, payable to group companies have not been restated by the Company at the year-end closing rate. The accounting treatment is not in compliance of the provisions of the Accounting Standard (AS-11) -'The Effects of changes in Foreign Exchange Rates'.The effect of non-compliance of the provisions on the Statement of Profit and Loss of the year has not been quantified by the Company as explained in note no.2.9 of the accounts.

Further, group payables (including old balances) are stated to be in the process of reconciliation by the Company.

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

f) In our opinion and to the best of our information and according to the explanation given to us, the said accounts read together with significant accounting policies and notes thereon and subject to para (d) above give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

ANNEXURE TO THE AUDITOR'S REPORT

(Referred to in paragraph 3 of our report of even date)

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 state that: (reference of the phrase 'during the year' hereinafter should be read and understood as 'during the year ended 31st March 2012')

(I) (a) The Company is maintaining records showing quantitative details and situation of fixed assets. However, asset numbering exercise is stated to be under compilation. Further, legal formalities including payment of stamp duty, conveyances etc. in respect of immovable properties received on demerger from Alicon Castalloy Ltd. (erstwhile Enkei Castalloy Ltd.) on 1st April 2009 are yet to be completed by the Company.

(b) As informed to us, some part of the fixed assets has been physically verified by the management during the year. However, in our opinion, the Company needs to undertake a comprehensive programme of physical verification thereby book values of all its fixed assets could be compared and reconciled with the results of physical verification. We are informed that the discrepancies noticed on physical verification of the fixed assets have been properly dealt with in the books of account.

(c) The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.

(ii) (a) The inventories comprising semi-finished goods, raw materials, stores and spares etc. have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) According to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. However, in our opinion, the procedures need to be further strengthened so that slow and non-moving inventories can be identified and adjusted for losses.

(c) The Company needs to improve its inventory records so as to cover all details of each transaction and for each item of the stock. The closing inventory is established only on the basis of year-end physical verification.

(iii) (a) In our opinion and according to the information and explanations given to us, during the year, the Company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraph 4(iii) (b), (c) and (d) of the Order are not applicable.

(b) In our opinion and according to the information and explanations given to us, during the year, 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 Companies Act, 1956. However, the Company had taken unsecured loans from its overseas promoter company in earlier years which have remained outstanding as at the end of the year where the year-end balance is Rs.547,111,754/-.

(c) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of unsecured loans taken by the Company from its overseas promoter company in earlier years are prima facie not prejudicial to the interest of the Company.

(d) The principal amount/s of unsecured loan/s taken by the Company from its overseas promoter Company is not yet due for repayment by the end of the financial year. The payment of interest is regular.

(iv) In our opinion and according to the information and explanations given to us, there exists internal control system commensurate with the size of Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods. However, in our opinion, the existing internal control system needs to be further strengthened particularly in respect of fixed assets. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system of the Company.

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

(b) According to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time, to the extent that such comparative prices are available and where items purchased/sold are of special nature for which suitable alternative sources do not exist.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit from the public during the year. We are informed that no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this regard.

(vii) The Company has internal audit system commensurate with its size and nature of its business which needs to be further strengthened as a part of its overall internal control system.

(viii) In our opinion and according to the information and explanations given to us, the cost records required to be maintained under section 209(l)(d) of the Companies Act, 1956 have been made and maintained. We, however, have not made detailed examination of the records.

(ix) (a) Based on verification of records and information and explanations given to us, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Workmen Compensation, Income-tax, Sales-tax, Value Added Tax, Service Tax, Custom Duty, Excise Duty, cess and other material statutory dues as applicable.

According to the information and explanation given to us, there are no dues payable by the Company under Employees' State Insurance Scheme and Investor Education and Protection Fund.

According to the information and explanation given to us, no undisputed amounts payable in respect of the aforesaid statutory dues were in arrears and outstanding as at March 31, 2012 for a period of more than six months from the date those became payable.

(b) According to the information and explanations given to us, there are no dues, to the extent applicable, of Income-tax, Sales-tax, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and cess which have not been deposited on account of any dispute.

(x) Post-demerger, the year ended March 31, 2012 is third year of operations of the Company. The Company has accumulated losses as at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, the Company has not defaulted in repayment of dues to the banks and financial institutions. The Company has not borrowed money in the form of debentures.

(xii) Based on our examination of records and according to the information and explanations given to us, the Company has not granted 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 or Nidhi Mutual benefit Fund/Society and therefore provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003, as amended are not applicable to the Company.

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

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

(xvi) In our opinion and according to the information and explanations given to us and on overall examination of the Balance Sheet read with notes thereon of the Company, the term loans have prima-facie been applied for the purposes for which they were obtained.

(xvii) In our opinion and according to the information and explanation given to us and on overall examination of the Balance Sheet read with notes thereon of the Company with notes annexed to, no funds raised on short-term basis have prima facie been used for long-term investment.

(xviii) During the year, 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 other than conversion of 9,251,250 compulsorily convertible preference shares into equity shares, earlier issued on preferential basis to its overseas promoter company. Accordingly 1,233,500 equity shares of Face value of Rs. 5/- each at a premium of Rs. 70/- each have been allotted to the overseas promoter company, viz. Enkei Corporation, Japan. The said allotment is in compliance with clause 40A of the Listing Agreement. In our opinion and according to the information and explanation given to us, the price at which shares have been issued is not prejudicial to the interest of the Company.

(xix) The Company has not issued debentures during the year. The Company also did not have any debentures outstanding as at the end the year.

(xx) The Company has not raised any money byway of public issue during the year.

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

For Asit Mehta & Associates Chartered Accountants FirmRegnNo. 100733W

Sanjay. Rane (Partner) Membership No. 100374

Place: Pune Date: 21st May 2012

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Mar 31, 2010

1. We have audited the attached Balance Sheet of Enkei Wheels (India) Limited (the Company) as at 31st March, 2010 and the Profit and Loss Account for the period ended on that date both 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.

Pursuant to the Scheme of Arrangement (de-merger) sanctioned by the Hon'ble High Court of Bombay, the Wheel Division of Enkei Castalloy Limited (ECL) was de-merged into Enkei Wheels (India) Limited (EWIL) with effect from end of the day of 31st March 2010. However, since the Scheme had provided for transfer and vesting of all assets and liabilities of the Wheel Division of ECL to EWIL w.e.f. the appointed date and which is 01.04.2009, the balances as of 01.04.2009, as identified and mutually agreed by the managements of the respective companies have been carried forward in the accounts of the respective companies.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure 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 statements presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, (as amended by DCA Notification G.S.R. 766(E), dated November 25, 2004) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable.

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

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

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 such books unless stated otherwise;

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

d) In our opinion, the Balance Sheet and the Profit & Loss Account dealt with by this report comply in all material respects with the Accounting Standards (AS) referred to in sub-section (3C) of Section 211 of the Companies Act,1956, unless stated otherwise in notes to accounts;

e) On the basis of written representations received from the directors as at 31st March 2010 and taken on record by the Board of Directors, we report that none of the Directors was disqualified as at 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanation given to us, the said accounts read together with and subject to notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(I) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010 and

(ii)In the case of the Profit and Loss Account, of the loss for the period ended on that date

(Referred to in paragraph 3 of our report of even date)

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 state that:

(I) (a) The Company is maintaining records showing details and situation of fixed assets. However, asset numbering exercise is stated to be under compilation. Pending completion of legalities, the assets of the demerged undertaking have been transferred to the Company at the values which were appearing in the books of the demerged Company as on the appointed date, i.e. 01.04.2009.

(b) As informed to us, fixed assets (more appropriately listed in Schedule A of the Scheme of Arrangement (de-merger)) have been verified by the management during the year. However, in our opinion, the Company needs to undertake a comprehensive programme of physical verification by which book values could be reconciled with physical tangible assets.

(c) A substantial part of the fixed assets has not been disposed off during the year.

(ii) (a) The inventories comprising semi-finished goods, raw materials, stores and spares etc. have been physically verified by the management at the end the period covered by the audit.

(b)In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business which needs to be further strengthened to quickly identify slow/non moving inventories, stock held by others etc. if any.

(c) The Company needs to improve its inventory records so as to contain all details of each transaction and for each item of the stock. The closing inventory is established on the basis of year-end physical verification.

(iii) (a) In our opinion and according to the information and explanations given to us, during the period, the Company has not granted any loan, secured or unsecured, to companies, firms or other parties that would require to be listed in the register maintained under section 301 of the Companies Act, 1956.

(b) In our opinion and according to the information and explanations given to us, during the period, the Company has taken unsecured loan from its foreign collaborator shareholder of JPY 200 mio equivalent to Rs. 900.69 lakhs. The same along with loan taken in earlier year has remained outstanding at the end of the year, where the aggregate amount involved is Rs. 2363.50 lakhs. Other than this, the Company has not taken any loans secured or unsecured, from companies, firms or other parties that would require to be listed in the register maintained under section 301 of the Companies Act, 1956.

(iv) According to the information and explanations given to us, there exists internal control procedures commensurate with the size of Company and the nature of its business. with regard to purchase of inventory, fixed assets and for the sale of goods. However, in our opinion, the existing system needs to be strengthened particularly in respect of documentation and record keeping. However, no major weakness was noticed in internal control system during the period.

(v) (a) According to information and explanations given to us, among others, the Company is in the process of entering the particulars of contracts or arrangements in the register required to be maintained under section 301 of the Companies Act, 1956 and thus could not be made available to us for our verification.

(b) According to the information and explanations given to us, the transactions in pursuance of such contracts or arrangements and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time, to the extent that such comparative prices are available.

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

(vii) Post-demerger, the financial year.2009-10, has only been the first year of operations of the Company, it did not have full-fledged internal audit system.

(viii) According to the information and explanations given to us and on verification of records, the Company has initiated the exercise of maintaining the cost records required to be maintained under section 209(1) (d) of the Companies Act, 1956.

(ix) (a) Based on verification of records and information and explanations given to us, the Company is generally regular in depositing with appropriate authorities undisputed amount of statutory dues including Provident Fund, Workmen Compensation, Income tax, Value Added Tax, Custom Duty, Excise Duty and Service Tax.

(b) According to the information and explanations given to us, there are no dues payable by the Company under the Employees State Insurance Scheme and Investor Education and Protection Fund.

(c) According to the information and explanation given to us, no undisputed materials amounts payable in respect of the statutory dues referred above were in arrears as at 31st March 2010 for the period more than six months from the date they became payable.

(d) According to the information and explanations given to us, there are no dues, to the extent applicable, of Sales-tax,/ Income- tax//Customs Duty/ Wealth Tax / Excise Duty /Cess, which have not been deposited on account of any dispute.

(x) The Company has accumulated losses as at the end of the financial period under audit. However, the Company has not incurred cash losses during the period covered by our audit.

(xi) Based on our audit procedures and on the information and explanations given by the management, the Company has not defaulted in repayment of dues to the banks. The Company has not borrowed money in the form of debentures.

(xii) Based on our examination of records and according to the information and explanations given to us, the Company has not granted 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/nidhi/mutual benefit fund/society and therefore provisions of clause 4 (xiii) of the Order are not applicable to the Company.

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

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

(xvi) In our opinion and according to the information and explanations given to us and on overall examination of the Balance Sheet of the Company, we report that, the term loans have been applied for the purpose for which they were obtained.

(xvii) According to the information and explanation given to us, management representations and on overall examination of the balance sheet of the Company, we are of the opinion that no funds raised on short-term basis have prima facie been used for long- term investment.

(xviii) During the period under audit, 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. However, during the current financial year, the Company has allotted convertible preference shares to its foreign collaborator shareholder which was pending for allotment on the balance-sheet date.

(xix) The Company did not have any outstanding debentures at the end the period under audit.

(xx) The Company has not raised any money by public issues during the period under audit.

(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 such case by the management.

For Asit Mehta & Associates

Chartered Accountants

Firm Regn No. 100733W

Sanjay S. Rane (Partner)

Membership No. 100374

Place: Shikhrapur,

Date : 04.08.2010