Auditor Report of Rexnord Electronics and Controls Ltd.

Mar 31, 2018

INDEPENDENT AUDITOR’S REPORT

To

The Members of

REXNORD ELECTRONICS AND CONTROLS LIMITED Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Rexnord Electronics and Controls Limited (“the Company”), which comprise the Balance Sheet as at 31 March 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information (hereinafter referred to as “the standalone Ind AS financial statements”).

Management’s Responsibility for the Standalone Ind AS Financial Statements

The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance (including other comprehensive income), changes in equity and cash flows 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 relevant Rules issued there under.

This responsibility also includes the maintenance of adequate accounting records in accordance with the provision 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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone 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 there under.

We conducted our audit of the Standalone Ind AS financial statements 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 standalone Ind AS financial statements are free from material misstatement.

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 31 March 2018, and its profit and Other comprehensive income, its changes in equity and its cash flows for the year ended on that date.

Other Matter

The standalone financial statements of the Company for the year ended March 31, 2017, were audited by another firm of chartered accountants under the Companies Act, 2013 who, vide their report dated May 30, 2017, expressed an unmodified opinion on those financial statements. Our opinion is not qualified in respect of this matter.

Report on other Legal and Regulatory Requirements

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

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

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

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

c) the Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) in our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act;

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

g) with respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014, in our opinion and to our 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 standalone Ind AS financial statements - Refer Note 36(i)(c) to the standalone Ind AS financial statements;

(ii) The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses;

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

(iv) The disclosures regarding details of specified bank notes held and transacted during 8 November 2016 to 30 December 2016 has not been made since the requirement does not pertain to financial year ended 31 March 2018.

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

(i) (a) the Company has maintained records, showing particulars including quantitative details and situation of its fixed assets;

(b) as explained to us, all the fixed assets have been physically verified by the management at the close of the year. We were informed that no material discrepancy have been noticed by the management on such verification as compared to the aforesaid records of fixed assets; and

(c) According to the information and explanations given to us, in our opinion, the title deeds of immoveable properties are held in the name of the Company except in the case of a plot of land purchased during the financial year 2016-17 by the Company as detailed below:

Particulars	Area (In Hectare)	Gross Block ('' in lakhs	Net Block ('' in lakhs)	Remarks
A plot of land situated at S. No. 61, H. No. 1 Part at Village-Kaman, Taluka -Vasai District -Palghar (MS)	0.242	14.50	14.50	Plot purchased by executing Memorandum of Understanding and possession taken. Sale deed is yet to be executed and registered.

(ii) as certified by the management, physical verification of inventories was conducted by the management at the close of the year. There were no material discrepancies noticed on physical verification of inventories as compared to book records and the same have been properly dealt with in the books of account.

(iii) the Company has, during the year, not granted any loans, secured or unsecured, to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act. Accordingly the provisions of clauses (a), (b) and (c) of paragraph 3 (iii) of the Order are not applicable to the Company.

(iv) in our opinion and according to the information and explanation given to us, the Company has complied with the provisions of section 186 the Act in respect of the investment made by it during the year. The Company has, during the year, not granted any loans and given any guarantee or provided any security in connection with a loan covered under the sections 185 and 186 of the Act.

(v) the Company has not accepted any deposit from public during the year in accordance with the provisions of sections 73 to 76 of the Act and rules framed there under.

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

(vii) (a) on the basis of books and records examined by us, amount deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, goods and services tax w.e.f. 1 July 2017, duty of customs, duty of excise, value added tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities. There are no arrears of undisputed statutory dues as at the last day of financial year concerned, outstanding for a period of more than six months from the date they became payable except Central Sales Tax '' 26255.00.

(b) on the basis of books and records examined by us, there are no dues of income tax, sales tax, service tax, goods and services tax w.e.f. 1 July 2017, duty of customs, duty of excise and value added tax which have not been deposited with appropriate authorities on account of any dispute.

(viii) on the basis of selective checks carried out during the course of audit, we are of the opinion that the Company has not defaulted in the repayment of dues to financial institutions and banks. There are no dues payable to the debenture holders and Government.

(ix) As per the records of the Company, the Company did not raise any money by way of initial public offer or further public offer (including debt instruments) during the year. In respect of term loans obtained during the year, we are of the opinion that the term loans were applied for the purpose for which they were obtained.

(x) According to the information and explanations given to us, 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, the Company has paid/ provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, provisions of paragraph 3(xii) of the Order are not applicable to the Company.

(xiii) According to the information and explanations given to us, transactions with the related parties are in compliance with Section 177 and Section 188 of the Act where applicable and details of such transactions have been disclosed in the standalone Ind AS financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, provisions of paragraph 3(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, provisions of 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.

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 Rexnord Electronics and Controls Limited (“the Company”) as of 31 March 2018 in conjunction with our audit of the standalone 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 issued by the Institute of Chartered Accountants of India (“the ICAI”). 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.

Auditor’s 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, issued by the ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI. 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 standalone Ind AS 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.

Opinion

In our opinion, 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 31 March 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 issued by the ICAI.

For Rakesh Soni & Co.

Chartered Accountants

(Firm Registration No. 114625W)

Rahul Chomal

Partner

Membership No. 427631

Place: Mumbai

Dated: May 30, 2018

---

Mar 31, 2016

To

The Members of

REXNORD ELECTRONICS AND CONTROLS LIMITED Report on the Financial Statements

We have audited the accompanying financial statements of Rexnord Electronics and Controls Limited (“the Company”), which comprise the Balance Sheet as at 31 March 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

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

Auditor’s Responsibility

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

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

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

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2016, and its profit and its cash flows for the year ended on that date.

Report on other Legal and Regulatory Requirements

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

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

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

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

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

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

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

f) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”; and

g) with respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014, in our opinion and to our 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 26 (i) (c) to the financial statements;

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

(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 1 under the heading of “Report on Other Legal and Regulatory Requirements” of our report of even date In terms of information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state that:

(i) (a) the Company has maintained records, showing particulars including quantitative details and situation of its fixed assets;

(b) as explained to us, all the fixed assets have been physically verified by the management at the close of the year. We were informed that no material discrepancy have been noticed by the management on such verification as compared to the aforesaid records of fixed assets; and

(c) According to the information and explanations given to us, in our opinion, the title deeds of immoveable properties are held in the name of the Company.

(ii) as certified by the management, physical verification of inventories was conducted by the management at the close of the year. There were no material discrepancies noticed on physical verification of inventories as compared to book records and the same have been properly dealt with in the books of account;

(iii) the Company has, during the year, not granted any loans, secured or unsecured, to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Act. Accordingly the provisions of clauses (a), (b) and (c) of paragraph 3 (iii) of the Order are not applicable to the Company.

(iv) as per the records of the company and according to the information and explanations given to us, the Company has not granted any loans, made any investments, given any guarantee or provided any security in connection with a loan during the year. Therefore the provisions of section 185 and 186 of the Act have not been applicable to the Company.

(v) t he Company has not accepted any deposit from public during the year in accordance with the provisions of Section 73 to 76 of the Act and rules framed there under.

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

(vii) (a) on the basis of books and records examined by us, amount deducted/

accrued in the books of account in respect of undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities. There are no arrears of undisputed statutory dues as at the last day of financial year concerned, outstanding for a period of more than six months from the date they became payable except Central Sales Tax Rs. 26255.00.

(b) on the basis of books and records examined by us, there are no dues of sales tax, service tax, duty of customs, duty of excise and value added tax which have not been deposited with appropriate authorities on account of any dispute. The particulars of amounts of income tax as at 31st March 2016 which have not been deposited on account of dispute are as follows:

Name of Statute	Nature of Dues	Amount (Rs.)	Period to which the amount relates	Forum where dispute is pending
The Income Tax Act, 1961	Disallowance of deduction	3276107-	2009-10*	Appeal with the Income Tax Appellate Tribunal

*Assessment Year

(viii) on the basis of selective checks carried out during the course of audit, we are of the opinion that the Company has not defaulted in the repayment of dues to financial institutions and banks. There are no dues payable to the debenture holders and Government.

(ix) As per the records of the Company, the Company did not raise any money by way of initial public offer or further public offer (including debt instruments) during the year. In respect of term loans obtained during the year, we are of the opinion that the term loans were applied for the purpose for which they were obtained.

(x) According to the information and explanations given to us, 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, the Company has paid/ provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, provisions of paragraph 3(xii) of the Order are not applicable to the Company.

(xiii) According to the information and explanations given to us, transactions with the related parties are in compliance with Section 177 and Section 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations give to us, the Company has not made any private placement of shares or fully or partly convertible debentures during the year. In respect of the preferential allotment of equity shares on conversion of warrants made to promoters and non promoter group, the Company has complied with the requirement of section 42 of the Act and the amount raised have been used for the purpose for which it was raised.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, provisions of 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.

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

We have audited the internal financial controls over financial reporting of Rexnord Electronics and Controls Limited (“the Company”) as of 31 March 2016 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 ICAI’). 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.

Auditor’s 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, issued by the ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI. 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.

Opinion

In our opinion, 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 31 March 2016, 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 ICAI.

For R. S. AGRAWAL & ASSOCIATES

Chartered Accountants

(Firm Registration No. 100156W)

O. P. Agrawal

Place: Mumbai. Partner

Dated : May 30, 2016 Membership No. 045862

---

Mar 31, 2015

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

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters 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 the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding the assets of the Company and for preventing and detecting the 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 control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

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

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

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

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

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

Opinion

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

We draw attention to note no. 41 to the financial statements which describes the non compliance to the provisions of section 178 of the Companies Act, 2013 with regard to composition of the Nomination and Remuneration Committee of the Company.

Our opinion is not modified in respect of this matter.

Report on other Legal and Regulatory Requirements

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

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

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

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

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

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

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

f) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014, in our opinion and to our 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 26 (i) (c) to the financial statements;

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

(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 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date

In terms of information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state that:

(i) (a) the Company has maintained records, showing particulars including quantitative details and situation of its fixed assets; and

(b) as explained to us, all the fixed assets have been physically verified by the management at reasonable intervals during the year. We were informed that no material discrepancy have been noticed by the management on such verification as compared to the aforesaid records of fixed assets.

(ii) (a) as certified by the management, physical verification of inventories was conducted by the management at the close of the year;

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

(c) the Company is maintaining proper records of inventory. As certified by the management, there were no material discrepancies noticed on physical verification of inventories as compared to book records and the same have been properly dealt with in the books of account.

(iii) (a) the Company has, during the year, not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 189 of the Act. Accordingly the provisions of clauses (a) and (b) of paragraph 3 (iii) of the Order are not applicable.

(iv) in our opinion there are adequate internal control procedures commensurate with the size of the Company and nature of its business for purchase of inventory and fixed assets and for the sale of goods. During the course of audit, no continuing failure to correct major weakness in internal control system, has been noticed.

(v) as explained to us, the Company has not accepted any deposit from public.

(vi) The Central Government has not specified the maintenance of cost records under sub section (1) of Section 148 of the Act for any of the products of the Company for the year under audit.

(vii) (a) on the basis of books and records examined by us, amount deducted / accrued in the books of account in respect of undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities. There are no arrears of undisputed statutory dues as at the last day of financial year concerned, outstanding for a period of more than six months from the date they became payable except Central Sales Tax Rs, 26255.00.

(ii) on the basis of books and records examined by us, there are no dues of sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax and cess which have not been deposited with appropriate authorities on account of any dispute. The

particulars of amounts of income tax as at 31st March 2015 which have not been deposited on account of dispute are as follows:

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

The Income Non Credit of 47308/- 2006-07* Rectification Tax Act, 1961 TDS Application with the Assessing Officer

The Income Non Credit of 154019/- 2008-09* Rectification Tax Act, 1961 TDS Application with the Assessing Officer

The Income Disallowance 327610/- 2009-10* Appeal with the Tax Act, 1961 of deduction Income Tax Appellate Tribunal

The Income Non 344100/- 2013-14* Rectification Tax Act, allowance of Application with 1961 the MAT Credit Assessing Officer

*Assessment Year

(iii) on the basis of books and records examined by us, there are no amounts which were required to be transferred to the investor education and protection fund by the Company in accordance with the relevant provisions of the Companies Act 1956 and rules made there under.

(viii) the Company has neither accumulated losses at the end of the financial year nor has it incurred cash losses, both in the financial year under report and in the immediately preceding financial year.

(ix) on the basis of selective checks carried out during the course of audit, we are of the opinion that the Company has not defaulted in the repayment of dues to banks and financial institutions. There are no dues payable to the debenture holders.

(x) the Company has not given any guarantee for loans taken by others from banks or financial institutions. Therefore provisions of paragraph 3 (x) of the Order are not applicable to the Company.

(xi) in our opinion, the term loan was applied for the purpose for which it was obtained.

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

For R.S. AGRAWAL & ASSOCIATES

Chartered Accountants

(Firm Registration No. 100156W)



R. S. Agrawal

Partner

Membership No. 033216

Place : Mumbai

Dated : May 26, 2015

---

Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principal generally accepted in India. 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

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:

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

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

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

Report on Other Legal and Regulatory Requirements

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

2. Attention of the members is invited that the composition of the remuneration committee is not in conformity with the requirements of Schedule XIII to the Act.

3. 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 notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013; and

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

ANNEXURE TO INDEPENDENT AUDITORS'' REPORT Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date

In terms of information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state that:

(i) (a) the Company has maintained records, showing particulars including quantitative details and situation of its fixed assets;

(b) as explained to us, all the fixed assets have been physically verified by the management at reasonable intervals during the year. We were informed that no material discrepancy have been noticed by the management on such verification as compared to the aforesaid records of fixed assets; and

(c) there was no substantial disposal of fixed assets during the year.

(ii) (a) as certified by the management, physical verification of inventories was conducted by the management at the close of the year;

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

(c) the Company is maintaining records of inventory. As certified by the management, there were no material discrepancies noticed on physical verification of inventories as compared to book records and the same have been properly dealt with in the books of account.

(iii) (a) the Company has, during the year, not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Act;

(b) as the Company has not granted any loans, therefore, the provisions of sub clauses (b), (c) and (d) of the clause 4 (iii) of the Order are not applicable to the Company;

(c) the Company has taken interest free unsecured loans from two parties covered in the register maintained under section 301 of the Act. The maximum amount involved during the year was e 6670000.00 and balance of loan taken from such parties at the end of the year wasRs. 6170000.00;

(d) the terms and conditions of the aforesaid interest free unsecured loans taken were prima facie not prejudicial to the interest of the Company; and

(e) since the aforesaid loans have not become due for payment, payment of principal amount of the same is considered to be regular.

(iv) in our opinion there are generally adequate internal control procedures commensurate with the size of the Company and nature of its business for purchase of inventory and fixed assets and for the sale of goods. During the course of audit, no major weakness in internal control, has been noticed.

(v) (a) in our opinion, the particulars of contracts and arrangements referred to in section 301 of the Act, have been entered in the register required to be maintained under that section; and

(b) in our opinion and according to information and explanation given to us, there were no transactions made in pursuance of the contracts or arrangements entered in the register required to be maintained under section 301 of the Act, exceeding the value of Rs. 500000.00 in respect of any party during the year.

(vi) as explained to us, the Company has not accepted any deposit from public.

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

(viii) the Company, as also certified by the Cost Auditors, has maintained the cost accounting records pursuant to rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Act. We have broadly reviewed such records and are of the opinion that prima facie such accounts and records have been made and maintained. However we have not carried out detailed examination of the same with a view to determine whether they are accurate or complete.

(ix) (a) on the basis of books and records examined by us, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance (ESI), Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues have generally been regularly deposited with the appropriate authorities though there has been a delay in few cases. There are no arrears of undisputed statutory dues as at the last day of financial year concerned, outstanding for a period of more than six months from the date they became payable except Interest on Excise Rs. 12183.00 and Central Sales Taxt 26255.00; and

(b) on the basis of books and records examined by us, the statutory dues outstanding on account of any dispute are as follows:

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

The Income Non Credit of 47,308/- 2006-07* Rectification Tax Act, 1961 TDS Application with the Assessing Officer

The Income Non Credit of 154019/- 2008-09* Rectification Tax Act, 1961 TDS Application with the Assessing Officer

The Income Disallowance 327610/- 2009-10* Appeal with the Tax Act, 1961 of deduction Commissioner of Income Tax (Appeals)

* Assessment Year

(x) the Company has neither accumulated losses at the end of the financial year nor has it incurred cash losses, both in the financial year under report and in the immediately preceding financial year.

(xi) on the basis of selective checks carried out during the course of audit, we are of the opinion that the Company has not defaulted in the repayment of dues to banks. There are no dues payable to the financial institutions and debenture holders.

(xii) the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore provisions of clause 4 (xii) of the Order are not applicable to the Company.

(xiii) the Company is not a chit fund or a nidhi / mutual benefit fund/society. 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. Therefore provisions of clause 4 (xiv) of the Order are not applicable to the Company.

(xv) the Company has not given any guarantee for loans taken by others from banks or financial institutions. Therefore provisions of clause 4 (xv) of the Order are not applicable to the Company.

(xvi) in our opinion, the term loan was applied for the purpose for which it was obtained.

(xvii) according to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that no funds raised on short-term basis have been used for long- term investment by the Company.

(xviii)the Company has, during the year, not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act. Therefore provisions of clause 4 (xviii) of the Order are not applicable to the Company.

(xix) the Company did not have any outstanding debenture during the year. Therefore provisions of clause 4 (xix) of the Order are not applicable to the Company.

(xx) the Company has not raised any money through a public issue during the year. Therefore provisions of clause 4 (xx) of the Order are not applicable to the Company.

(xxi) based on the audit procedures performed and the information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For R.S. AGRAWAL & ASSOCIATES Chartered Accountants (Firm Registration No. 100156W)

O.P. Agrawal

Partner Membership No. 045862

Place : Mumbai Dated : May 30, 2014

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fnancial statements of REXNORD ELECTRONICS AND CONTORLS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Proft and Loss and Cash Flow Statement for the year then ended, and a summary of signifcant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these fnancial statements that give a true and fair view of the fnancial position, fnancial performance and cash fows of the Company in accordance with the Accounting Principles generally accepted In India including Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fnancial 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 fnancial 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 fnancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fnancial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the fnancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the fnancial 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 fnancial statements.

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

Opinion

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

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

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

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

Report on Other Legal and Regulatory Requirements

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

2. Attention of the members is invited that the composition of the remuneration committee is not in conformity with the requirements of Schedule XIII to the Act.

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

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

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

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

d. in our opinion, the Balance Sheet, Statement of Proft and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act; and

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

Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date

In terms of information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state that:

(i) (a) the Company has maintained records, showing particulars including quantitative details and situation of its fxed assets;

(b) as explained to us, all the fxed assets have been physically verifed by the management at reasonable intervals during the year. We were informed that no material discrepancy have been noticed by the management on such verifcation as compared to the aforesaid records of fxed assets; and

(c) there was no substantial disposal of fxed assets during the year.

(ii) (a) as certifed by the management, physical verifcation of inventories was conducted by the management at the close of the year;

(b) the procedures, as explained to us, of physical verifcation of inventories followed by the management are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business; and

(c) the Company is maintaining records of inventory. As certifed by the management, there were no material discrepancies noticed on physical verifcation of inventories as compared to book records and the same have been properly dealt with in the books of account.

(iii) (a) the Company has, during the year, not granted any loans, secured or unsecured, to companies, frms or other parties covered in the register maintained under section 301 of the Act;

(b) as the Company has not granted any loans, therefore, the provisions of sub clauses (b), (c) and (d) of the clause 4 (iii) of the Order are not applicable to the Company;

(c) the Company has taken interest free unsecured loans from two parties covered in the register maintained under section 301 of the Act. The maximum amount involved during the year was Rs. 6670000.00 and balance of loan taken from such parties at the end of the year was Rs. 6670000.00;

(d) the terms and conditions of the aforesaid interest free unsecured loans taken were prima facie not prejudicial to the interest of the Company; and

(e) since the aforesaid loans have not become due for payment, payment of principal amount of the same is considered to be regular.

(iv) in our opinion there are generally adequate internal control procedures commensurate with the size of the Company and nature of its business for purchase of inventory and fxed assets and for the sale of goods. During the course of audit, no major weakness in internal control, has been noticed.

(v) (a) in our opinion, the particulars of contracts and arrangements referred to in section 301 of the Act, have been entered in the register required to be maintained under that section; and

(b) in our opinion and according to information and explanation given to us, there were no transactions made in pursuance of the contracts or arrangements entered in the register required to be maintained under section 301 of the Act, exceeding the value of Rs. 500000.00 in respect of any party during the year.

(vi) as explained to us, the Company has not accepted any deposit from public.

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

(viii) the Company, as also certifed by the Cost Auditors, has maintained the cost accounting records pursuant to rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Act. We have broadly reviewed such records and are of the opinion that prima facie such accounts and records have been made and maintained. However we have not carried out detailed examination of the same with a view to determine whether they are accurate or complete.

(ix) (a) on the basis of books and records examined by us, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance (ESI), Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues have generally been regularly deposited with the appropriate authorities though there has been a delay in few cases. There are no arrears of undisputed statutory dues as at the last day of fnancial year concerned, outstanding for a period of more than six months from the date they became payable except Interest on Excise Rs. 12183.00 and Central Sales Tax Rs. 41340.00; and

(x) the Company has neither accumulated losses at the end of the fnancial year nor has it incurred cash losses, both in the fnancial year under report and in the immediately preceding fnancial year.

(xi) on the basis of selective checks carried out during the course of audit, we are of the opinion that the Company has not defaulted in the repayment of dues to banks. There are no dues payable to the fnancial institutions and debenture holders.

(xii) the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore provisions of clause 4 (xii) of the Order are not applicable to the Company.

(xiii) the Company is not a chit fund or a nidhi / mutual beneft fund/society 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. Therefore provisions of clause 4 (xiv) of the Order are not applicable to the Company.

(xv) the Company has not given any guarantee for loans taken by others from banks or fnancial institutions. Therefore provisions of clause 4 (xv) of the Order are not applicable to the Company.

(xvi) in our opinion, the term loan was applied for the purpose for which they were obtained.

(xvii) according to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that no funds raised on short-term basis have been used for long-term investment by the Company.

(xviii) the Company has, during the year, not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act. Therefore provisions of clause 4 (xviii) of the Order are not applicable to the Company.

(xix) the Company did not have any outstanding debenture during the year. Therefore provisions of clause 4 (xix) of the Order are not applicable to the Company.

(xx) the Company has not raised any money through a public issue during the year. Therefore provisions of clause 4 (xx) of the Order are not applicable to the Company.

(xxi) based on the audit procedures performed and the information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For R. S. AGRAWAL & ASSOCIATES

Chartered Accountants

(Firm''s Registration No. 100156W)

O.P. Agrawal

Place : Mumbai. Partner

Dated : 30th May, 2013 Membership No. 045862

---

Mar 31, 2012

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

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

3) As required by the Companies (Auditors' Report) Order 2003 ('the Order'), issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 ('the Act'), we give in the Annexure a statement on the matters specified in the paragraph 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 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 dealt with by this report comply with the accounting standards referred to insub section (3C) of Section211 oftheAct;

e) based on the representations made by the directors of the Company and taken on record by the Board of Directors of the Company, we report that none of the directors is disqualified as at 31" March 2012 from being appointed as director in terms of clause (g) of sub section (1) of Section 274 oftheAct;

f) Attention of the members is invited that the composition of the remuneration committee is not in conformity with the requirements of Schedule XIII to the Companies Act, 1956;

g) Subject to the forgoing, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and notes to the financial statements, give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31" March, 2012; ii) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and iii)in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT

ANNEXURE REFERRED IN PARAGRAPH (3) OF AUDITORS' REPORT OF EVEN DATE ON THE ACCOUNTS OF REXNORD ELECTRONICS AND CONTROLS LIMITED FOR THE YEAR ENDED 31 ST MARCH, 2012 ON THE BASIS OF SUCH CHECKS/TEST CHECKS AS WE CONSIDER APPROPRIATE AND IN TERMS OF THE INFORMATION AND EXPLANATIONS GIVEN TO US, WE STATE THAT: -

(i) (a) the Company has maintained records, showing particulars including quantitative details and situation of its fixed assets; (b) as explained to us, all the fixed assets have been physically verified by the management at reasonable intervals during the year. We were informed that no material discrepancy have been noticed by the management on such verification as compared to the aforesaid records of fixed assets; and

(c) there was no substantial disposal of fixed assets during the year.

(ii) (a) as certified by the management, physical verification of inventory was conducted by the management at the close of the year;

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

(c) the Company is maintaining records of inventory. As certified by the management, there were no material discrepancies noticed on physical verification of inventories as compared to book records and the same have been properly dealt with in the books of account.

(iii)(a) the Company has, during the year, not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Act;

(b) as the Company has not granted any loans, therefore, the provisions of sub clauses (b), (c) and (d) of the clause 4 (iii) of the Companies (Auditors' Report) Order 2003 are not applicable to the Company;

(c) the Company has taken interest free unsecured loan from one party covered in the register maintained under section 301 of the Companies Act 1956. The maximum amount involved during the year was Rs. 1500000.00 and balance of loan taken from such party at the end of the year wasRs. 500000.00;

(d) the terms and conditions of the aforesaid interest free unsecured loan taken were prima facie not prejudicial to the interest of the Company; and

(e) since the aforesaid loan, as informed, is repayable on demand, payment of principal amount of the same is considered to be regular.

(iv)in our opinion there are generally adequate internal control procedures commensurate with the size of the Company and nature of its business for purchase of inventory and fixed assets and for the sale of goods and services. During the course of audit, no major weakness in internal control, has been noticed

(v) (a) in our opinion, the particulars of contracts and arrangements referred to in section 301 of the Act, have been entered in the register required to be maintained under that section; and

(b) in our opinion and according to information and explanation given to us, there were no transactions made in pursuance of the contracts or arrangements entered in the register required to be maintained under section 301 of the Act, exceeding the value ofRs. 500000.00 in respect of any party during the year.

(vi)as explained to us, the Company has not accepted any deposit from public.

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

(viii)The Company, as also certified by the Cost Accountants, has maintained the cost accounting records pursuant to rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Act. We have broadly reviewed such records and are of the opinion that prima facie such accounts and records have been made and maintained. However we have not carried out detailed examination of the same.

(ix)(a) on the basis of books and records examined by us, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance (ESI), Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues have generally been regularly deposited with the appropriate authorities though there has been a delay in few cases. There are no arrears of undisputed statutory dues as at the last day of financial year concerned, outstanding for a period of more than six months from the date they became payable except Interest on Excise Rs. 12183.00 and Central Sales Tax Rs. 26201.00; and

(b) on the basis of books and records examined by us, the statutory dues outstanding on account of any dispute are as follows:

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

The Income Tax Act Non Credit of TDS 47,308/- 2006-07* Rectificaton Application with the Assessing Officer

The Income Tax Act Interest on Fringe 13.430/- 2007-08* Rectification Application Benefit Tax with the Assessing Officer

The Income Tax Act Non Credit of TDS 154019/- 2008-09* Rectification Application with the Assessing Officer

The Income Tax Act Non Credit of TDS 149710/- 2009-10* Rectification Application with the Assessing Officer

*Assessment Year

(x) the Company has neither accumulated losses at the end of the financial year nor has it incurred cash losses, both in the financial year under report and in the immediately preceding financial year.

(xi)on the basis of selective checks carried out during the course of audit, we are of the opinion that the Company has not defaulted in the repayment of dues to banks. There are no dues payable to the financial institutions and debenture holders.

(xii)the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore provisions of clause 4 (xii) of the Order are not applicable to the Company.

(xiii)in our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund/society. 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. Therefore provisions of clause 4 (xiv) of the Order are not applicable to the Company.

(xv)the Company has not given any guarantee for loans taken by others from banks or financial institutions. Therefore provisions of clause 4 (xv) of the Order are not applicable to the Company.

(xvi)in our opinion, the term loans were applied for the purpose for which they were obtained.

(\\)according to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we are of the opinion that due to investment in factory building premises and other fixed assets during the year, the funds raised on short-term basis have been used for long-term investment to the extent of Rs. 963909.15 at the end of the year.

(xviii)the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act, during the year. Therefore provisions of clause 4 (xviii) of the Order are not applicable to the Company.

(xix) the Company did not have any outstanding debenture during the year. Therefore provisions of clause 4 (xix) of the Order are not applicable to the Company.

(xx)the Company has not raised any money through a public issue during the year. Therefore provisions of clause 4 (xx) of the Order are not applicable to the Company.

(xxi)based on the audit procedures performed and the information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For and on behalf of R. S. AGRAWAL & ASSOCIATES

Chartered Accountants

Firm Registration No. 100156W

O. P. Agrawal

Partner

Place : Mumbai. M. No. 045862

Dated: 1st September 2012

---

Mar 31, 2011

1) We have audited the attached Balance Sheet of REXNORD ELECTRONICS AND CONTROLS LIMITED ('the Company') as at 31st March 2011 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3) As required by the Companies (Auditors' Report) Order 2003 ('the Order'), issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 ('the Act'), we give in the Annexure a statement on the matters specified in the paragraph 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 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 Profit and 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, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub section (3C) of Section 211 of the Act;

e) based on the representations made by the directors of the Company and taken on record by the Board of Directors of the Company, we report that none of the directors is disqualified as at 31st March 2011 from being appointed as director in terms of clause (g) of sub section (1) of Section 274 of the Act;

f) Attention of the members is invited that the composition of the remuneration committee, is not in conformity with the requirements of Schedule XIII to the Companies Act, 1956;

g) Subject to the forgoing, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and other notes thereon, give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

ANNEXURE TO THE AUDITORS' REPORT

ANNEXURE REFERRED IN PARAGRAPH (3) OF AUDITORS' REPORT OF EVEN DATE ON THE ACCOUNTS OF REXNORD ELECTRONICS AND CONTROLS LIMITED FOR THE YEAR ENDED 31st MARCH, 2011 ON THE BASIS OF SUCH CHECKS/TEST CHECKS AS WE CONSIDER APPROPRIATE AND IN TERMS OF THE INFORMATION AND EXPLANATIONS GIVEN TO US, WE STATE THAT: -

1. (i) the Company has maintained records, showing particulars including quantitative details and situation of its fixed assets;

(ii) as explained to us, all the fixed assets have been physically verified by the management at reasonable intervals during the year. We were informed that no material discrepancy have been noticed by the management on such verification as compared to the aforesaid records of fixed assets; and

(iii) there was no substantial disposal of fixed assets during the year.

2. (i) as certified by the management, physical verification was conducted by the management at the close of the year in respect of finished goods, stores, spare parts and raw materials;

(ii) the procedures of physical verification of stocks followed by the management are, in our opinion, need to be strengthened in relation to the size of the Company and the nature of its business; and

(iii) the Company is maintaining records of inventory. As certified by the management, there were no material discrepancies noticed on physical verification of stocks as compared to book records and the same have been properly dealt with in the books of account.

3. the Company has neither granted nor taken any loans, secured or unsecured, to/ from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly the provisions of sub clauses (b), (c) (d), (f) and (g) of the clause 4 (iii) of the Order are not applicable to the Company.

4. on the basis of selective checks carried out during the course of audit, we are of the opinion that the internal control system followed by the Company need to be strengthened commensurate with the size of the Company and nature of its business for purchase of inventory and fixed assets and for the sale of goods. As informed to us, the Company has initiated steps to ensure strengthening such controls.

5. (i) in our opinion, the particulars of contracts and arrangements referred to in section 301 of the Act, have been entered in the register required to be maintained under that section; and

(ii) in our opinion and according to information and explanation given to us, there were no transactions made in pursuance of the contracts or arrangements entered in the register required to be maintained under section 301 of the Act, exceeding the value of Rs. 5.00 lacs in respect of any party during the year.

6. as explained to us, the Company has not accepted any deposit from public.

7. the Company has, during the year, appointed a firm of Chartered Accountants to carry out the internal audit of the transactions of the Company. However, the scope and coverage of which, in our opinion, required to be enlarged to be commensurate with the size and nature of its business.

8. we are informed that the cost records prescribed by the Central Government under Section 209 (1) (d) of the Act, are under preparation. Hence for want of such records, we are unable to comment on the same.

9. (i) on the basis of books and records examined by us, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance (ESI), Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in few cases. There are no arrears of undisputed statutory dues as at the last day of financial year concerned, outstanding for a period of more than six months from the date they became payable; and

(ii) on the basis of books and records examined by us, the statutory dues outstanding on account of any dispute are as follows:

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

The Income Tax Act Non Credit of TDS 47,308/- 2006-07* Rectifi cation Applic ation with the Assessing Officer

The Income Tax Act Interest on Fringe 13,430/- 2007-08* Rectifi cation Applic ation Benefit Tax with the Assessing Officer

The Central Excise Act Excise Duty, 31,000/-** 1999-00 The Custom, Excise, & Penalty and Fine Service Tax Appellate Tribunal

*Assessment Year

** net of Rs. 2,59,005/- paid

10. the Company has neither accumulated losses at the end of the financial year nor has it incurred cash losses, both in the financial year under report and in the immediately preceding financial year.

11. on the basis of selective checks carried out during the course of audit, we are of the opinion that the Company has not defaulted in the repayment of dues to banks. There are no dues payable to the financial institutions and debenture holders.

12. the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore provisions of clause 4 (xii) of the Order are not applicable to the Company.

13. in our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore provisions of clause 4 (xiii) of the Order are not applicable to the Company.

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

15. the Company has not given any guarantee for loans taken by others from banks or financial institutions. Therefore provisions of clause 4 (xv) of the Order are not applicable to the Company.

16. in our opinion, the term loans were applied for the purpose for which the loans were obtained.

17. on the basis of an overall examination of the balance sheet of the Company, we are of the opinion that funds raised on short term basis have not been utilized for long term investment.

18. the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act, during the year. Therefore provisions of clause 4 (xviii) of the Order are not applicable to the Company.

19. the Company did not have any outstanding debenture during the year. Therefore provisions of clause 4 (xix) of the Order are not applicable to the Company.

20. the Company has not raised any money through a public issue during the year. Therefore provisions of clause 4 (xx) of the Order are not applicable to the Company.

21. based on the audit procedures performed and the information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For R. S. AGRAWAL & ASSOCIATES

Chartered Accountants

Firm Registration No. 100156W

O. P. Agrawal

Partner

M. No. 045862

Place : Mumbai.

Dated : 31st August, 2011

---

Mar 31, 2010

We have audited the attached Balance Sheet of REXNORD ELECTRONICS AND CONTROLS LIMITED (the Company) as at 31st March 2010 and also the Profit and Loss Account 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 Companys management.

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

2) As required by the Companies (Auditors Report) Order 2003, issued by the Central Government of India in terms of me section 227 (4A) of the Companies Act, 1956, we give in the annexure a statement on the matters specified in the paragraph 4 & 5 of the said order.

3) Further to our comments in the Annexure referred to above, we report that we have obtained all the information and explanations which, to the best of our

a) Weknowledge 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 Profit and 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, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub section (3C) of Section 211 of the Companies Act, 1956;

e) based on the representations made by me directors of the Company and taken on record by the Board of Directors of the company, we report that none of the directors is prima-facie disqualified as on 31st March 2010 from being appointed as director in terms of clause (g) of sub section (1) of Section 274 of the Companies Act, 1956;

f) Attention of the members is invited that the composition of the remuneration committee, is not in conformity with the requirements of Schedule XIII to the Companies Act, 1956;

g) Subject to the forgoing, in our opinion and to the best of our information and the significant accounting policies and other notes thereon, give the information required by the Companies Act 1956, in the manner so required and give a true and fair view hi conformity with the accounting principles generally accepted hi India:

i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;

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

iii) In the case of the Cash Flow Statement, of the cash flows for the year

ANNEXURE TO THE AUDITORS REPORT

ANNEXURE REFERRED IN PARAGRAPH (2) OF AUDITORS REPORT OF EVEN DATE ON THE ACCOUNTS FOR THE YEAR ENDED 31s7 MARCH, 2010 OF REXNORD ELECTRONICS AND CONTROLS LIMITED ON THE BASIS OF SUCH CHECKS/TEST CHECKS AS WE CONSIDER APPROPRIATE AND IN TERMS OF THE INFORMATION AND EXPLANATIONS GIVEN TO US, WE STATE THAT: -

1. (i) the Company has maintained records, showing particulars including quantitative details and situation of its fixed assets;

(ii) as explained to us, all the fixed assets have been physically verified by the management at reasonable intervals during the year. We were informed mat no material discrepancy have been noticed by the management on such verification as compared to the aforesaid records of fixed assets; and

(iii) there was no substantial disposal of fixed assets during the year.

2. (i) as certified by the management, physical verification was conducted by the management at the close of the year in respect of finished goods, stores, spare parts and raw materials;

(ii) the procedures of physical verification of stocks followed by the management are, in our opinion, need to be strengthened in relation to the size of the Company and the nature of its business; and

(iii) the Company is maintaining records of inventory. As certified by the management, there were no material discrepancies noticed on physical verification of stocks as compared to book records and the same have been properly dealt with in the books of account

3. (i) the Company has, during the year, not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act 1956;

(ii) as the Company has not granted any loans, therefore, the provisions of sub clauses (b), (c) and (d) of the clause 4 (iii) of the Companies (Auditors Report) Order 2003 are not applicable to the Company;

(iii) the Company has taken interest free unsecured loan from one party covered in the register maintained under section 301 of the Companies Act 1956. The maximum amount involved during the year was Rs. 1.00 lac and balance of loan taken from such party at the end of the year was Nil;

(iv) the terms and conditions of the aforesaid unsecured loan taken were prima facie not prejudicial to the interest of the company; and

(v) since the aforesaid loan, as informed, was repayable on demand, we are not in the position to comment whether the payment of principal amount on the aforesaid unsecured loan taken was regular.

4. on the basis of selective checks carried out during the course of audit, we are of the opinion that the internal control system followed by the Company need to be strengthened commensurate with the size of the Company and nature of its business for purchase of inventory and fixed assets and for the sale of goods and services. As informed to us, the company has initiated steps to ensure strengthening such controls.

5. (i) in our opinion, the particulars of contracts and arrangements referred to in section 301 of the Companies Act, 1956, have been entered hi the register required to be maintained under that section; and

(ii) in our opinion, the transactions made in pursuance of contracts or arrangements entered in the register required to be maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rupees five lacs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time where such market prices are available. Further the Company has not complied with provisions of section 297 of the Companies Act, 1956 in respect of contracts referred to in note no. 21 and 22 (1) (a) of Schedule 17.

6. as explained to us, the company has not accepted any deposit from public. 1. we are informed that the company does not have any internal audit system.

8. we are informed that the cost records prescribed by the Central Government under Section 209 (1) (d) of the Companies Act, 1956, are under preparation.

9.(i) on the basis of books and records examined by us, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance (ESI), Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in few cases. There are no arrears of undisputed statutory dues as at the last day of financial year concerned, outstanding for a period of more than six months from the date they became payable.

10. the Company has neither accumulated losses at the end of the financial year nor has it incurred cash losses, both in the financial year under report and in the immediately preceding financial year.

11. on the basis of selective checks carried out during the course of audit, we are of the opinion that the Company has not defaulted in the repayment of dues to banks. There are no dues payable to the financial institutions and debenture holders.

12. the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore provisions of clause 4 (xii) of the Companies (Auditors Report) Order 2003 are not applicable to the Company.

13. in our opinion, the Company is not a chit or a nidhi / mutual benefit fund or a society. Therefore provisions of clause 4 (xiii) of the Companies (Auditors Report) Order 2003 are not applicable to the Company.

14. in our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Therefore provisions of clause 4 (xiv) of the Companies (Auditors Report) Order 2003 are not applicable to the Company.

15. the company has not given any guarantee for loans taken by others from banks or financial institutions. Therefore provisions of clause 4 (xv) of the Companies (Auditors Report) Order 2003 are not applicable to the Company.

16. as explained, in our opinion, the term loans were applied for the purpose for which the loans were obtained.

17. on the basis of an overall examination of the financial statements of the Company, we are of the opinion that funds raised on short term basis have not been utilized for long term investments.

18. the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year. Therefore provisions of clause 4 (xviii) of the Companies (Auditors Report) Order 2003 are not applicable to the Company.

19. the Company did not have any outstanding debenture during the year. Therefore provisions of clause 4 (xix) of the Companies (Auditors Report) Order 2003 are not applicable to the Company.

20. the Company has not raised any money through a public issue during the year. Therefore provisions of clause 4 (xx) of the Companies (Auditors Report) Order 2003 are not applicable to the Company.

21. based on the audit procedures performed and the information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit

By order of the Board

REXNORD ELECTRONICS AND CONTROLS LIMITED

Kishore Chand Talwar

Chairman & Managing Director Place: Mumbai

Dated: 30th August, 2010