Bajaj Hindusthan Ltd

Bajaj Hindusthan Limited

We have audited the attached Balance Sheet of BAJAJ HINDUSTHAN LIMITED as at 30thSeptember, 2010, and the related Profit and Loss Account and Cash Flow Statement for theyear ended on that date annexed thereto. These Financial Statements are the responsibilityof the Company's management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.

1. We have conducted our audit in accordance with auditing standards generally acceptedin India. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. AnAudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin financial statements. An Audit also includes assessing the accounting principles usedand significant estimates made

by management as well as evaluating the overall financial statement presentation. Webelieve that our audit provides reasonable basis for our opinion.

2. As required by the Companies (Auditor's Report) Order, 2003 (CARO, 2003), (asamended) issued by the Central Government of India in terms of Section 227(4A) of theCompanies Act,1956, we annex hereto a Statement on the matters specified in paragraph 4and 5 of the said Order.

3. Further to our comments in the Annexure referred to in paragraph 2 above, we reportthat:-

(a) We have obtained all the information and explanations, which to the best of ourknowledge 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 theCompany so far as appears from our examination of such books;

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

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow

Statement comply with the Accounting Standards referred to in section 211 (3C) of theCompanies Act, 1956, to the extent applicable;

(e) On the basis of the written representations received from the Directors, as on 30thSeptember, 2010 and taken on record

by the Board of Directors, we report that none of the Directors are disqualified as on30th September, 2010, from being appointed as a Director in terms of Clause (g) ofsub-section (1) of Section 274 of the Companies Act, 1956;

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

(a) in the case of the Balance Sheet, of the state of the affairs of the Company as at30th September, 2010;

(b) in the case of the Profit and Loss Account, of the Profit for the year ended onthat date; and

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

ANNEXURE REFERRED TO IN PARAGRAPH 2 OF

OUR REPORT OF EVEN DATE

Re : BAJAJ HINDUSTHAN LIMITED (''the Company")

1. a) The Company has maintained proper records

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

b) As explained to us, all the fixed assets have been physically verified by themanagement in a phased periodical manner, which in our opinion is reasonable, havingregard to the size of the Company and nature of its assets. No material discrepancies werenoticed on such physical verification.

c) In our opinion, the Company has not disposed off substantial part of its fixedassets during the year and the going concern status of the Company is not affected.

2. In respect of its inventories:

a) As explained to us, the inventories have been physically verified by the managementat reasonable intervals during the year;

b) As explained to us, the procedures of physical verification of the inventoryfollowed by the management are, in our opinion, reasonable and adequate in relation to thesize of the Company and the nature of its business;

c) According to the inventory records produced to us for our verification, we are ofthe opinion that the Company is maintaining proper records of its inventory. Further,discrepancies noticed on physical verification of inventories, if any, referred to above,as compared to book records, though not material, have been properly dealt with in thebooks of account.

3. In respect of the loans, secured or unsecured, granted or taken by the Company to /from companies, firms or other parties covered in the register maintained under Section301 of the Companies Act, 1956:

a) The Company has given loans to three subsidiary companies. In respect of the saidloans, the maximum amount outstanding at any time during the year is Rs. 2,193.23 croresand the same has been squared off during the year.

b) In our opinion and according to the information and explanations given to us, therate of interest and other terms and conditions of the loans given by the Company, are notprima facie prejudicial to the interest of the Company.

c) The principal amounts are repayable on demand and there is no repayment schedule.The interests is payable on demand.

d) In respect of the said loans, the same have been repaid during the year. Thereforequestion of repayment overdue amount does not arise.

e) The Company has not taken any loan during the year from companies, firms or otherparties covered in the Register maintained under Section 301 of the Companies Act, 1956.Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of theOrder are not applicable.

4. In our opinion and according to the information and explanations given to us, thereis generally adequate internal control system commensurate with the size of the Companyand the nature of its business with regard to the purchase of inventory and fixed assetsand for the sale of goods. During the course of our audit, we have not observed anycontinuing failure to correct major weaknesses in internal control system.

5. According to information and explanation given to us, there are no contracts orarrangements referred to in section 301 of the Companies Act, 1956 that need to be enteredinto the register maintained under section 301. Therefore, the provisions of clause 5 (b)of the Companies (Auditor's Report) Order 2003, (as amended) is not applicable to theCompany.

6. In our opinion and according to the information and explanations given to us thecompany has complied with the directives issued by the provisions of section 58A, 58AA orany other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance ofDeposits) Rules, 1975 with regard to the deposits accepted from the public. According tothe information and explanations given to us, no order has been passed by the Company LawBoard or National Company Law Tribunal or Reserve Bank of India or any court or any otherTribunal.

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

8. We have broadly reviewed the books of account maintained by the Company pursuant tothe rules made by the Central Government for maintenance of cost records under Section209(1)(d) of the Companies Act, 1956 in respect of Company's products to which the saidrules are made applicable and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. We have, however, not made a detailedexamination of the records with a view to determine whether they are accurate.

9. In respect of statutory dues:

a) According to the records of the Company, the Company has been generally regular indepositing with statutory authorities, undisputed statutory dues including Provident Fund,Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales tax,Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and other material statutory duesapplicable to it. According to the information and explanations given to us, no undisputedamounts payable in respect of income tax, sales tax, wealth tax, service tax, customsduty, excise duty and cess were outstanding, at the year end for a period of more than sixmonths from the date they became payable.

b) On the basis of our examination of the documents and records of the Company and theinformation and explanations given to us upon our inquiries in this regard, there were nodisputed amounts payable in respect of Income-tax, Sales Tax, Wealth-tax, Service tax,Customs Duty and Excise Duty/cess and not deposited with the appropriate authorities otherthan those stated hereunder :

10. The Company does not have any accumulated losses at the end of the financial yearand has not incurred cash losses in the financial year and in the immediately precedingfinancial year.

11. Based on the information and explanations given by the management, we are of theopinion that the Company has not defaulted in repayment of dues to financial institutions,banks and debenture holders.

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

13. In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/society. Therefore, the provisions of

clause 4(xiii) of the Companies (Auditor's Report) Order 2003, (as amended) are notapplicable to the Company.

14. The Company has maintained proper records of the transactions and contracts inrespect of dealing or trading in shares, securities, debentures and other investments andtimely entries have been made therein. All shares, securities, debentures and otherinvestments have been held by the Company in its own name.

15. The Company has given guarantee for loans taken by its two subsidiary companiesfrom banks; the terms and conditions whereof in our opinion are not prima facieprejudicial to the interest of the company.

16. Based on the information and explanations given to us by the management, the termloans were applied for the purpose for which the loans were obtained.

17. According to the information and explanations given to us and on overallexamination of the balance sheet of the Company, we report that no funds on short- termbasis have been used for long- term investment.

18. The Company has not made any preferential allotment of shares to companies/ firms/parties covered in the register maintained under section 301 of the Companies Act, 1956,except the shares issued during the year against the warrants allotted during the previousyear on preferential basis to promoter group in according with the SEBI preferential issueguidelines.

19. In our opinion and according to the information and explanations given to us, theCompany has not issued any secured debentures during the period covered by our report.Accordingly, provisions of clause (xix) of the Companies (Auditor's Report) Order, 2003are not applicable.

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

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