Eveready Industries India Ltd

To the Members of

Eveready Industries India Limited

1. We have audited the attached Balance Sheet of Eveready Industries India Limited("the Company") as at 31st March, 2010, the Profit and Loss Account and the CashFlow Statement of the Company for the year ended on that date, both annexed thereto. Thesefinancial statements are the responsibility of the Company's Management. Ourresponsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally acceptedin India. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatements. Anaudit includes examining, on a test basis, evidence supporting the amounts and thedisclosures in the financial statements. An audit also includes assessing the accountingprinciples used and the significant estimates made by the Management, as well asevaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (CARO) issued by theCentral Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose inthe Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Attention is invited to Note 3 of Schedule 18 forming part of the financialstatements regarding amortization of brand over a period of 40 years on the basis of anexpert opinion.

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

(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 it appears from our examination of those books;

(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealtwith 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 FlowStatement dealt with by this report are in compliance with the Accounting Standardsreferred to in Section 211(3C) of the Companies Act, 1956;

(e) in our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts give the information required by the Companies Act, 1956 inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2010;

(ii) in the case of the Profit and Loss Account, of the profit of the Company for theyear ended on that date and

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

6. On the basis of the written representations received from the Directors as on 31stMarch, 2010 taken on record by the Board of Directors, none of the Directors isdisqualified as on 31st March, 2010 from being appointed as a director in terms of Section274(1)(g) of the Companies Act, 1956.

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

(i) Having regard to the nature of the Company's business/activities/result, clauses(x), (xii), (xiii), (xiv), (xv), (xviii), (xix) and (xx) of CARO are not applicable.

(ii) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, includingquantitative details and situation of the fixed assets.

(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which, in our opinion, provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanation given to us, no material discrepancies were noticed on suchverification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute asubstantial part of the fixed assets of the Company and such disposal has, in our opinion,not affected the going concern status of the Company.

(iii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the year by theManagement at reasonable intervals.

(b) In our opinion and according to the information and explanation given to us, theprocedures of physical verification of inventories followed by the Management werereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) In our opinion and according to the information and explanations given to us, theCompany has maintained proper records of its inventories and no material discrepancieswere noticed on physical verification.

(iv) The Company has not taken any loans, secured or unsecured, from companies, firmsor other parties listed in the Register maintained under Section 301 of the Companies Act,1956.

In respect of loans, secured or unsecured, granted by the Company to companies, firmsor other parties covered in the Register under Section 301 of the Companies Act, 1956,according to the information and explanations given to us:

(a) At the year-end, the outstanding balances of such loans aggregated Rs. 22.01 lakhsand the maximum amount involved during the year was Rs.24.21 lakhs.

(b) The rate of interest and other terms and conditions of such loans are, in ouropinion, prima facie not prejudicial to the interests of the Company.

(c) The receipts of principal amounts and interest have been regular.

(d) There is no over due amount outstanding at the year end.

(v) In our opinion and according to the information and explanations given to us,having regard to the explanations that some of the items purchased are of special natureand suitable alternative sources are not readily available for obtaining comparablequotations, there is an adequate internal control system commensurate with the size of theCompany and the nature of its business with regard to purchases of inventory and fixedassets and the sale of goods and services. During the course of our audit, we have notobserved any major weakness in such internal control system.

(vi) In respect of contracts or arrangements entered in the Register maintained inpursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge andbelief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to Section 301 that needed tobe entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction is in excess of Rs.5 lakhs in respect of any party,the transactions (excluding loans reported in paragraph (iv) above) have been made atprices which are prima facie reasonable having regard to the prevailing market prices atthe relevant time.

(vii) According to the information and explanations given to us, the Company has notaccepted any deposit from the public during the year. In respect of unclaimed deposits,the Company has complied with the provisions of Sections 58A & 58AA or any otherrelevant provisions of the Companies Act, 1956.

(viii) In our opinion, the Company has an adequate internal audit system commensuratewith the size and the nature of its business.

(ix) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records underSection 209(1) (d) of the Companies Act, 1956 in respect of manufacture of dry cellbatteries and are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained. We have, however, not made a detailed examination of the recordswith a view to determining whether they are accurate or complete. To the best of ourknowledge and according to the information and explanations given to us, the CentralGovernment has not prescribed the maintenance of cost records for any other product of theCompany.

(x) According to the information and explanations given to us in respect of statutorydues:

(a) The Company has generally been regular in depositing undisputed dues, includingProvident Fund, Investor Education and Protection Fund, Employees' State Insurance,Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and othermaterial statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Income-tax, Wealth Tax,Custom Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31stMarch, 2010 for a period of more than six months from the date they became payable.

(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty,Excise Duty and Cess which have not been deposited as on 31st March, 2010 on account ofdisputes are given below:

* Excludes interest claimed in a few cases by respective Authorities but amount notquantified.

(xi) In our opinion and according to the information and explanations given to us, theCompany has not defaulted in the repayment of dues to banks, financial institutions.

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

(xiii) In our opinion and according to the information and explanations given to us andon an overall examination of the Balance Sheet, we report that funds raised on short-termbasis have not been used during the year for long- term investment.

(xiv) To the best of our knowledge and according to the information and explanationsgiven to us, no fraud by the Company and no fraud on the Company has been noticed orreported during the year.