Exide Industries Ltd

TO THE MEMBERS OF EXIDE INDUSTRIES LIMITED

We have audited the attached Balance Sheet of Exide Industries Limited (‘theCompany’) as at March 31, 2011 and also the Profit and Loss account and the cash flowstatement for the year ended on that date annexed thereto. These financial statements arethe responsibility of the Company’s management. Our responsibility is to express anopinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted inIndia. 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 the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued bythe Central Government of India in terms of sub-section (4A) of Section 227 of theCompanies Act, 1956, we enclose in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, we report that:

i. We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purposes of our audit;

ii. In our opinion, proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books.

iii. The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account.

iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report comply with the accounting standards referred to in subsection(3C) of Section 211 of the Companies Act, 1956.

v. On the basis of the written representations received from the directors, as on 31stMarch 2011 and taken on record by the Board of Directors, we report that none of thedirectors is disqualified as on 31st March 2011 from being appointed as a director interms of clause(g) of sub-section(1) of Section 274 of the Companies Act, 1956.

vi. 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,in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India;

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

b) in the case of Profit and Loss Account, of the profit for the year ended on thatdate; and

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

ANNEXURE TO THE AUDITORS’ REPORT

TO THE MEMBERS OF EXIDE INDUSTRIES LIMITED

(REFERRED TO IN OUR REPORT OF EVEN DATE)

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

(b) All fixed assets have been physically verified by the management during the yearwhich, in our opinion, is reasonable having regard to the size of the Company and thenature of its assets.

No material discrepancies were noticed on such verification.

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

(ii) (a) The management has conducted physical verification of inventory at reasonableintervals during the year.

(b) The procedures of physical verification of inventory followed by the management arereasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) The Company is maintaining proper records of inventory and no materialdiscrepancies were noticed on physical verification.

(iii) (a) The Company in earlier year had granted unsecured loan to a company coveredin the register maintained under section 301 of the Companies Act, 1956. The maximumamount involved during the year was Rs. 0.07 crores and the year-end balance of such loanis Rs. 0.07 crores.

(b) In our opinion and according to the information and explanations given to us, therate of interest and other terms and conditions for such loans are prima facie notprejudicial to the interest of the Company.

(c) In respect of above loan granted, the recovery of principal amount has not fallendue but the recovery of interest has been regular during the year. (d) There is no overdueamount of loan granted to companies, firms or other parties listed in the registermaintained under section 301 of the Companies Act, 1956.

(e) As informed, the Company has not taken any loans, secured or unsecured fromcompanies, firms or other parties covered in the register maintained under section 301 ofthe Companies Act, 1956 and hence the requirements of sub clause (f) and (g) of clause4(iii) of the order are not applicable.

(iv) In our opinion and according to the information and explanations given to us,there is an adequate internal control system commensurate with the size of the Company andthe nature of its business, for the purchase of inventory and fixed assets and for thesale of goods and services. During the course of our audit, no major weakness has beennoticed in the internal control system in respect of these areas. During the course of ouraudit, we have not observed any continuing failure to correct major weakness in internalcontrol system of the company.

(v) (a) According to the information and explanations provided by the management, weare of the opinion that the particulars of contracts or arrangements referred to insection 301 of the Act that need to be entered into the register maintained under section301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of such contracts or arrangements exceeding the value ofRupees five lakhs have been entered into during the financial year at prices which arereasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposit from the public.

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

(viii) 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, and are of the opinion that prima facie, theprescribed accounts and records have been made and maintained.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund, investor education and protection fund,employees’ state insurance, income-tax, sales-tax, wealth-tax, service tax, customsduty, excise duty, and cess and other material statutory dues applicable to it.

The Central Government has till date neither notified the effective date nor prescribedthe amount of cess payable under section 441 A of the Companies Act, 1956. Hence, we arenot in a position to comment upon the regularity or otherwise of the company in depositingthe same.

(b) According to the information and explanations given to us, no undisputed amountspayable in respect of provident fund, investor education and protection fund,employees’ state insurance, income-tax, wealth-tax, service tax, sales-tax, customsduty, excise duty, cess and other material undisputed statutory dues were outstanding, atthe year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax,sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of anydispute, are as follows.

(x) The Company has no accumulated losses at the end of the financial year and it hasnot incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given bythe management, we are of the opinion that the Company has not defaulted in repayment ofdues to a financial institution or bank. There were no outstanding debentures during theyear.

(xii) According to the information and explanations given to us and based on thedocuments and records produced to us, the Company has not granted loans and advances onthe basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefitfund/society.

Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’s Report)Order, 2003 (as amended) are not applicable to the Company.

(xiv) In respect of dealing/trading in mutual fund units, in our opinion and accordingto the information and explanations given to us, proper records have been maintained ofthe transactions and contracts and timely entries have been made therein. The units havebeen held by the Company, in its own name. The company is not dealing/trading in shares,debentures, securities or any other investments.

(xv) According to the information and explanations given to us, the Company has notgiven any guarantee for loans taken by others from bank or financial institutions.

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

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

(xviii) The Company has not made any preferential allotment of shares during the yearto parties or companies covered in the register maintained under section 301 of theCompanies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

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

(xxi) Based upon the audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and as per the information and explanationsgiven by the management, we report that no fraud on or by the Company has been noticed orreported during the course of our audit.