Hind Rectifiers Ltd

TO THE MEMBERS OF HIND RECTIFIERS LIMITED

We have audited the attached Balance Sheet of HIND RECTIFIERS LIMITED as at 31stMarch, 2011, the related Profit and Loss Account and the Cash Flow Statement of theCompany for the year ended on that date annexed thereto. The returns from the branchaudited by other Auditor are incorporated in the annexed Balance Sheet and the Profit andLoss Account. These financial statements are the responsibility of the Company'smanagement. Our responsibility is to express an opinion on these financial statementsbased on our audit. We conducted our audit in accordance with auditing standards generallyaccepted in India. Those Standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.

As required by the Companies (Auditor's Report) Order, 2003, as amended by theCompanies (Auditor's Report) (Amendment) Order, 2004, issued by the Central Government ofIndia in terms of sub-section (4A) of Section 227 of "The Companies Act, 1956 ofIndia" (the 'Act') and on the basis of such checks of the books and records of theCompany as we considered appropriate and according to the information and explanationsgiven to us, we give in the Annexure a statement on the matters specified in paragraphs 4and 5 of the said Order. Further to our aforesaid comments and our comments in theAnnexure referred to above, we report that:

(a) We have obtained all the information and explanations, which to the best of ourknowledge 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 theCompany so far as appears from our examination of those books and proper returns adequatefor the purposes of our audit have been received from the branch not visited by us. TheBranch Auditor's Reports have been forwarded to us and have been appropriately dealt with;

(c) The Balance Sheet, the Profit and Loss Account and Cash Flow Statement dealt withby this report are in agreement with the books of account and with the audited returnsfrom the Branch;

(d) In our opinion, the Balance Sheet, the Profit and Loss Account and Cash FlowStatement dealt with by this report comply with the accounting standards referred to insub-section (3C) of Section 211 of the Companies Act, 1956;

(e) On the basis of the written representations received from the Directors of theCompany as on March 31, 2011 and taken on record by the Board of Directors, we report thatnone of the Directors are disqualified as on March 31, 2011 from being appointed as aDirector in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act,1956;

(f) In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read with the Significant Accounting Policies and Notes toAccounts give the information required by the Companies Act, 1956, in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:

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

(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 Cash Flow Statement, of the cash flows for the year ended on thatdate.

ANNEXURE TO AUDITORS' REPORT

(Referred to in paragraph 3 of the Auditors' Report of even date to the members of HindRectifiers Limited on the financial statements for the year ended March 31, 2011)

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

(b) As informed the fixed assets have been physically verified by the management atreasonable intervals; and discrepancies noticed on such verification were not material andthe same have been properly dealt with in the books of account;

(c) The disposal of fixed assets during the year cannot be regarded as substantial anddo not affect the going concern assumption;

2. (a) As explained to us, Inventories (except stock lying with third parties, forwhich confirmations obtained in respect of such inventory) have been physically verifiedduring the year by the management;

(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) In our opinion, the Company is maintaining proper records of inventory.Discrepancies noticed on physical verification were not material, and the same have beenproperly dealt with in the books of account;

3. According to the information and explanation given to us, the Company has neithergranted nor taken loans, secured or unsecured from parties covered in the registermaintained under section 301 of the Act. Therefore the provisions of clause 4(iii) of theOrder are not applicable to the Company;

4. In our opinion, and according to the information and explanations given to us, thereare adequate internal control procedures commensurate with the size of the Company and thenature of its business with regard to purchase of inventories and fixed assets and forsale of goods & services. We have not come across any major weakness in internalcontrol;

5. (a) To the best of our knowledge and belief, and according to the information andexplanation given to us, the particulars of contracts or arrangements refer to in Section301 of the Act have been entered in the register maintained under that section;

(b) In our opinion and having regard to our comments in paragraph (iv) above, andaccording to the information and explanations given to us, transactions made in pursuanceof contracts or arrangements entered in the register maintained under Section 301 of theCompanies Act, 1956 have been made at reasonable prices;

6. In our opinion and according to the information and explanations given to us, theCompany has complied with the provisions of Section 58A and 58AA of the Companies Act,1956, and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the depositsaccepted from public;

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

8. As explained to us maintenance of cost records has not been prescribed by theCentral Government under clause (d) of sub-section (1) of section 209 of the Act;

9. (a) According to the records of the Company, the Company is regular in depositingundisputed statutory dues including Provident Fund (PF), Investor Education &Protection Fund, Employees State Insurance (ESI), Income-Tax, Sales Tax, Wealth Tax,Service Tax, Custom Duty, Excise Duty and Cess and other statutory dues with theAppropriate Authorities. According to the information and explanation given to us, thereare no undisputed amounts payable in respect of such statutory dues which have remainedoutstanding as at 31st March, 2011 for a period of more than six months from the day theybecome payable;

(b) The disputed statutory dues aggregating Rs.32.22 lacs, that have not been depositedon account of disputed matters pending before Appropriate Authorities are as under:

10. The Company does not have accumulated losses. The Company has not incurred cashlosses during the financial year covered by our audit and in the immediately preceedingfinancial year;

11. In our opinion and according to the information and explanations given to us, theCompany has not defaulted in repayment of dues to banks;

12. According to the information and explanations given to us, the Company has notgranted any loans and advances on the basis of security by way of pledge of shares,debentures and other securities;

13. The provisions of any special statute applicable to Chit Funds, Nidhis or MutualBenefit Funds / Societies are not applicable to the Company;

14. As the Company is not dealing or trading in shares, securities, debentures andother investments, the provisions of Clause 4(xiv) of the Companies (Auditor's Report)Order, 2003 is not applicable to the Company;

15. In our opinion and according to the information and explanations given to us, theCompany has not given guarantees for loans taken by others from banks or financialinstitutions;

16. The Company has not taken any term loans during the year;

17. According to the Cash Flow Statement and other records examined by us and on thebasis of information and explanations given to us, on and overall basis, funds raised onshort term basis have, prima facie, not been used during the year for Long TermInvestment;

18. The Company has not made any preferential allotment of shares during the year;

19. The Company has not issued any debentures during the year;

20. The Company has not raised any money by way of public issue during the year;

21. As per the information and explanations given to us, no material fraud on or by theCompany has been noticed during the year.