Indian Hume Pipe Company Ltd

To the Members of

The Indian Hume Pipe Company Limited

1. We have audited the attached Balance Sheet of The Indian Hume Pipe CompanyLimited as at 31st March, 2012, Statement of Profit and Loss and also 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.

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 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 management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 as amended byCompanies (Auditor’s Report)(Amendment) Order, 2004 issued by the Central Governmentof India in terms of subsection (4A) of section 227 of the Companies Act, 1956, we enclosein the Annexure a statement on the matters specified in paragraphs 4 and 5 of the saidOrder.

4. Without qualifying our opinion, we draw attention to note 2.45 of the notes toaccounts regarding application seeking approval from Central Government for the excessremuneration paid to managerial personnel.

Further to our comments in the Annexure referred to in 3 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. The Branch Auditor’sReports have been forwarded to us and have been appropriately dealt with in this report;

(iii) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealtwith by this report are in agreement with the books of account and with the auditedreturns from the branches; (iv) In our opinion, the Balance Sheet, Statement of Profit andLoss and Cash Flow statement dealt with by this report comply with the accountingstandards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

(v) On the basis of written representations received from the Directors as on 31stMarch, 2012, and taken on record by the Board of Directors, we report that none of theDirectors is disqualified as on 31st March, 2012 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 theexplanations given to us, the said accounts give the information required by the CompaniesAct, 1956, in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India;

a) in the case of the Balance Sheet of the state of the affairs of the Company as at31st March, 2012;

b) in case of the Statement of Profit and Loss, 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 TO AUDITORS’ REPORT

Re: The Indian Hume Pipe Company Limited

Referred to in paragraph 3 of our report of even date,

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

(b) Fixed assets have been physically verified by the management during the year. Inour opinion the frequency of such verification is reasonable having regard to the size ofthe Company and the nature of it’s fixed assets. No material discrepancies werenoticed on such physical verification.

(c) The fixed assets disposed off during the year were not substantial. According tothe information and explanation given to us, we are of the opinion that the disposal ofthe fixed assets has not affected the going concern status of the Company.

(ii) (a) The inventory has been physically verified during the year by the managementat reasonable intervals.

(b) The procedures of physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

(c) The Company is maintaining proper records of inventory. The discrepancies noticedon verification between the physical stocks and the book records were not material.

(iii) (a) The Company has not granted any loans, secured or unsecured to the companies,firms and other parties covered in the register maintained under section 301 of theCompanies Act, 1956. Accordingly sub clause (b), (c) and (d) are not applicable.

(b) The Company has not taken any loans, secured or unsecured from the companies, firmsand other parties covered in the register maintained under section 301 of the CompaniesAct, 1956. Accordingly sub clause (f) & (g) 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 with regardto the sale of goods and services. During the course of our audit, we have not observedany continuing failure to correct major weaknesses in the internal control system.

(v) According to the information and explanations given to us, there were no contractsor arrangements that needed to be entered in the register maintained under section 301 ofthe Companies Act, 1956. Accordingly sub clause (b) is not applicable.

(vi) In our opinion and according to the information and explanations given to us, theCompany has complied with provisions of sections 58A and 58AA or any other relevantprovision of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,1975 with regard to the deposits accepted from the public. As informed to us, no order hasbeen passed by the Company Law Board, National Company Law Tribunal or Reserve Bank ofIndia or any Court or any other Tribunal.

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

(viii) We have broadly reviewed the books of account relating to materials, labour andother items of cost maintained by the Company pursuant to the Rules made by the CentralGovernment for the maintenance of cost records under section 209 (1) (d) of the CompaniesAct, 1956 and we are of the opinion that, prima facie, the prescribed accounts and recordshave been made and maintained. However, we have not made a detailed examination of therecords for determining whether they are accurate or complete.

(ix) (a) The Company is generally regular in depositing with appropriate authorities,undisputed statutory dues including Provident Fund, Investor Education and ProtectionFund, Employee’s State Insurance, Income Tax, Fringe Benefit Tax, Sales Tax, WealthTax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory duesapplicable to it.

According to the information and explanations given to us, undisputed dues in respectof Provident Fund, Investor Education and Protection Fund, Employees’ StateInsurance, Income-Tax, Wealth-Tax, Service Tax, Sales-Tax, Customs duty, Excise duty, cessand other statutory dues which were outstanding, at the year end for a period of more thansix months from the date they became payable are as follows:

(b) According to the records of the Company, there are no dues of Sales Tax, IncomeTax, Fringe Benefit Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty, Cess whichhave not been deposited on account of any dispute other than those detailed below:

(x) The Company does not have any accumulated losses as per the Balance Sheet as at theend of the financial year. The Company has not incurred cash losses during the financialyear covered by our audit and the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, theCompany has not defaulted in repayment of dues to a financial institution, bank ordebenture holders.

(xii) In our opinion and according to the information and explanations given to us, theCompany has not granted any loans and advances on the basis of security by way of pledgeof shares, debentures and other securities.

(xiii) 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 not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities,debentures and other investments. Accordingly, the provisions of clause 4(xiv) of theCompanies (Auditor’s Report) Order, 2003 (as amended) are not applicable to theCompany.

(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) According to the information and explanations given to us, the term loans havebeen 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 Balance Sheet of the Company, we report that no funds raised on short-termbasis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties andcompanies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) There are no debentures issued by the Company during the year and therefore therequirement of creation of security or charge is not applicable.

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

(xxi) As per the information and explanations given to us, no fraud on or by theCompany has been noticed or reported during the course of our audit.