Denso India Ltd Auditor Reports

TO THE MEMBERS OF DENSO INDIA LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of DENSO INDIA LIMITED ("the Company"), which comprise the Balance Sheet as at 31 March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Managements Responsibility for the Financial Statements

The Companys Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 ("the Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Companys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March, 2014;

(b) in the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2003 ("the Order") issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which to the best of our knowledge 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 the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of the written representations received from the directors as on 31 March, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2014 from being appointed as a director in terms of Section 274(l)(g) of the Act.

	For DELOITTE HASKINS & SELLS
	Chartered Accountants
	(Firms Registration No. 015125N)
	(Khazat A. Kotwal)
	Partner
Gurgaon, 29 May, 2014	(Membership No. 103707)

ANNEXURE TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements section of our report of even date)

(i) In respect of fixed assets:

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

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

(c) Although a substantial part of the fixed assets have been disposed of during the year, in our opinion and according to the information and explanations given to us, the ability of the Company to continue as a going concern is not affected.

(ii) In respect of its inventory:

(a) As explained to us, the inventories have been physically verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

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

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956 (the "Act"). Accordingly clauses (iii) (a), (iii) (b), (iii) (c) and (iii) (d) of paragraph 4 of the Order are not applicable to the Company.

The Company has not taken any secured loan from companies, firms or other parties listed in the Register maintained under Section 301 of the Act. In respect of unsecured loans taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Act, according to the information and explanations given to us:

(e) The Company has loan amounting Japanese Yen () 1,172 million (equivalent to INR 800 million on the date of receipt of loan in November 2011) from one party outstanding during the year. Further, the Company has obtained an additional loan of INR 900 million repayable in INR equivalent from the same party during the current year. At the year-end, the outstanding balance of such loans including interest payable were 1,174 million (equivalent to INR 693 million) and INR 901 million respectively. The maximum amounts outstanding during the year including interest payable were 1,175 million (equivalent to INR 736 million) and INR 949 million respectively.

(f) The rate of interest and other terms and conditions of such loan is, in our opinion, prima facie not prejudicial to the interests of the Company.

(g) The payments of principal amounts and interest in respect of such loans are as per terms of the loan agreement.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased and sold are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventories and fixed assets and the sale of goods. During the course of our audit, we have not observed any major weakness in such internal control system.

(v) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Act, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to in Section 301 that needed to be 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 have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time other than some of the items purchased are of special nature and suitable alternatives sources are not readily available for obtaining comparable quotations.

(vi) According to the information and explanations given to us, the Company has not accepted any deposit from the public, within the meaning of Sections 58A and 58AA or any other relevant provisions of the Act, and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of paragraph 4(vi) of the Order is not applicable to the Company.

(vii) In our opinion, the internal audit functions carried out during the year by firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

(viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1) (d) of the Act, and are of the opinion that, prima facie, the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Taxes Deducted at Source, Employees State Insurance, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Taxes Deducted at Source, Employees State

Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31 March 2014 for a period of more than six months from the date they became payable, (c) Details of dues of Income-tax, Service Tax and Excise Duty which have not been deposited as at 31 March 2014 on account of disputes are given below:

Name of the statute	Nature of dues	Forum where dispute is pending	Period to which the amount relates	Amount Involved (Rs. million)
Income Tax Act	Disallowance for certain expenses and transfer pricing matters.	High Court	2002-03	27
	Disallowance for certain expenses and transfer pricing matters.	High Court	2003-04	70
	Disallowance for certain expenses and transfer pricing matters.	Income tax Appellate tribunal	2004-05	23
	Disallowance for certain expenses and transfer pricing matters.	Income tax Appellate tribunal	2005-06	70
	Disallowance for certain expenses.	Income tax Appellate tribunal	2006-07	23*
	Interest on tax payments demanded	Assessing Officer	2007-08	2
	Disallowance for certain expenses and transfer pricing matters.	Income tax Appellate tribunal	2009-10	47
Central Excise Act	Matters relating to cenvat credit on raw material and fixed assets. ***	CESTAT	2002-07	11
	Cenvat credit disallowed on certain items.***	CESTAT	2002-11	3
	Matters relating to applicability of excise duty on certain transactions.***	CESTAT	2006-09	213**
Service Tax	Matters relating to credit on various input services	Commissioner of service tax	Prior to September 2004	3
	Matters relating to credit on various input services	Commissioner of service tax	2005-08	1
	Matters relating to credit on various input services	Commissioner of service tax	2008-09	2
	Matters relating to credit on various input services	Commissioner of service tax	2008-11	3

* Excluding Rs. 37 million which has been paid / adjusted by Income tax authorities under protest. ** Excluding Rs. 5 million which has been paid / adjusted by Central Excise Authorities under protest. *** Stay has been granted by CESTAT against these demands.

(x) The Company has no accumulated losses at the end of the financial year and the Company has not incurred any cash losses during the preceding year but has incurred cash loss during the current financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks. The Company has neither raised funds from any financial institution nor issued any debentures. Accordingly, the provisions of clause 4(xi) of the Order are not applicable to the Company.

(xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities during the year. Accordingly, the provisions of clause 4(xii) of the Order are not applicable to the Company.

(xiii) According to the information and explanations given to us, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) According to the information and explanations given to us, the Company is not dealing in shares, securities and debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantees during the year for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 4(xv) of the Order are not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained.

(xvii) In our opinion and according to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short term basis have prima facie not been used during the year for long term investments.

(xviii) According to the information and explanations given to us, the Company has not made any preferential allotment of shares during the year. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable to the Company.

(xix) According to the information and explanations given to us, Company has not issued any debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable to the Company.

(xx) According to the information and explanation given to us the Company has not raised any money by way of public issue during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable to the Company.

(xxi) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and material fraud on the Company has been noticed or reported during the year.

	For DELOITTE HASK1NS & SELLS
	Chartered Accountants
	(Firm Registration No. 015125N)
	(Khazat A. Kotwal)
	Partner
Gurgaon, 29 May 2014	(Membership No. 103707)