1.  We have audited the attached Balance Sheet of Aditya Birla Nuvo
 Limited (''the Company'') as at March 31, 2011, and also the Profit and
 Loss Account, and the Cash Flow Statement for the year ended on that
 date annexed thereto. These financial statements are the responsibility
 of the Company''s management. Our responsibility is to express an
 opinion on these financial statements based on our audit.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted in India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 (as
 amended) (''the Order''), issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 of the Companies Act, 1956
 (''the Act''), we enclose in the Annexure a statement on the matters
 specified in paragraphs 4 and 5 of the said Order.
 
 4.  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 our knowledge 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 the Company so far as it appears from our examination of
 those books. The Branch Auditor''s Report have been forwarded to us and
 have been appropriately dealt with in this report;
 
 iii. The Balance Sheet, Profit and Loss Account, and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account and with audited returns from the branches;
 
 iv In our opinion, the Balance Sheet, Profit and Loss Account, and Cash
 Flow Statement dealt with by this report comply with the accounting
 standards referred to in sub-section (3C) of Section 211 of the Act;
 
 v. On the basis of written representations received from the directors
 as on March 31, 2011, and taken on record by the Board of Directors, we
 report that none of the directors is disqualified as on March 31, 2011,
 from being appointed as director in terms of Section 274 (1)(g) of the
 Act;
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the said accounts 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 March 31, 2011;
 
 b) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 c) in case of Cash Flow Statement, of the cash flows of the Company for
 the year ended on that date.
 
 Annexure referred to in paragraph 3 of our report of even date
 Re: Aditya Birla Nuvo Limited
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The Company has a phased programme for physical verification of all
 its fixed assets, which in our opinion, is reasonable having regard to
 the size of the Company and the nature of its assets. As informed, 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 reasonable intervals during the year.
 
 (b) The procedures of physical verification of inventory followed by
 the management are reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 (c) The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) (a) As informed, the Company has not granted any loans, secured
 or unsecured, to companies, firms or other parties covered in the
 register maintained under Section 301 of the Act.  Hence, clauses
 (iii)(b), (c) and (d) of the Order are not applicable.
 
 (e) As informed, the Company has not taken any loans, secured or
 unsecured, from companies, firms or other parties covered in the
 register maintained under Section 301 of the Act.  Hence, clauses
 (iii)(f) and (g) 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 and the nature of its business, for the
 purchase of inventory and fixed assets, and for the sale of goods and
 services. During the course of our audit, no major weakness has been
 noticed in the internal control system in respect of these areas.
 
 (v) (a) According to the information and explanations provided to us,
 there have been no transactions which need to be entered in the
 register maintained under Section 301 of the Act. Hence, clause (v) (b)
 of the Order is not applicable to the Company.
 
 (vi) In respect of deposits accepted, in our opinion and according to
 the information and explanations given to us, directives issued by the
 Reserve Bank of India and the provisions of Sections 58A, 58AA or any
 other relevant provisions of the Act and the rules framed there under,
 to the extent applicable, have been complied with. We are informed by
 the management that no order has been passed by the Company Law Board,
 National Company Law Tribunal or Reserve Bank of India or any Court or
 any other Tribunal.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under Section 209(1)(d) of the Act, in
 respect of the Company''s products to which said rules are made
 applicable and are of the opinion that prima facie, the prescribed
 accounts and records have been made and maintained.
 
 (ix) (a) The Company is generally regular in depositing with
 appropriate authorities undisputed statutory dues including provident
 fund, investor education and protection fund, employees'' state
 insurance, income-tax, sales-tax, wealth-tax, service tax, customs
 duty, excise duty, cess and other material statutory dues applicable to
 it. Further, since the Central Government has till date not prescribed
 the amount of cess payable under Section 441A of the Act, we are not in
 a position to comment upon the regularity or otherwise of the Company
 in depositing the same.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees'' state insurance, income-tax,
 sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and
 other undisputed statutory dues outstanding at the 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 any dispute, are as follows:
 
 Name of the Statue      Natures of Dues       Forum where
                                               Dispute is Pending
 
 Central Excise Act      Excise Duty           Tribunals
                         including                      
 
                         Interest and          Commissioner
                         Penalty              (Appeals)
 
                                               High Court(s)
                                               Assessing Authorities
 
 Sales Tax Act           Sales Tax/            Tribunals
                         Purchase Tax
                         including Interest
                         and Penalty           Joint Commissioner
                                              (Appeals)
 
                                               Additional
                                               Commissioner
                                              (Appeals)
 
                                               Commissioner
                                              (Appeals)
 
                                               Deputy Commissioner
                                              (Appeals)
 
                                               High Court(s)
 
                                               Assessing
                                               Authorities
 
                         Entry Tax Demand      Joint Commissioner
                         and Interest         (Appeals)
 
 Textile                 Textile Cess          Tribunals
 Committee Act                                 Assessing
 
                                               Authorities
 
 Value Added Tax         Tax Demand            Tribunals
                         and Interest/         Additional
                         Non-submission        Commissioner
                         of Forms             (Appeals)
 
                                               Assessing
                                               Authorities
 
 Custom Act              Tax Demand            Tribunals
                         and Interest          High Court(s)
 
 Employees'' State        Employees'' State      Tribunals
 
 Insurance Act           Insurance Dues
 
 Electricity Tax         Tamil Nadu             High Court(s)
 
                         Electricity Tax        Assessing
 
                                                Authorities
 
 Finance Act, 1994       Service Tax            Tribunals
 
 (Service Tax)                                  Assessing
 
                                                Authorities
 
 U.P . Trade Tax         Tax Demand             Tribunals
 
 Act, 1948               and Interest           Additional
 
                                                Commissioner
                                                (Appeals)
 
 Name of the Statue      Period to which           Amount
                         the Amount Relates     (Rs. in Crore)
 
 Central Excise Act      1985-86 to 2005-06,          2.69
                         2007-08
 
                         1989-90 to 2009-10          11.51
 
                         1977-78                      0.02
 
                         1984-85 to 2010-11           2.89
 
 Sales Tax Act           1981-82 to 1986-87,          0.33
 
                         1999-00 to 2003-04,
 
                         2004-05
 
                         2001-02                      0.21
 
                         2000-01, 2001-02,           17.90
                         2006-07, 2009-10
 
                         2000-01, 2001-02,            0.07
                         2006-07
 
                         2004-05, 2005-06,            1.25
 
                         2006-07, 2009-10
 
                         2002-03                      0.21
 
                         1988-89, 1994-95 to          6.74
 
                         2007-08
 
                         2002-03 to 2004-05,        102.57
                         2008-09
 
 Textile
 Committee Act           1980-81 to 1998-99           0.63
 
                         1998-99 to 2004-05           0.65
 
 Value Added Tax         2005-06 to 2006-07           0.06
 
                         2008-09                      0.03
 
                         2005-06 to 2007-08           0.78
 
 Custom Act              2003-04                      0.11
 
                         1975-76, 1976-77,            0.39
 
                         1986-87, 2001-02
 
 Employees'' State
 Insurance Act           1998-99 and                  0.07
 
                         2002-03 to 2005-06
 
 Electricity Tax         1998-99 to 2002-03           4.62
 
                         2002-03 to 2004-05           0.70
 
 Finance Act, 1994
 (Service Tax)           2003-04, 2004-05             1.36
 
                         2001-02 to 2005-06           0.38
 
 U.P . Trade Tax
 Act, 1948               2002-03                      0.07
 
                         2007-08                      0.01
 
 (x) The Company has no accumulated losses at the end of the financial
 year, and it has not 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 by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a financial
 institution, bank or debentureholder.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances on the 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
 benefit fund/society Therefore, the provisions of clause 4(xiii) of the
 Order 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 the Order are not applicable to the
 Company.
 
 (xv) According to the information and explanations given to us, the
 Company has given guarantee for loans taken by others from banks or
 financial institutions, the terms and conditions whereof in our opinion
 are not prima facie prejudicial to the interest of the Company.
 
 (xvi) Based on information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we report
 that no funds raised on short-term basis have been used for long-term
 investment.
 
 (xviii)The Company has made preferential allotment of shares to parties
 and companies covered in the register maintained under Section 301 of
 the Act. In our opinion, the price at which shares have been issued is
 not prejudicial to the interest of the Company.
 
 (xix) According to the information and explanations given to us, during
 the period covered by our audit report, the Company has issued
 20,000,000 unsecured debentures of Rs.100 each on which no security or
 charge is required to be created.
 
 (xx) The Company has not raised any money through a public issue during
 the year.
 
 (xxi) Based upon the audit procedures performed and information and
 explanations given to us, we report that no fraud on or by the Company
 has been noticed or reported during the course of our audit.
 
 
 For Khimji Kunverji & Co.        For S.R. Batliboi & Co.
 
 Firm Registration No. 105146W    Firm Registration No. 301003E
 
 Chartered Accountants            Chartered Accountants
 
 Per Shivji K. Vikamsey           Per Vijay Maniar
 
 Partner                          Partner
 
 Membership No. 2242              Membership No. 36738
 
 Place: Mumbai                    Place: Mumbai
 
 Date: May 30, 2011               Date: May 30, 2011