We have audited the attached balance sheet of Akzo Nobel Chemicals
 (India) Limited (the Company) as at 31 March 2009 and also, the
 related 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 Companys management. Our responsibility
 is to express an opinion on these financial statements based on our
 audit.
 
 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.
 
 1 As required by the Companies (Auditors Report) Order, 2003,
 (CARO), issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose
 in the Annexure a statement on the matters specified in paragraphs 4
 and 5 of the said Order.
 
 2 Further to our comments in the Annexure referred to above, 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 appears from our examination of
 those books;
 
 (c) the balance sheet, profit and loss account and cash flow statement
 dealt with by this report are in agreement with the books of account;
 
 (d) 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
 Companies Act, 1956;
 
 (e) on the basis of written representations received from the
 directors, as on 31 March 2009, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31 March 2009 from being appointed as a director in terms of clause (g)
 of sub-section (1) of Section 274 of the Act; and
 
 (f) in our opinion and to the best of our information and according to
 the explanations given to us, the said financial statement 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
 accounting principles generally accepted in India:
 
 i. in the case of the balance sheet, of the state of affairs of the
 Company as at 31 March 2009;
 
 ii. in the case of the profit and loss account, of the profit for the
 year ended on that date; and
 
 iii. in the case of the cash flow statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO AUDITORS REPORT - 31 MARCH 2009
 
 With reference to the Annexure referred to in paragraph 1 of the
 Auditors Report to the Members of Akzo Nobel Chemicals (India) Limited
 (the Company) on the financial statements for the year ended 31 March
 2009, we report that:
 
 1.  a.  The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 b.  The Company has a phased program of physical verification of its
 fixed assets so as to cover all the assets over a period of three
 years. In our opinion, the periodicity of physical verification is
 reasonable having regard to the size of the Company and the nature of
 its assets. No discrepancies have been noted on such verification
 during the year.
 
 c.  Fixed assets disposed off during the year were not substantial and
 therefore do not affect the going concern assumption.
 
 2.  a.  The inventory, except goods-in-transit, has been physically
 verified by the management during the current year. In our opinion, the
 frequency of such verification is reasonable.
 
 b.  In our opinion and according to the information and explanations
 given to us, the procedures for physical verification of inventories
 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. The
 discrepancies noted on verification between the physical stocks and the
 book records were not material.
 
 3.  According to the information and explanations given to us, we are
 of the opinion that there are no companies, firms or other parties
 covered in the register required under section 301 of the Companies
 Act, 1956. Accordingly, paragraph 4(iii) of the Order is not
 applicable.
 
 4.  In our opinion and according to the information and explanations
 given to us and having regard to the explanation that purchases of most
 of the items of inventory are for Companys specialized requirements .
 and similarly certain goods sold and all services rendered by the
 Company are for the specialized requirements of the buyers and suitable
 alternative sources are not available to obtain 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 purchase
 of inventories, fixed assets and with regard to sale of goods and
 services. We have not observed any major weakness in the internal
 control system during the course of the audit.
 
 5.  In our opinion, and according to the information and explanations
 given to us, there are no contracts or arrangements the particulars of
 which need to be entered into the register maintained under section 301
 of the Companies Act, 1956.
 
 6.  The Company has not accepted any deposits from the public.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size and the nature of its business.
 
 8.  According to the information and explanations given to us, the
 Central Government has not prescribed the maintenance of cost records
 under section 209 (1)(d) of the Companies Act, 1956, for any products
 of the Company.
 
 9.  (a) According to the information and explanations given to us and
 on the basis of our examination of the books of account, the Company
 has been regular in depositing with appropriate authorities, the
 undisputed statutory dues including provident fund, sales tax, income
 tax, wealth tax, service tax, customs duty, excise duty and other
 material statutory dues, except for dues relating to transfer of
 unclaimed dividend to investor education and protection fund. As
 explained to us, the Company did not have any dues on account of
 Employees State Insurance. There were no dues on account of Cess under
 section 441A of the Companies Act, 1956, since the aforesaid section
 has not yet been made effective by the Central Government.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, income tax,
 wealth tax, sales tax, service tax, customs duty, excise duty, investor
 protection fund and other material statutory dues were in arrears, as
 at 31 March 2009, for a period of more than six months from the date
 they became payable.
 
 (b) According to the information and explanations given to us, there
 are no dues of sales tax, income- tax, customs duty, wealth-tax,
 service tax and excise duty, which have not been deposited on account
 of any dispute, other than those stated in Appendix I to this report.
 
 10.  The Company does not have any accumulated losses at 31 March 2009.
 The Company has not incurred cash losses during the financial year
 covered by our audit and the immediately preceding financial year.
 
 11.  The Company does not have any dues to banks, financial
 institutions or debenture holders during the year.
 
 12.  The Company has not granted loans or advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund / nidhi / mutual benefit
 fund / society.
 
 14.  In our opinion and according to the information and explanations
 given to us, the Company is not dealing in or trading in shares,
 securities, debentures and other investments.
 
 15.  According to the information and explanations given to us, the
 Company has not given any guarantees for loans taken by others from
 banks or financial institutions.
 
 16.  According to the information and explanations given to us, the
 Company did not have any term loans outstanding during the year.
 
 17.  According to the information and explanations given to us and an
 overall examination of the balance sheet of the Company, the Company
 has not used funds raised on short term basis for the purpose of long
 term investment.
 
 18.  As stated in paragraph 5 above, there are no companies / firms /
 other parties covered in the register required to be maintained under
 section 301 of the Companies Act, 1956.
 
 19.  The Company did not have any outstanding debentures during the
 year.
 
 20.  According to the information and explanations given to us, the
 Company has not raised any money by way of public issues during the
 year.
 
 21.  According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
 
                                                       For B S R & Co.
                                                Chartered Accountants
 
                                                     Juzer Miyajiwala
 Pune                                                         Partner
 28 August 2009                                  Membership No.047483