1 We have audited the attached Balance Sheet of Akzo Nobel India
 Limited (formerly ICI India Limited) (the Company) as at 31 March
 2011 and also the Profit and Loss Account and the Cash Flow Statement
 of the Company 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.
 
 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 (Auditors Report) Order, 2003 (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:
 
 (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 the 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 the
 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, to the extent applicable;
 
 (e) on the basis of written representations received from the directors
 of the Company as on 31 March 2011 and taken on record by the Board of
 directors, we report that none of the directors is disqualified as on
 31 March 2011 from being appointed as a director in terms of clause (g)
 of sub-section (1) of section 274 of the Companies Act, 1956; and
 
 (f) 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 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 2011;
 
 (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 referred to in paragraph 3 of the Auditors Report to the
 Members of Akzo Nobel India limited (formerly ICI India limited) on the
 accounts for the year ended 31 March 2011
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) As explained to us, the fixed assets are physically verified by the
 management in accordance with a phased programme designed to cover all
 items of fixed assets over a period of three years, which, in our
 opinion, is reasonable having regard to the size of the Company and
 nature of its fixed assets. In accordance with this programme, certain
 categories of fixed assets at certain locations have been physically
 verified by the management during the year and no material
 discrepancies were noticed on such verification, which have been
 properly dealt with in the books of account.
 
 (c) The Company did not dispose off any substantial part of its fixed
 assets during the current year.
 
 (ii) (a) According to the information and explanations given to us,
 physical verification has been conducted by management at reasonable
 intervals during the year in respect of inventory of raw materials,
 stores and spare parts, work-in-process and finished goods in the
 Companys possession. The existence of stocks lying with third parties
 as at 31 March 2011 has been evidenced based on confirmations or
 statements of account received in most cases. In our opinion, the
 frequency of physical 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) On the basis of our examination of the records of inventories, we
 are of the opinion that the Company is maintaining proper records of
 inventories. The discrepancies noticed on physical verification of
 inventories as compared to book records were not material and have been
 properly dealt with in the books of account.
 
 (iii) (a) According to the information and explanations given to us,
 the Company has granted loan to a company covered in the register
 maintained under section 301 of the Companies Act, 1956. The maximum
 amount outstanding during the year was Rs.190 million and the year-end
 balance of such loan was Rs. 110 million.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 on which loan has been granted to the company listed in the register
 maintained under section 301 of the Companies Act, 1956 is not, prima
 facie, prejudicial to the interest of the Company.
 
 (c) In the case of loan granted to the company listed in the register
 maintained under section 301, the borrower has been regular in repaying
 the principal amounts as stipulated and in the payment of interest.
 
 (d) There is no overdue amount of more than Rupees one lakh in respect
 of loan granted to the company listed in the register maintained under
 section 301.
 
 (e) 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 Companies Act, 1956.
 
 (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 with regard
 to purchase of inventories and fixed assets and with regard to the sale
 of goods. Further, on the basis of our examination and according to the
 information and explanations given to us, we have neither come across
 nor have been informed of any major weaknesses in the aforesaid
 internal control system.
 
 (v) (a) According to the information and explanations given to us, the
 particulars of contracts or arrangements referred to in section 301 of
 the Companies Act, 1956 have been entered in the register required to
 be maintained under that section.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956, and exceeding Rs 5 lacs in respect of any
 party during the year, have been made at prices which are reasonable
 having regard to prevailing market prices at the relevant time.
 
 (vi) According to the information and explanations given to us, the
 Company has not accepted any deposits from the public during the year
 within the meaning of Sections 58A and 58AA or other relevant
 provisions of the Companies Act, 1956 and the rules framed there under.
 
 (vii) In our opinion and according to the information and explanations
 given to us, the Company has an internal audit system commensurate with
 its size and the nature of its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company in respect of products where, pursuant to the rules made by the
 Central Government, the maintenance of cost records has been prescribed
 under section 209(1)(d) of the Companies Act, 1956 and are of the
 opinion that, prima facie, the prescribed accounts and records have
 been made and maintained. However, we have not made a detailed
 examination of such records with a view to determine whether they are
 accurate or complete.
 
 (ix) (a) According to the information and explanations given to us and
 on the basis of our examination of the records of the Company, amounts
 deducted/ accrued in the books of account in respect of 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 have generally been regularly deposited during
 the year by the Company with the appropriate authorities.
 
 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 material statutory dues were in arrears as at 31 March 2011 for a
 period of more than six months from the date they became payable.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, there are no dues of Income tax,
 Sales tax, Wealth tax, Service tax, Customs duty, Excise duty and Cess
 which have not been deposited with the appropriate authorities on
 account of any dispute, except as mentioned below:
 
 Name of the  Nature of   Amount   Amount  Period to which   Forum where
 Statute      the dues    involved paid    the amount        dispute is
                             *#    under   relates           pending
                                   protest
 
 Income Tax   Income Tax   1,437    1,435  1989-90,          High Court/
 Act, 1961                                 1994-95 to 2007-  Tax 
                                                             Appellate 
                                                             Tribunal/
                                           08 (Assessment    Commissio-
                                           year)             ner of 
                                                             Income
                                                             Tax Appeal
 
 Central      Excise duty     84        -  1991-92 to        Customs, 
 Excise Act,                                                 Excise and
 1944                                      2005-06           Appellate 
                                                             Tribunal
 
                               7        -  2004-05 and       Commissio-
                                                             ner Appeals
                                           2005-06           Central 
                                                             Excise and
                                                             Customs
 
 Central      Sales tax      198       14  1982-83 to        Sales Tax
 Sales Tax                                 1999-00,          Officer/ 
 Act, 1956                                 2002-03 to 2005-  Sales Tax
                                           06,2007-08        Revision 
                                                             Board / 
                                                             Deputy
                                                             Commissio-
                                                             ner/ Deputy
                                                             Commissio-
                                                             ner Appeal/
                                                             Appellate 
                                                             Tribunal
 
 Uttar        Sales tax       37        -  1976-77,1979-     Sales Tax 
 Pradesh                                   80, 1980-81,      Officer/ 
 Trade Tax                                 1986-87 to 1989-  Sales Tax
 Act, 1948                                 90, 1992-93,      Revision 
                                           2000-01, 2003-    Board / 
                                           04 to 2005-06,    Deputy
                                           2007-08           Commissio-
                                                             ner/ Deputy
                                                             Commissio-
                                                             ner Appeal/
                                                             Additional
                                                             Commissio-
                                                             ner/
                                                             Appellate 
                                                             Tribunal/
                                                             High Court
 
 West Bengal  Sales tax      17         -  1995-96,2004-
 Tax Act, 1994                             05
 
 Delhi Sales  Sales tax       8         -  1983-84,1985-
 Act, 1975                                 86 to 1987-88,
                                           1989-90, 2002-
                                           03 to 2004-05
 
 The Kerala   Sales tax       2         -  2005-06,2006-
 General                                   07,2008-09
 Sales Tax
 Act, 1963
 
 Rajasthan    Sales tax       2         -  1998-99
 Sales
 Tax Act, 1994
 
 Bihar Sales  Sales tax      34         5  1992-93 to
 Tax Act, 1959                             1999-00, 2004-
                                           05, 2006-07
 
 The Madhya   Sales tax      38         7  2003-04 to
 Pradesh                                   2007-08
 General 
 Sales Tax 
 Act, 1958
 
 Orissa Sales Sales tax      17        17  1995-96 to
 Tax Act, 1947                             1999-00
 
 Bombay Sales Sales tax      35         -  2004-05
 Tax Act, 1959
 
 
 * Including disputed dues aggregating Rs. 36 million in respect of
 sales tax disputes, which have been stayed by the respective
 authorities.
 
 # Excluding the demands the proceedings of which have been set aside or
 remanded for reassessment by the appropriate authorities.
 
 (x) The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses during the financial
 year and in the immediately preceding financial year.
 
 (xi) According to the information and explanations given to us, the
 Company has not defaulted in repayment of dues to its bankers. The
 Company did not have any outstanding dues to any financial institutions
 or debenture-holders during the year.
 
 (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.
 
 (xiii) According to the information and explanations given to us, the
 Company is not a chit fund or a nidhi/ mutual benefit fund/ society.
 
 (xiv) According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 (xv) 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 during the year.
 
 (xvi) According to the information and explanations given to us, the
 Company did not have any term loans outstanding during the year.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we are of
 the opinion that the funds raised on short-term basis have not been
 used for long- term investments.
 
 (xviii) The Company has not made any preferential allotment of shares
 to companies/firms/parties covered in the register maintained under
 Section 301 of the Companies Act, 1956 during the year.
 
 (xix) The Company did not have any outstanding debentures during the
 year.
 
 (xx) The Company has not raised any money by way of public issue during
 the year.
 
 (xxi) Based on the audit procedures performed and according to the
 information and explanations given to us, no fraud on or by the Company
 has been noticed or reported during the year.
 
 
                                                For B S R & Associates
                                                 Chartered Accountants
                                         Firm Registration No: 116231W
 
 
   
                                                       Kaushal Kishore
                                                               Partner 
                                                 Membership No: 090075
 
 
 Place : Gurgaon 
 Date  : 11 May 2011