Apollo Tyres

1.  We have audited the attached Balance Sheet of Apollo Tyres Ltd.(the
 Company) as at 31st March 2009, the Profit and Loss Account and also
 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.
 
 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 (as
 amended) 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.
 
 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 appears from our examination of
 those books;
 
 iii. The Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 iv. In our opinion, the Balance Sheet, the 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.
 
 v. On the basis of the written representations received from the
 directors and taken on record by the Board of Directors, we report that
 none of the directors is disqualified as on 31st March 2009 from being
 appointed as a director in terms of clause (g) of sub-section (1) of
 Section 274 of the Companies Act, 1956 as on the said date.
 
 vi. 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 31st March 2009;
 
 (ii) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 (iii) in the case of the 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
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) Physical verification of fixed assets is carried out in a phased
 manner as determined by the management, whereby assets held at the
 Companys factories have been verified during the year. The program of
 verification is considered reasonable having regard to the size of the
 Company and the nature of its assets and no material discrepancies were
 noticed on such verification.
 
 (c) The fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial part of the fixed assets of the Company
 and such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 (ii) (a) The inventory has been physically verified during the year by
 the management. Jn our opinion, the frequency of verification is
 reasonable.
 
 (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. The
 discrepancies noticed on 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 companies, firms or other parties covered in the register maintained
 under section 301 of the Companies Act, 1956.
 
 (b) 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 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.
 During the course of our audit, we have not observed any significant
 continuing failure to correct major weaknesses in such internal
 controls.
 
 (v) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in Section 301 of the Companies Act, 1956 have
 been entered into the register required to be maintained under that
 section; and
 
 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 the value of rupees five lakhs in respect of
 any party during the year have been made at prices which are, prima
 facie, reasonable having regard to prevailing market prices at the
 relevant time.
 
 (vi) The Company has not accepted any deposits from the public during
 the year.
 
 (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 relating to the manufacture of automobile tyres and tubes,
 pursuant to the order made by the Central Government for the
 maintenance of cost records 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. We have, however,
 not made a detailed examination of the records with a view to
 determining whether they are accurate or complete.
 
 (ix) (a) The Company is regular in depositing with appropriate
 authorities undisputed statutory dues including Provident Fund,
 Investor Education and Protection Fund, Employees State Insurance,
 Income-Tax, Sales-Tax, VAT, Wealth-Tax, Service Tax, Customs Duty,
 Excise Duty, Cess and other material statutory dues applicable to it.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts in respect of Provident Fund, Investor Education and
 Protection Fund, Employees State Insurance, Income-Tax, Sales Tax,
 VAT, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other
 material statutory dues applicable to the Company were in arrears as at
 31st March 2009, for a period of more than six months from the date
 they became payable.
 
 (c) According to the information and explanations given to 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 on account of
 any dispute, except the following:
 
 (x) The Company does not have accumulated losses at the end of the
 financial year and has not incurred cash losses in the current and
 immediately preceding financial year.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 banks, financial institutions and debenture holders during the year.
 
 (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) The Company is not a chit fund or a nidhi / mutual benefit fund
 / society. Therefore, the provisions of clause 4(xiii) of the Companies
 (Auditors Report) Order, 2003 (as amended) are not applicable to the
 Company.
 
 (xiv) The Company is not dealing in or trading in shares, securities,
 debentures and other investments. Accordingly, the provisions of clause
 4(xiv) of the Companies (Auditors Report) Order, 2003 (as amended) are
 not applicable to the Company.
 
 (xv) In our opinion and according to the information and explanations
 given to us, the Company has not given any guarantee for loans taken by
 others from bank or financial institutions during the year except for
 the bank deposits pledged by the Company as referred to in Schedule 6
 to the financial statements.
 
 (xvi) To the best of our knowledge and belief and according to the
 information and explanations given to us, term loans availed by the
 Company were, prima facie, applied during the year for the purpose for
 which these loans were obtained, other than temporary deployment
 pending application.
 
 (xvii) According to the information and explanations given to us, and
 on overall examination of the Balance Sheet of the Company, no funds
 raised on short-term basis have been used for long term investment.
 
 (xviii) According to the information and explanations given to us, 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 such shares have been issued is
 not prejudicial to the interests of the Company.
 
 (xix) The Company had created security in respect of debentures issued
 during the year.
 
 (xx) The Company has not raised any money by public issues during the
 year as defined under SEBI (Disclosure and Investor Protection)
 Guidelines, 2000 which excludes conversion of warrants referred to in
 Note 3.b to Schedule 12 to the financial statements.
 
 (xxi) To the best of our knowledge and belief and according to the
 information and explanations given to us, we report that no fraud on or
 by the Company has been noticed or reported during the year.
 
 
                                          For Deloitte Haskins & Sells
 
                                                 Chartered Accountants
 
                                                 Geetha Suryanarayanan
 
 Place; Gurgaon                                         Partner
 
 Date : 29th April, 2009                         Membership No : 29519