Ashok Leyland

1.  We have audited the attached Balance Sheet of ASHOK LEYLAND LIMITED
 as at March 31, 2009, the Profit and Loss Account and the Cash Flow
 Statement (financial statements) for the year ended on that date,
 annexed thereto, signed by us under reference to this report. 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 and assurance
 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.  We report that:
 
 3.1 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.
 
 3.2 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.
 
 3.3 the financial statements dealt with by this report are in agreement
 with the books of account.
 
 3.4 in our opinion, the aforesaid financial statements comply in all
 material respects with the applicable Accounting Standards referred to
 in section 211(3C) of the Companies Act, 1956 (the Act).
 
 3.5 on the basis of written representations received from the directors
 as on March 31, 2009, and taken on record by the Board of Directors, we
 report that none of the directors is prima facie disqualified as on
 March 31, 2009 from being appointed as a director in terms of section
 274 (1) (g) of the Act.
 
 3.6 in our opinion and to the best of our information and according to
 the explanations given to us, the aforesaid financial statements read
 with the Statement on Significant Accounting Policies and Notes to the
 Accounts, give the information required by the Act, in the manner so
 required and also 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 March 31, 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
 
 4. As required by the Companies (Auditor’s Report) Order, 2003 issued
 by the Government of India in terms of section 227(4A) of the Companies
 Act, 1956, and on the basis of such checks as we considered appropriate
 and according to the information and explanations given to us, we
 further report that:
 
 4.1 (i) the Company is maintaining proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (ii) the fixed assets are being physically verified under a phased
 programme of verification, which, in our opinion, is reasonable having
 regard to the nature and value of its assets, and no material
 discrepancies have been noticed on such verification.
 
 (iii) the Company has not disposed off substantial part of its fixed
 assets during the year.
 
 4.2 (i) inventories have been physically verified during the year by
 the management at reasonable intervals.
 
 (ii) the procedures of physical verification of the inventory followed
 by the management are reasonable and adequate in relation to the size
 of the Company and the nature of its business.
 
 (iii) the Company is maintaining proper records of its inventories and
 no material discrepancies were noticed on physical verification.
 
 4.3 the Company has neither granted nor taken any loans, secured or
 unsecured, to / from companies, firms or other parties covered in the
 register maintained under section 301 of the Act.
 
 4.4 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 inventory and fixed assets and for sale of goods and
 services. Further, on the basis of our examination of the books and
 records of the Company, we have neither come across nor have been
 informed of any continuing failure to correct major weaknesses in the
 aforesaid internal control system.
 
 4.5 to the best of our knowledge there are no contracts or arrangements
 referred to in section 301 of the Act which need to be entered in the
 register maintained under the said section.
 
 4.6 the Company has complied with the provisions of section 58A and
 58AA or any other relevant provisions of the Act and the Companies
 (Acceptance of Deposit) Rules, 1975 with regard to deposits accepted
 from public.
 
 4.7 the Company has an internal audit system commensurate with its size
 and nature of its business.
 
 4.8 we have broadly reviewed the books of account and records
 maintained by the Company relating to the manufacture of commercial
 vehicles, diesel engines, gensets and auto components pursuant to the
 order made by the Central Government for the maintenance of cost
 records under section 209(1)(d) of the Act and are of the opinion that
 prima facie the prescribed accounts and records have been made and
 maintained.
 
 4.9 (i) the Company is regular in depositing 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
 as applicable with the appropriate authorities during the year.
 
 (ii) there are no dues of income tax/ wealth-tax, service tax, customs
 duty, which have not been deposited on account of any dispute. Details
 of dues towards sales tax, excise duty and cess that have not been
 deposited on account of dispute are as stated below:
 
 Nature               Dues
 of
 dues
                     Rs. Lakhs
 
 Sales                232.14
 Tax
                        8.82
 Excise                17.55
 Duty
 and
 cess
 
 Forum                  Amount
 where the             stayed not
 dispute is            included
 pending               in dues
                       Rs. Lakhs
 
 Appellate
 Deputy /
 Additional
 Commis-
 sioner                1,983.77
 Tribunal                148.35
 Commis-
 sioner of
 Central
 Excise
 (Appeals)                    -
 
 4.10 the Company does not have any accumulated losses as at March 31,
 2009 and has not incurred any cash losses in the financial year ended
 on that date or in the immediately preceding financial year.
 
 4.11 the Company has not defaulted in repayment of dues to any
 financial institution, bank or debenture holders during the year.
 
 4.12 the Company has maintained adequate documents and records where it
 has granted loans and advances on the basis of security by way of
 pledge of shares, debentures and other securities.
 
 4.13 the provisions of any special statute applicable to a chit fund,
 nidhi, mutual benefit fund / societies are not applicable to the
 Company.
 
 4.14 the Company is not dealing or trading in shares, securities,
 debentures and other investments. Accordingly the provisions of clause
 4 (xiv) of the Companies’ (Auditor’s report) Order 2003 are not
 applicable to the Company.
 
 4.15 the terms and conditions of guarantees given during the year by
 the Company, for loans taken by others from banks or financial
 institutions, are not prima facie prejudicial to the interest of the
 Company.
 
 4.16 the term loans availed by the Company were prima facie, applied
 for the purpose for which they were obtained. The loan funds pending
 application was temporarily deployed as deposits with banks.
 
 4.17 on an overall examination of the financial statements of the
 Company, funds raised on short-term basis have, prima facie, not been
 used during the year for long-term investment.
 
 4.18 the Company has not made any preferential allotment of shares
 during the year to any party.
 
 4.19 the Company has created securities / charges in respect of
 debentures issued and outstanding.
 
 4.20 the Company has not raised any money by public issues during the
 year.
 
 4.21 considering the size and nature of the Company’s operations, no
 fraud of material significance on or by the Company has been noticed or
 reported during the year.
 
 For M.S. Krishnaswami & Rajan             For Deloitte Haskins & Sells
 Chartered Accountants                         Chartered Accountants
 
 M.K. Rajan                                          R.Laxminarayan
 Partner                                                Partner
 Membership No.4059                                Membership No.33023
 
 May 15, 2009
 Chennai