We have audited the attached Balance Sheet of Asian Paints Limited
 (the Company) as at 31st 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.
 
 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 of our opinion.
 
 As required by the Companies (Auditors Report) Order, 2003, 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 to the extent applicable.  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 purpose 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
 referred to in 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 Section 211(3C) of the Act.
 
 (e) on the basis of the written representations received from the
 Directors of the Company as at 31st March 2011, and taken on record by
 the Board of Directors, we report that none of the directors of the
 Company is disqualified as on 31st March 2011 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 statements give the
 information required by the Act, in the prescribed manner 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 on 31st March 2011;
 
 (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 for the
 year ended on that date.
 
 Annexure to the Auditors Report - 31st March, 2011 (Referred to in our
 report of even date)
 
 1.  (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of the fixed
 assets.
 
 (b) The Company has a regular programme of physical verification of its
 fixed assets by which all the fixed assets are verified in a phased
 manner, over a period of 3 years. In our opinion, this periodicity of
 physical verification is reasonable, having regard to the size of the
 Company and the nature of its assets. No material discrepancies were
 noticed on such verification.
 
 (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 and stocks lying with
 third parties, have been physically verified by the management during
 the year. In our opinion, the frequency of verification is reasonable.
 For stocks lying with third parties at the year end written
 confirmations, have been obtained.
 
 (b) The procedures for the 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 has maintained proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 book records were not material.
 
 3.  The Company has neither granted nor taken any loans, secured or
 unsecured, to or from companies, firms or other parties covered in the
 register required to be maintained under Section 301 of the Act.
 
 4.  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 sale of
 goods and services. We have not observed any major weakness in the
 internal control system during the course of the audit.
 
 5.  (a) According to the information and explanations given to us, the
 particulars of all contracts and arrangements referred to in Section
 301 of the Act, 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 and
 arrangements referred to in (a) above and exceeding the value of ? 5
 lakh with any party during the year have been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 6.  The Company has not accepted any deposits from the public.
 
 7.  In our opinion the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the books of accounts maintained by the
 Company pursuant to the rules prescribed by the Central Government for
 the maintenance of cost records under Section 209(1) (d) of the Act in
 respect of paints, resins and pentaerythritol 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 the
 records.
 
 9.  (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, Employees State Insurance,
 Investor Education and Protection Fund, Income tax, Sales tax, Wealth
 tax, Service tax, Customs duty, Excise duty, Cess and other material
 statutory dues have been generally 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, Employees State Insurance, Investor
 Education and Protection Fund, Income tax, Sales tax, Wealth tax,
 Service tax, Customs duty, Excise duty, Cess and other material
 statutory dues were in arrears as at 31st March, 2011 for a period of
 more than six months from the date they became payable.
 
 There were no dues on account of Cess under Section 441A of the Act,
 since the date from which the aforesaid \ section comes into force has
 not yet been notified by the Central Government.
 
 (b) According to the information and explanations given to us, the
 following dues have not been deposited by the Company on account of
 disputes.
 
 Name of the     Nature of dues        Financial Year
 Statute
 
 Sales Tax        Assessment          F.Y. 1994-95 to 1995-96,
                  Dues                F.Y. 1997-98, F.Y. 2000-01
                                      to 2009-10
 
                                      F.Y. 1999-00 to 2001-02,
                                      F.Y. 2003-04 to 2006-07
  
                                      F.Y. 1991-92, F.Y. 1993-94,
                                      F.Y. 1996-97 to 1998-99,
                                      F.Y. 2000-01 to 2006-07
 
                                      F.Y. 1993-94, F.Y. 1997-98,
                                      F.Y. 2000-01 to 2006-07
 
                                      F.Y. 1992-93, 1993-94
 
                 Total (A)
 
 Central Excise  Dispute relating     F.Y. 1994-95, F.Y. 2007-08
 Act, 1944       to Excise duty
 
                                      F.Y. 1992-93 to 1993-94,
                                      F.Y. 1995-96 to 2003-04,
                                      F.Y. 2006-07 to 2010-11
 
                                      F.Y. 1969-70 to 1972-73,
                                      F.Y. 1998-99 to 1999-00
 
                  Total (B)
 
 Income Tax      IT matters under     A.Y. 2004-05 and
                 dispute              A.Y. 2008-09 to 2010-11
 
                                      A.Y. 2003-04 and A.Y. 2007-08
 
                                      A.Y. 1996-97 to A.Y. 1999-00
                                      and A.Y. 2005-06
 
                 Total (C)
 
                 Grand Total (A)+(B)+(C)
 
 
 
 
 Name of the Statue        Amount           Forum where
                         (Rs. in Crores)   dispute is pending
 
 
 Sales Tax                 15.89          First Appellate level
 
                            0.79          Second Appellate
                                          level
 
                            8.83          Tribunal
 
                            1.34          High court
 
                            0.16          Supreme Court
 
 Total                  27.01
 
 Central Excise
 Act, 1944                  0.14         First Appellate
 
                            0.27          Tribunal
 
                            0.09          High Court
 
 Total                   0.50
 
 Income Tax                 0.92         Assessing officer
 
                            1.20         First Appellate
 
                            4.67         Tribunal
 
 Total                   6.79
 
 Grand Total(A)++    34.30
 
 10.  The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the current
 financial year and in the immediately preceding financial year.
 
 11.  In our opinion and according to the information and explanations
 given to us, the Company has not defaulted during the year in repayment
 of dues to its bankers or to any financial institution. The Company did
 not have any outstanding debentures or any outstanding loans from
 financial institutions during the year.
 
 12.  The Company has not granted any loans and 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
 or society.
 
 14.  According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 15.  The Company has given certain guarantees on behalf of its dealers
 and subsidiaries as mentioned in note B - 3 of Schedule M of the
 accounts. In our opinion based on the information and explanations
 received, the terms and conditions of these guarantees are not
 prejudicial to the interest of the Company.
 
 16.  The Company did not have any term loans outstanding during the
 year.
 
 17.  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 funds raised on short-term basis have not been used
 for long term investment.
 
 18.  The Company has not made any preferential allotment of shares to
 company, firms or parties covered in the register maintained under
 Section 301 of the Act during the year.
 
 19.  The Company has not issued any debentures during the year.
 
 20.  The Company has not raised any money by public issues during the
 year.
 
 21.  As per the information and explanations given to us, no material
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
 For Shah & Co.                             For B S R & Associates
 
 Chartered Accountants                       Chartered Accountants
 
 Firm Registration No.: 109430W     Firm Registration No.: 116231W
 
 H. N. Shah                                    Natrajh Ramakrishna
 
 Partner                                                   Partner
 
 Membership No.: 08152                       Membership No.: 32815
 
 Mumbai
 
 10th May, 2011