1.  We have audited the attached Balance Sheet of
 BAJAJ AUTO LIMITED (the “Company”) as at 31 March 2011, and the related
 Profit and Loss Account and Cash Flow Statement for the year ended on
 that date annexed thereto, which we have signed under reference to this
 report.  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 the 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 by the Companies (Auditors Report) (Amendment) Order, 2004
 (together the “Order”), issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 of The Companies Act, 1956
 of India (the Act) and on the basis of such checks of the books and
 records of the Company as we considered appropriate and according to
 the information and explanations given to us, we give in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 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 Act;
 
 (e) On the basis of written representations received from the
 directors, as on 31 March 2011 and taken on record by the Board of
 Directors, 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 Act;
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto give, in the prescribed
 manner, the information required by the Act, 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 to Auditors Report
 Referred to in paragraph 3 of the Auditors Report of even date to the
 members of Bajaj Auto Limited on the financial statements for the year
 ended 31 March 2011
 
 1.  (a) The Company is maintaining proper records showing full
 
 particulars, including quantitative details and situation, of fixed
 assets.
 
 (b) The fixed assets are physically verified by the Management
 according to a phased programme designed to cover all the items over a
 period of three years which, in our opinion, is reasonable having
 regard to the size of the Company and the nature of its assets.
 Pursuant to the programme, a portion of the fixed assets has been
 physically verified by the Management during the year and no material
 discrepancies between the book records and the physical inventory have
 been noticed.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 of by the Company during the year.
 
 2.  (a) The inventory (excluding stocks with third parties) has
 
 been physically verified by the Management during the year. In respect
 of inventory lying with third parties, these have substantially been
 confirmed by them. In our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion, 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) On the basis of our examination of the inventory records, in our
 opinion, the Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 3.  (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 Act.
 
 (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 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 for the
 purchase of inventory, fixed assets and for the sale of goods and
 services. Further, on the basis of our examination of the books and
 records of the Company, and according to the information and
 explanations given to us, we have neither come across nor have been
 informed of any continuing failure to correct major weaknesses in the
 aforesaid internal control system.
 
 5. (a) According to the information and explanations given to us, the
 particulars of contracts or 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 such contracts or
 arrangements and exceeding the value of Rs. 5 lakh in respect of 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.  In our opinion and according to the information and explanations
 given to us, the Company has complied with the directives issued by
 Reserve Bank of India and the provisions of Sections 58A and 58AA or
 any other relevant provisions of the Act and the Companies (Acceptance
 of Deposits) Rules, 1975 with regard to the deposits accepted from the
 public.  According to the information and explanations given to us, no
 Order has been passed by the Company Law Board or National Company Law
 Tribunal or Reserve Bank of India or any Court or any other Tribunal on
 the Company in respect of the aforesaid deposits.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 8.  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 of India, the maintenance of cost records has been
 prescribed under clause (d) of sub-section (1) of Section 209 of the
 Act, and are of the opinion that prima facie, the prescribed accounts
 and records have been made and maintained. We have not, however, made a
 detailed examination of the records with a view to determine whether
 they are accurate or complete.
 
 9.  (a) According to the information and explanations given to us
 
 and the records of the Company examined by us, in our opinion, the
 Company is regular in depositing the 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. .
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, the particulars of dues of
 income-tax, sales-tax, wealth-tax, service-tax, customs duty, excise
 duty and cess as at 31 March 2011 which have not been deposited on
 account of a dispute, are shown in Table 1:
 
 10. The Company has no accumulated losses as at 31 March 2011 and it
 has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 11. According to the records of the Company examined by us and the
 information and explanation given to us, the Company has
 
 (Rs. In Crore)
 
 Table 1:
 
 Name of the    Nature of dues                  Amount
 statute                     
 
 Sales Tax      Additional demand received       319.5 
                on basis of assessment 
                order received 
 
                Additional demand received        2.40
                on basis of assessment 
                order 
 
                Additional demand received
                on basis of assessment
                order received                    6.50
 
 Income Tax     —                                    — 
 
 Wealth Tax     —                                    — 
 
 Service Tax    Denial of credit and others       0.09
 
                                                  2.44 
 
                                                  3.77 
 
 Customs duty   Recovery of duty by treating 
                the vehicles                      0.24
                as not fuel efficient             3.84
 
 Excise         Additional demand received        0.78 
 
                                                  5.16 
 
                                                  1.81
 
                                                  6.28 
 
 Octroi         Rate difference cases              0.7 
 
                                                   7.1 
 
 Name of the    Period to which the              Forum where the
 statute         amount relates                  dispute is 
                               pending
 
 
 Sales Tax      FY 1998-99, 2000-01, 2001-02,    Commissioner 
                2002-03, 2003-04, 2004-05        Appeals
 
                                                 CEGAT
                                                 High Court
 
 Income Tax     —                                —
 
 Wealth Tax     —                                —
 
 Service Tax    —                                Commissioner 
                                                 Appeals
 
                Various years 2004-08            CEGAT
 
                Various years 1997-2008          High Court
 
 Customs duty   FY 2001-02                       CEGAT
 
                FY 1988-89                       High Court
 
 Excise         Various years 1991-2003          Commissioner 
                                                 Appeals
 
                Various years 1984-2006          CEGAT
 
                Various years 1986-2000          High Court
 
                Various years 1993-1999          Supreme Court
 
 Octroi         FY 2002-03                       Civil court
 
                Various years 2002-07            High court
 
 
 not defaulted in repayment of dues to any financial institution or bank
 or debenture holders as at the balance sheet date.
 
 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, the Company has maintained proper records of
 transactions and contracts relating to dealing or trading in shares,
 securities, debentures and other investments during the year and timely
 entries have been made therein.
 
 14. In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company, for loans taken by others from banks or financial institutions
 during the year, are not prejudicial to the interest of the Company.
 
 15. The Company has not obtained any term loans.
 
 16. On the basis of an overall examination of the balance sheet of the
 Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short-term
 basis which have been used for long-term investment.
 
 17. The Company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Act during the year.
 
 18. The Company has not issued any debentures.
 
 19. The Company has not raised any money by public issues during the
 year.
 
 20. During the course of our examination of the books and records of
 the Company, carried out in accordance with the generally accepted
 auditing practices in India, and according to the information and
 explanations given to us, we have neither come across any instance of
 fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by the Management.
 
 21. Considering the nature of the business conducted by the company,
 clause xiii of paragraph 4 of the Companies (Auditors Report) Order
 2003, as amended by the Companies (Auditors Report) (Amendment) Order,
 2004, is not applicable in the case of the Company for the year, as
 they do not relate to the business carried on by the company
 
 
 For Dalal and Shah
 Firm Registration Number: 102021W
 Chartered Accountants
 
 Anish P Amin
 Partner
 Membership Number: 40451
 
 Pune: 18 May 2011