1.  We have audited the attached Balance Sheet of Bajaj Auto Limited
 (the Company) as at 31 March 2012, and the related Statement of
 Profit and Loss 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 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 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 (Auditor''s Report) Order, 2003, as
 amended by the Companies (Auditor''s 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, Statement of Profit and Loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (d) In our opinion, the Balance Sheet, Statement of Profit and Loss 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 2012 and taken on record by the Board of
 Directors, none of the directors is disqualified as on 31 March 2012
 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 2012;
 
 (ii) in the case of the Statement of Profit and Loss, 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 2012
 
 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. Accordingly, clauses 3(b) to 3(d) of para
 4 of the order are not applicable to the Company for the year.
 
 (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. Accordingly, clauses 3(f) and 3(g) of
 para 4 of the order are not applicable to the Company for the year.
 
 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 and 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, no major weaknesses have been noticed or
 reported.
 
 5.  (a) In our opinion, and 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 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 the 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 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, service tax, customs duty and excise duty as at
 31 March 2012 which have not been deposited on account of a dispute,
 are as follows:
 
                                                       (Rs. In Crore)
 
 Name of the   Nature of dues    Amount   Period to which 
                                            the           Forum where the
 statute                                  amount relates  dispute is
                                                           pending
 
 Excise Duty  Additional Demand
              Received           6.61    Various years 
                                         1984-2006          CEGAT
 
              Additional Demand 
              Received           0.50    Various years 
                                         1991-2003        Commissioner 
                                                          Appeals
 
              Additional Demand 
              Received           1.83    Various years 
                                         1986-2000        High Court
 
              Additional Demand 
              Received           6.25    Various years
                                         1993-1999        Supreme Court
 
 Sales Tax    Additional Demand 
              Received on                Financial year
                                         2000-01 to       Joint Commis
                                                          -sioner of
                               288.04    
              the basis of 
              Assessment Order           2004-05 and 
                                         2007-08          Sales tax
 
              Additional Demand 
              Received on                Financial year 
                                         2001-02 to 
                                         2004-05, 
                                 63.30                    Tribunal
              the basis of 
              Assessment Order           2008-09,2009-10,
                                         2011-12
 
              Additional Demand 
              Received on                Financial year 
                                         1996-97 to    
                                   6.5                   High Court
              account of entry tax       2000-2001
 
              Demand Notice 
              Received           
 Income Tax   against regular 
              Assessment          9.57   Financial year 
                                         2007-08       CIT (APPeals)
 
                                  3.77   For the year 
                                         2002-03         High Court
 Service Tax  Denial of Credit    2.38   Various years 
                                         2004 to 2008   CEGAT/CESAT
 
 Customs 
 Duty         Recovery of Duty 
              by treating         3.84   Financial 
                                         year 1988-89    High Court
 
 Customs 
 Duty         the vehicles as 
              not fuel efficient  0.24   Financial year 
                                         2001 and 2002        CEGAT
 
 10.  The Company has no accumulated losses.
 
 11.  According to the records of the Company examined by us and the
 information and explanation given to us, the Company has 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.  The provisions of any special statute applicable to chit
 fund/nidhi/mutual benefit fund/societies are not applicable to the
 Company.
 
 14.  In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 15.  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.
 
 16.  The Company has not obtained any term loans.
 
 17.  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.
 
 18.  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.
 
 19.  The Company has not issued any debentures during the year; and
 does not have any debentures outstanding as at the year end.
 
 20.  The Company has not raised any money by public issues during the
 year.
 
 21.  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 any such case by the Management.
 
 For Dalai and Shah
 
 Firm Registration Number: 102021W
 
 Chartered Accountants
 
 Anish P Amin
 
 Partner
 
 Membership Number: 40451
 
 Pune: 17 May 2012