Bajaj Auto Finance

We have audited the attached Balance Sheet of BAJAJ AUTO FINANCE
 LIMITED, as at 31st March 2009 and also the annexed Profit and Loss
 Account and the Cash Flow Statement of the company for the year ended
 on that date.  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.
 
 1.  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 misstatements. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in 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.
 
 2.  As required by the Companies (Auditors Report) Order, 2003 (CARO,
 2003), issued by the Central Government of India in terms of Section
 227(4A) of the Companies Act, 1956, we annex hereto a Statement on the
 matters specified in paragraph 4 of the said Order.
 
 3.  Further to our comments in Annexure referred to in paragraph 2
 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 the
 Books of the company;
 
 (c) The Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by the report are in agreement with the Books of
 Account of the company;
 
 (d) 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 Section 211 (3C) of the Companies
 Act,1956, to the extent applicable;
 
 (e) On the basis of the written representations received from the
 Directors as on 31st March, 2009, 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;
 
 (f) In our opinion, and to the best of our information and according to
 the explanations given to us, the said Financial Statements read
 together with relevant notes thereon, give the information required by
 the Companies Act,1956, in the manner so required and present 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 the affairs of
 the company as at 31st March, 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.
 
 Annexure to the Auditors Report
 
 Statement referred to in Paragraph 2 of the Auditors Report of even
 date to the Members of BAIAJ AUTO FINANCE LIMITED on the Financial
 Statements for the year ended 31st March, 2009.
 
 On the basis of the records produced to us for our verification /
 perusal, such checks as we considered appropriate, and in terms of
 information and explanations given to us on our enquiries, we state
 that:
 
 i) (a) The company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets;
 
 (b) As explained to us, considering the nature of the Fixed Assets, the
 same have been physically verified by the management, at reasonable
 intervals, during the year as per the verification plan adopted by the
 company, which is reasonable having regard to the size of the company
 and nature of its assets. According to the information and explanations
 given to us and the records produced to us for our verification,
 discrepancies noticed on physical verification were not, in our
 opinion, material however the same have been properly dealt with in the
 Books of Account;
 
 (c) As per the information and explanation given to us on our enquiries
 the disposal of assets during the year were not substantial so as to
 have an impact on the operations of the company, or affect its going
 concern.
 
 ii) (a) As per the information and explanation given to us and the
 records produced to us for our verification, the company has granted
 secured loan of Rs.10 crores to a company covered in register
 maintained under Section 301 of the Companies Act, 1956 and the balance
 outstanding at the close of the year is Rs.10 crores. The company has
 not granted loans, secured or unsecured, to firms and other parties
 covered in the register maintained under Section 301 of the Companies
 Act, 1956;
 
 (b) In our opinion, the rate of interest and other terms and conditions
 on which loan has been granted to the company listed in the register
 maintained under Section 301 are not prima facie, prejudicial to the
 interest of the company;
 
 (c) The principal and interest were not due at the close of the year;
 
 (d) As per the information and explanation given to us and the records
 produced to us for our verification, the company had taken unsecured
 loan from a company, covered in the register maintained under Section
 301 of the Companies Act, 1956, balance at the beginning of the year
 was Rs.40.50 crores, fresh loan taken during the year Rs.29.20 crores,
 repaid Rs.55.10 crores and the balance outstanding at the close of the
 year is Rs. 14.60 crores. The company has not taken any loans, secured
 or unsecured, from Firms or other parties covered under Section 301 of
 the Companies Act, 1956;
 
 (e) In our opinion the rate of interest and other terms and conditions
 on which loan has been taken from a company listed in the register
 maintained under Section 301 are not prima facie, prejudicial to the
 interest of the company;
 
 (f) The company is regular in repaying the principal amount as
 stipulated and has been regular in the payment of interest.
 
 iii) In our opinion and according to the information and explanation
 given to us, there are adequate internal control procedures
 commensurate with the size of the company and the nature of its
 business with regard to the purchase of fixed assets and also for sale
 of services. During the course of our audit, nothing had come to our
 notice that may suggest a major weakness in internal control systems of
 the company.
 
 iv) (a) On the basis of the audit procedures applied by us, and
 according to the information and explanations given to us on our
 enquiries on this behalf and the records produced to us for our
 verification, transactions required to be entered into the register in
 pursuance of Section 301 of the Companies Act, 1956 have been so
 entered; (b) The transactions so entered, aggregating in excess of
 Rs.500,000/- in respect of each party during the year, have been, in
 our opinion, as per the information and explanation given to us, made
 at prices, which are reasonable, having regard to the prevailing market
 prices available with the company for such transactions or prices at
 which transactions for similar goods or services have been made with
 other parties at the relevant time.
 
 v) In our opinion and according to the information and explanations
 given to us, the company has complied with the directives issued by the
 Reserve Bank of India and provisions of Section 58A and 58AA of the
 
 Companies Act, 1956, other relevant provisions of the said Act
 including the Companies (Acceptance of Deposits) Rules, 1975, with
 regard to the deposits accepted from the public. No order has been
 passed on the company by the Company Law Board or National Company Law
 Tribunal or Reserve Bank of India or any Court or any other Tribunal in
 this regard.
 
 vi) On the basis of internal audit report broadly reviewed by us, we
 are of the opinion that, the company has an adequate internal audit
 system commensurate with the size and nature of its business.
 
 vii) (a) According to the records of the company, the company has been
 generally 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, Cess and
 other Statutory dues with the appropriate authorities; 
 
 (b) On the basis of our examination of the documents and records of the
 company and the information and explanations given to us upon our
 inquiries in this regard, disputed amounts payable in respect of Sales
 Tax, Income Tax , Wealth Tax and Service Tax not deposited with
 appropriate authorities are as follows:
 
 Statutes     Commission    Triburals  High   Suprame  Total  
              Appeals                  Court  Court  
              Rs.              Rs.      Rs.     Rs.      Rs.
 
 Sales Tax    15,484,767       -        -        -     15,484,767
 Income Tax       -            -        -        -         -  
 Wealth Tax       -            -        -        -         -  
 Service Tax      -            -        -        -         -  
 
 viii) As per the information and explanations given to us on our
 enquiries, and records of the company examined by us the company has
 not defaulted in repayment of dues to banks, financial institution or
 debenture holders during the year.
 
 ix) As per the information and explanations given to us on our
 enquiries, and records of the company examined by us, the company has
 generally maintained adequate documents and records where it has
 granted loans and advance on the basis of security by way of pledge of
 shares and securities.
 
 x) The company has, in our opinion, maintained proper records and
 contracts with respect to its investments
 
 where timely entries of transactions are made in the former. All
 investments held by the company at the close of the year are held in
 its own name.
 
 xi) As per the information and explanations given to us on our
 enquiries, and records of the company examined by us, the company has
 not given any guarantee for loans taken from financial institutions and
 / or banks by others.
 
 xii) As per the information and explanations given to us, term loans
 obtained by the company, in our opinion, have been applied for the
 purpose for which they were obtained.
 
 xiii) According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the company, we report
 that no funds raised on short-term basis have been used for long term
 investments.
 
 xiv) According to the information and explanations given to us, the
 company has not made preferential allotment of shares to a company
 covered in the register maintained under Section 301 of the Companies
 Act, 1956.
 
 xv) The company has created securities and registered charges in
 respect of debentures issued, in past year as well as in current year.
 The details of security are disclosed in Schedule 3 to the financial
 statements.
 
 xvi) As per the information and explanation given to us on our
 enquiries in this behalf there were no frauds on or by the company
 noticed or reported by the company during the year.
 
 In view of the nature of activities carried on by the company clause no
 (xiii) of CARO, 2003 is not applicable to the company. Further in view
 of the absence of conditions pre-requisite to the reporting requirement
 of clauses (ii), (viii), (x) and (xx) the said clauses are, at present,
 not applicable.
 
                                                  For and on behalf of
                                                          DALAL & SHAH
                                                 Chartered Accountants
 
                                                         SHISHIR DALAL
                                                               Partner
 Mumbai: 20th May, 2009                           Membership No. 37310