1.  We have audited the attached Balance Sheet of BAJAJ ELECTRICALS
 LIMITED, as at 31st 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 March 31, 2011 and taken on record by the Board of
 Directors, none of the directors is disqualified as on March 31, 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 March 31, 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 THE AUDITORS REPORT:
 
 Referred to in paragraph 3 of the Auditors Report of even date to the
 members of Bajaj Electricals Limited on the financial statements for
 the year ended 31st March, 2011
 
 1.  (a) The Company is maintaining 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 schedule adopted by
 the Company, whereby all the assets are verified, in a phased manner,
 once in a block of three years. According to the information and
 explanations given to us and the records produced to us for our
 verification, discrepancies noticed on such physical verification were
 not, in our opinion, material and the same have been properly dealt
 with in the books of account.
 
 (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 has been physically verified by the management
 during the year. In our opinion, the frequency of verification is
 reasonable. Inventories lying with outside parties have been confirmed
 by them at the close of the year.
 
 (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) As per the information and explanations given to us and the
 records produced to us for our verification, the company has granted
 unsecured loans to two companies covered in the register maintained
 under section 301 of the Companies Act, 1956, aggregating Rs.2,652
 lakhs at the beginning of the year, fresh loans granted during the year
 Rs. 500 lakhs, loans recovered during the year Rs. NIL and balance at
 the end of the year aggregating to Rs. 3,152 lakhs.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 of such loans are not prima facie prejudicial to the interest of the
 Company.
 
 (c) In respect of the aforesaid loans, the parties are regular in
 paying interest. Since there is no stipulation on the repayment of
 principal, we are unable to comment whether the parties are regular in
 repaying the principal.
 
 (d) In absence of stipulation on repayment of principal amounts of the
 aforesaid loans, this clause in not applicable.  However, in respect of
 interest on the aforesaid loans, in case where the overdue amount is
 more than Rupees One Lakh, in our opinion, reasonable steps have been
 taken by the company for recovery of the interest amounts.
 
 (e) The company has not taken any loans, secured or unsecured, from
 companies, firms or other parties covered in the registered 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) 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 Rupees Five Lakhs in respect of
 any party during the year have been made having regard to the
 capacities available, 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 generally 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 31st March, 2011 which have not been deposited on
 account of a dispute, are as follows –
 
 Name of       Nature of dues         Amount    Period to which the
 the statute                          (Rs. In     amount relates
                                      Lakhs)
 
 Sales Tax     Additional demand
               received on basis of   531.11    For Kolkata, Delhi, 
               assessment order                 Lucknow,Chennai, 
               received                         Indore, Nagpur,
                                                Guwahati, Patna,
                                                Jaipur, Cochin, 
                                                Bhubaneshwar,
                                                HO/EPD/Mumbai.
                                                Various 
                                                assessment 
                                                years ranging
                                                from 1988
                                                to 2010
 
              Additional demand      170.06     For Kolkata, Lucknow,
              received                          Patna, Hyderabad,
              on basis of                       Bhubaneshwar.
              assessment order                  Various assessment 
              received                          years ranging from
                                                1985 to 2009.                 
 
              Additional demand       24.75     Cochin Branch  
              received                          Assessment Years  
              on basis of                       99-00,02-03, 03-04,
              assessment order                
              received
 
 Income Tax   Demand U/S 143 (3)     427.21     Assessment Years 
                                                05-06,06-07, 07-08 
                                                and 08-09
 
                                      28.05     Assessment Years
                                                84-85 and 90-91
 
              Question of Law         23.16     Assessment Year 85-86
 
 Wealth Tax   -                           -     -  
 
 Service Tax  -                           -     -
 
 Customs Duty -                           -     -
 
 Excise       Issues relating to       2.38     Financial Year 2006-07
              Export
 
              Decision issued in       6.52     Financial Years 92-93
              favour of Collector               and 97-98
              of Central Excise,
              Pune.
 
 Octroi       -                           -     - 
 
 
 
 Name of         Forum where the
 the Statue      dispute is pending
 
 
 Sales Tax       Commissioner Appeals
 
                 Tribunal
 
                 Sub Court
 
 Income Tax      Commissioner Appeals
 
                 Tribunal
 
                 High Court
 
 Wealth Tax      -
 
 Service Tax     -
 
 Customs Duty    -
 
 Excise          Commissioner Appeals
 
                 Tribunal
 
 Octroi          -
 
 
 10.  The Company has no accumulated losses as at 31st 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 not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holders 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 respect of shares, securities, debentures and other investments
 dealt or traded by the Company, proper records have been maintained in
 respect of the transactions and contracts and timely entries have been
 made therein. All the investments are held by the Company in its own
 name.
 
 The company, in our opinion, has maintained proper records and
 contracts with respect to its investments wherein timely entries of
 transactions are made.
 
 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 raised working capital funds which are used for
 the purpose as and when needed. Internal generations have been mainly
 deployed in fixed assets and investments and partially ploughed back
 into the business.
 
 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 and hence the company
 has not created any security or charge in respect thereof.
 
 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, clause (xiii) of paragraph
 4 of the Companies (Auditors Report) Order 2003, as amended by the
 Companies (Auditors Report) (Amendment) Order, 2004, are not
 applicable in the case of the Company for the current year, since in
 our opinion there is no matter which arises to be reported in the
 aforesaid order.
 
 
                                                       For Dalal & Shah
                                      Firm Registration Number: 102021W
                                                   Chartered Accountant
 
                                                             Anish Amin
                                                                Partner
                                               Membership Number: 40451
 
 Mumbai: May 23, 2011