1.  We have audited the attached Balance Sheet of Bata India Limited
 (the Company) as at December 31, 2010 and also the Profit and Loss
 account and the cash flow statement 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.
 
 2.  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 for
 our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 (as
 amended) issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose
 in the Annexure a statement on the matters specified in paragraphs 4
 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that:
 
 i. 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;
 
 ii. 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 ;
 
 iii. The balance sheet, profit and loss account and cash flow statement
 dealt with by this report are in agreement with the books of account;
 
 iv. 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
 Companies Act, 1956.
 
 v. On the basis of the written representations received from the
 directors, as on December 31, 2010, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 December 31, 2010 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956.
 
 vi. In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts give the information
 required by the Companies Act, 1956, in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India;
 
 a) in the case of the balance sheet, of the state of affairs of the
 Company as at December 31, 2010;
 
 b) in the case of the profit and loss account, of the profit for the
 year ended on that date; and
 
 c) in the case of cash flow statement, of the cash flows for the year
 ended on that date.
 
 Annexure referred to in paragraph 3 of our report of even date 
 Re: Bata India Limited
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) Fixed assets have been physically verified by the management during
 the year and no material discrepancies were identified on such
 verification.
 
 (c) There was no substantial disposal of fixed assets during the year.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 (b) 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) The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) (a) As informed, 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 Companies Act, 1956 and as
 such, clauses 4(iii) (a) to 4(iii) (d) of the Companies (Auditors
 Report) Order, 2003 (as amended) are not applicable.
 
 (b) As informed, 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 Companies Act, 1956 and as
 such, clauses 4(iii) (e) to 4(iii) (g) of the Companies (Auditors
 Report) Order, 2003 (as amended) are not applicable.
 
 (iv) 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. During the course of our audit, no major weakness has been
 noticed in the internal control system in respect of these areas.
 During the course of our audit, we have not observed any continuing
 failure to correct major weakness in internal control system of the
 company.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that there are no transactions that
 need to be entered into the Register maintained under Section 301 of
 the Companies Act, 1956.
 
 (b) In our opinion and according to the information and explanations
 given to us, as there are no transactions that need to be entered into
 Register maintained under Section 301 of the Companies Act,1956,
 paragraph 4(v)(b) of the Companies (Auditor’s Report) Order, 2003 (as
 amended) is not applicable.
 
 (vi) In respect of deposits accepted, in our opinion and according to
 the information and explanations given to us, directives issued by the
 Reserve Bank of India and the provisions of sections 58A, 58AA or any
 other relevant provisions of the Companies Act, 1956 and the rules
 framed there under, to the extent applicable, have been complied with.
 
 We are informed by the management that no order has been passed by the
 Company Law Board, National Company Law Tribunal or Reserve Bank of
 India or any Court or any other Tribunal.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under section 209(1)(d) of the Companies
 Act, 1956, and are of the opinion that prima facie, the prescribed
 accounts and records have been made and maintained.
 
 (ix) (a) Undisputed statutory dues including provident fund, investor
 education and protection fund, or employees state insurance,
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty, cess and other material statutory dues applicable to it have
 generally been regularly deposited with the appropriate authorities.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under section 441 A of the Companies Act, 1956,
 we are not in a position to comment upon the regularity or otherwise of
 the company in depositing the same.
 
 (b) According to the information and explanations given to us, no
 undisputed dues payable in respect of provident fund, investor
 education and protection fund, employees state insurance, income-tax,
 wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and
 other material statutory dues were outstanding, at the year end, for a
 period of more than six months from the date they became payable.
 
 (c) According to the information and explanation given to us and
 records of the Company, there are no dues of income-tax, sales-tax,
 wealth-tax, service tax, customs duty, excise duty and cess which have
 not been deposited on account of any dispute, other than following:
 
 
 
 Name of the        Nature of dues     Amount (Rs       Period to 
                                       in thousand)     which the  
                                       amount relates   pending
 Various State      MRP-Tax on tax 
                    case                  16,480        1987-88 to 
 Sales Tax Acts                                         2001-02
 
 Various State      Purchase Tax 
                    Dispute at             5,100        1984-85 
 Sales Tax Acts     Faridabad
 
 Various State      Revenue recovery 
                    against                6,700        1994-95 
 Sales Tax Acts     non payment of dem                  1998-99
                    and in assessment                   1999-00
                                                        2000-01
 
 Various State      Tax in dispute u/s 
                    92 of                  2,780        1991-92 
 Sales Tax Acts     Central Sales tax 
                    Act regarding
                    non-submission of 
                    forms
 
 Various State      Penalty for non 
                    payment                1,200          2002 
 Sales Tax Acts 
 of tax             and non collection 
                    on C forms
 
 Various State      Appeal Against         1,400        1985-87
 Sales Tax Acts 
 Assessment Order
 
 Central Excise     Excise Duty demand 
                    on                     1,500        1987-88 
 Act,1944           closing balance 
                    exempted footwear.
 
 Central Excise     Duty demanded for 
                    sale of                7,030       1997-1999 
 
 Act,1944           footwear at domestic 
                    Tariff area of which 
                    final hearing before 
                    commissioner concluded 
                    and order is pending.
 
 
 
 Name of the         Forum where
 statute             dispute is 
                     pending
 Various State
 Sales Tax Acts      High Court,Chennai
 
 Various State
 Sales Tax Acts      Supreme Court
 
 Various State
 Sales Tax Acts      STAT, Kerala
 
 Various State
 Sales Tax Acts      High Court, UP
 
 Various State
 Sales Tax Acts      STAT, Kolkata
 
 Various State
 Sales Tax Acts      High Court
                      
 Central Excise      CCE(Appeals
 Act,1944            Kolkata)
 
 Central Excise      Commissioner
 Act,1944            Central Excise
                     Chennai
 
 
 
 
 Name of the      Nature of dues             Amount (Rs       Period to
 statute                                     in thousand)     which the
                                             amount relates    pending
    
 Central Excise   Duty demanded on                870            2005
 Act, 1944        various chemicals used 
                  for processing Of leather
                  and subsequent clearance 
                  of said processed leather 
                  for manufacture of footwear
                  (Exempted)
 
 Central Excise   Disallowance for trade        2,750         1995-97
 Act,1944         discount for sale of
                  footwear to retail outlet
 
 Central Excise   Excise duty demanded on       5,040         2004-05
 Act,1944         parts of footwear used
                  captively in manufacture
                  of exempted footwear
 
 Central Excise   Central Excise Duty Demanded  5,100            2004
 Act,1944         for clearance of Defective
                  Footwear without payment of
                  Central Excise Duty, after
                  necessary re-processing of
                  said footwear. The process
                  treated as MANUFACTURE
 
 Central Excise   Excise duty demanded         15,560         2004-05
 Act,1944         for movement of raw
                  material to job worker
                  without payment of duty
 
 Central Excise   Disallowing of abatement      2,770           2006
 Act,1944         @ 40% on MRP for                              2007
                  Institutional Sales. Sale of                  2008 
                  Industrial Boots & Mines 
                  Safety Boots.
 
 Central Excise   Demand for alleged non 
                  reversal                      5,440           2007
 Act,1944         of CENVAT credit on cenveted
                  inputs and non payment of CE
                  duty on finished goods
                  on written off stock as
                  per Balance sheet
 
 Central Excise   Non compliance of the 
                  condition                    21,480           2008
 Act, 1944        of the notification for 
                  marking
                  MRP on factory seconds
                  cleared on payment of
                  appropriate C.E. duty.
 
 
 Name of the      Forum where
 statute          dispute is
                  pending
 
 Central Excise   Commissioner,
 Act,1944         CCE Kolkata
 
 Central Excise   CESTAT-Chennai
 Act, 1944
 
 Central Excise   Additional
 Act, 1944        Commissioner of
                  Central Excise -
                  Kolkata
 
 Central Excise   CESTAT-Kolkata
 Act, 1944 
 
 Central Excise   Commissioner
 Act, 1944        (Appeal Kolkata.
 
 Central Excise   CESTAT, Kolkata
 Act, 1944
 
 Central Excise   Commissioner
 Act, 1944         Kolkata.
 
 Central Excise   CESTAT, Kolkata
 Act, 1944
 
 
 
 Name of th         Nature of dues        Amount (Rs       Period to 
 statute                                  in thousand)     which the 
                                          amount relates   pending
 
 Central           Excise Exclusion of 
                   sales tax @ 8%           1,500          2009
 Act,1944         
 
 Customs           Duty demand on 
                   account of               10,340         2001 
 Act,1942          short levy of customs 
                   duty (anti dumping 
                   duty) for which 
                   hearing before 
                   commissioner 
                   concluded
                   and the order 
                   received.
 Customs           Wrong availment of        83,760        1998-2003
 Act,1942          concessional rate of
                   customs duty etc. 
                   against which the 
                   hearing has not
                   finalized as yet
 
 Customs           Adv. License No. 
                   P/W/3497630                100          2002
 Act,1961          dt.7.2.94
 
 Employees State  Exemption from ESI 
                   through                    14,195       2007-2008 
 Insurance Act,    Bata Workers Sickness
 1948              Benifit Society
 
 Income Tax        Short Term Capital Gains   230,552*     2007-08
 Act,1961
 
 
 
 
 Name of the              Forum where 
 statute                  dispute is
                          pending
 
 Central Excise           Additional
 Act,1944                 Commissioner of
                          Central Excisefootwear
                          CCR Kolkata
 
 Customs                  Deputy
                          Commissioner of
                          Customs
 Act,1942
 
 Customs                  CESTAT-Kolkata
 Act,1942
 
 Customs                  DGFT, Kolkata
 Act,1942
 
 Employees               Regional Director
 State Insurance          ESI, Kolkata
 Act 1948
 
 Income Tax              CIT (A), Kolkata
 Act,1961
 
 
 
 
 
 
 * As informed, any liability arising on transfer of development rights
 under the above reported case would be borne by the Joint Venture
 Company in terms of joint development agreement entered in December,
 2006.
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to banks. The Company
 had no outstanding dues in respect of debenture holders and financial
 institutions.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 4(xiii) of the Companies (Auditors Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments.  Accordingly, the
 provisions of clause 4(xiv) of the Companies (Auditors Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 (xvi) The Company did not have any term loans outstanding during the
 year.
 
 (xvii) 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
 investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties or companies covered in the register maintained under
 section 301 of the Companies Act, 1956.
 
 (xix) The Company did not have any outstanding debentures during the
 year.
 
 (xx) The Company has not raised any money by way of public issue during
 the year.
 
 (xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations given by the management, we report
 that no fraud on or by the Company has been noticed or reported during
 the course of our audit.
 
 
                                           For S.R. BATLIBOI & CO.
                                     Firm Registration No. 301003E 
                                             Chartered Accountants
  
                                                   per Rajiv Goyal
                                                           Partner 
                                             Membership No.: 94549
 
 Place : Gurgaon
 Date  : February 23, 2011