1.  We have audited the attached balance sheet of BHARAT SEATS LIMITED,
 as at 31st March, 2012, and also the statement of profit and loss and
 the cash flow statement for the year ended on that date annexed
 thereto.  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)
 issued by the Central Government of India in terms of sub-section (4A)
 of section 227 of the Companies Act, 1956 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 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 in paragraph 3
 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, statement of profit and loss and cash flow
 statement dealt with by this report are in agreement with the books of
 account;
 
 (iv) 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 Companies act, 1956;
 
 (v) On the basis of written representations received from the
 directors, as on 31st March, 2012 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31 st March, 2012 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, they 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 31st March, 2012;
 
 b) In the case of the statement of profit and loss account, of the
 profit for the year ended on that date: and
 
 c) In the case of the cash flow statement, of the cash flows for the
 year ended on that date.
 
 Re Bharat Seats Limited
 
 Referred to in paragraph 3 of our report of even date,
 
 (i) (a) The Company has maintained 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 were noticed on such verification.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 off by the Company during the year.
 
 (ii) (a) The inventories of the Company have been physically verified
 by the management during the year.
 
 In our opinion, the frequency of verification is reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the management are reasonable and adequate in relation to
 the size of the Company and the nature of its business.  /
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company a maintaining proper records of inventories.
 As explained to us, the discrepancies noticed/on verification between
 the physical stocks and the book records were not material and have
 been properly! dealt with in the books of account.
 
 (iii) (a) As informed to us, the Company has given interest-free
 unsecured mobilization advance against procurement of materials/tooling
 over a period of time to a company covered in the register maintained
 under section 301 of the Companies Act, 1956. The maximum amount
 involved during the year and the year-end balance of such advance was
 Rs.889.00 lacs.
 
 (b) In our opinion and according to the information and explanations
 given to us, the terms and conditions of the /aforesaid mobilization
 advance is not, prima facie, prejudicial to the interest of the
 Company, being of business nature.
 
 (c) As explained to us, the aforesaid mobilization/tooling advance is
 being regularly adjusted against the supplies which are being procured
 from the above party.
 
 (d) There is no overdue amount outstanding at the end of the year in
 respect of the above said advance.
 
 (e) The Company has taken unsecured loans from parties covered in the
 register maintained under section 301 of the Companies Act, 1956.The
 maximum amount involved during the year and yearend balance is Rs. 600
 lacs.
 
 (f) In our opinion the rate of interest and other terms & conditions on
 which these loans have been taken are not prime facie prejudicial to
 the interest of the Company.
 
 (g) The Company is regular in payment of interest and there are no
 overdue amount in respect of these loans
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and the nature of its business with regard
 to purchase of inventory, fixed assets and with regard to the sale of
 goods and services. Further, on the basis 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
 nor have been informed of any instance of a continuing failure to
 correct major weaknesses in the aforesaid internal control system.
 
 (v) (a) According to the information and explanations given to us, we
 are of the opinion that all the particulars of contracts or
 arrangements that need to be entered in the register maintained under
 section 301 of the Companies Act, 1956 have been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements entered into the register in pursuance to section 301 of
 the Companies Act, 1956 and exceeding the value of Rs.5 lacs in respect
 of any party during the year, have been made at prices which are prima
 facie reasonable having regard to the prevailing market prices
 available at the relevant time except in case of certain transactions
 of purchase and sale of goods being materials of special nature for
 which alternate quotations are not always available.
 
 (vi) The Company has not accepted any deposits from the public within
 the meaning of sections 58A and 58AA or any other relevant provisions
 of the Companies Act, 1956 and the rules framed there under.
 
 (vii) In our opinion, the Company has an adequate internal audit system
 commensurate with the size and nature of its business.
 
 (viii) We have broadly reviewed the books of account relating to
 materials, labour and other items of cost maintained by the Company
 pursuant to the rules made by the Central Government of India for them .
 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. We have not,
 however, made a detailed examination of the records with a view to
 determine whether they are accurate and complete.
 
 (ix) (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 undisputed statutory dues in respect
 of 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. Further, there were no
 undisputed amounts outstanding at the year-end for a period of more
 than six months from the date they became payable.
 
 (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, custom duty, wealth tax, excise duty, service
 tax and cess, which have not been deposited on account of any dispute,
 are as follows
 
 S.    Name of the    Nature of Dues   Amount    Period to  Forum where
 No    Statute                        (Rs. Lacs) which the  the dispute
                                                 amount     is pending 
                                                 relates
 
 1     Central 
       Excise         Recovery of 
                      Modvat 
                      Credit             3,195   1989-90 
 
                                                 and        Honorable
       Act, 1944      availed on 
                      Input and                  1991-93    High Court
                      Penalty. 
                      Case was 
                      already 
                      decided in 
                      favour of 
                      the Company 
                      by CEGAT,
                      New Delhi
 
 2    Central 
      Excise          Demand of 
                      Excise Duty       203.20   1997-99    Commissioner 
      Act, 1944       on account 
                      of 
                      difference                            of Central
 
                      in reconci
                      liation 
                     (Including                             Excise, Delhi 
                      Penalty)                              - III
 
 3    Central 
      Excise          SCN for 
                      excise duty 
                      u/s 11A           27.69   2004-06     First
                                                            Appellate 
      Act, 1944                                             Authority
 
 4    Cehtral 
      Excise          Denial of 
                      cenvat 
                      credit in          5.87    2005-06 
                                                  to        First
                                                            Appellate 
      Act, 1944       respect of 
                      service 
                      tax paid                   2009-10    Authority
 
                      on plant 
                      house 
                      keeping_
                      service
                     (including 
                      Penalty)
 
 5    Cenvat 
      Credit          Penalty - 
                      Recovery of        5.00     Upto      CESTAT - 
                                                            New 
      Rules,
      2002            cenvat 
                      credit of 
                      AED (GSI)                 31.3.2000   Delhi
 
                      taken & 
                      utilized 
                      for payment
                      of BED
 
 6    Customs 
      Act,            Customs duty 
                      on CNC Tube       11.66*   1994-95    Commissioner
      1962            Bending 
                      Machine 
                      imported                              of Central
                      under 
                      project 
                      imports                               Excise and
                                                            Customs
                                                           (Appeals)
                                                            Kandla
 
 7    Service 
      Tax             SCN for 
                      non- payment 
                      of                 11.46   2002-05    First Appel
                                                            late
      under 
      Finance         Service Tax
                      on Technical                          Authority ''
 
      Act 1994        Know-How 
                      Services.
 
 8    Income Tax      Disallowance
                      of expenditure     34.31   2007-08    Income Tax
      Act 1961        under section 
                      14A                                    Appellate
 
                                                             Tribunal, 
                                                             New Delhi
 
                                          0.92   2008-09    Commissioner
                                                             of Income
                                                             Tax 
                                                            (Appeals) 
                                                             New Delhi
 
 * The full amount is deposited
 
 (x) The Company does not have any accumulated losses as at the close of
 the financial year. The Company has not incurred any cash losses during
 the financial year covered by our audit and the immediately preceding
 financial year.
 
 (xi) According to the records of the Company examined by us and the
 information and explanations given to us, in our opinion, the Company
 has not defaulted in repayment of its dues to banks. The Company has
 not taken any loans from financial institutions or debenture holders.
 
 (xii) The Company has not granted any loans and advances on the basis
 of security by way of pledge of shares, debentures and other
 securities.
 
 (xiii) The Company is not a chit fund, nidhi, mutual benefit fund or a
 society.
 
 (xiv) The Company has maintained proper records of transactions and
 contracts for purchase and sale of units / securities during the year
 under review and timely entries were made therein. All shares,
 securities and other investments have been held by the Company in its
 own name.
 
 (xv) As per the information and explanations given to us and on the
 basis of our examination of the records, the Company has not given any
 guarantee for loans taken by others from banks or financial
 institutions.
 
 (xvi) As per the information and explanations given to us and on the
 basis of our examination of the records, in our opinion, the term loans
 taken by the Company have been applied for the purpose for which they
 were obtained.
 
 (xvii) According to the information and explanations given to us and on
 the basis of an overall examination of the balance sheet of the
 Company, in our opinion, generally, the funds raised by the Company on
 short term basis, have been used for long term investment to the extent
 of Rs. 1802.09 lacs.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties and companies covered in the register maintained under
 section 301 of the Companies Act, 1956, during the year.
 
 (xix) The Company has not issued any debentures during the year.
 
 (xx) The Company has not raised any money by public issue during the
 year.
 
 (xxi) 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, 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.
 
                                          For S. S. KOTHARI MEHTA & CO.
 
                                                 Chartered Accountants 
 
                                       (Firm Registration No. 000756 N)
 
                                                        (K. K. Tulshan)
 
 Place : New Delhi                                             Partner
 
 Date : 30th April, 2012                          Membership No. 85033