Carborundum Universal

1.  We have audited the attached Balance Sheet of CARBORUNDUM UNIVERSAL
 LIMITED (the Company) as at 31st March 2009, the Profit and Loss Account 
 and also 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 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 misstatements.  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 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
 accounts;
 
 (iv) In our opinion, the Balance Sheet, Profit and Loss Account and the
 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
 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 on the said date;
 
 (vi) In our opinion and to the best of our information and according to
 the expla- nations given to us, the said accounts together with
 schedules and notes there- on, 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 prin- ciples generally accepted
 in India:
 
 (a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March 2009;
 
 (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 the 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
 
 1.  In respect of fixed assets:
 
 a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 b) The fixed assets were physically verified in a phased manner by the
 management in accordance with a programme of verification which, in our
 opinion, is reasonable having regard to the size of the Company and the
 nature of its assets. According to the information and explanations
 given to us, no material discrepancies were noticed on such
 verification.
 
 c) The fixed assets disposed off during the year, in our opinion do not
 constitute a substantial part of the fixed assets of the Company and
 such disposals has, in our opinion not affected the going concern
 status of the Company.
 
 2.  In respect of its inventories:
 
 a) As explained to us, inventories were physically verified by the
 management at reasonable intervals.
 
 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 were 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 has maintained proper record of its inventory.
 The discrepancies noticed on physical verification between
 physical stock and book records were
 not material.
 
 3.  (a) According to the information and explanations given to us, 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. In respect of a loan granted in earlier
 years to a subsidiary company, the receipt of principal amounts and
 interest during the year have been regular/as per stipulations. The
 rate of interest and other terms and conditions of the aforesaid loan,
 are, in our opinion, prima facie not prejudicial to the interest of the
 Company. In respect of the above loan, the maximum amount involved
 during the year was Rs.3.20 million and the year end balance was NIL.
 
 (b) According to the information and explanations given to us, 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.
 
 4.  In our opinion and according to the information and explanations
 given to us, there is adequate internal control system commensurate
 with the size of the Company and nature of its business with regard to
 the purchase of inventory and fixed assets and with regard to the sale
 of goods and services. During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses in such
 internal controls.
 
 5.  In respect of the contracts or arrangements referred to in Section
 301 of the Companies Act, 1956,
 
 a) According to the information and explanations given to us, the
 particulars of contracts or arrangements that needed to be entered into
 the register 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 in the Register maintained under the said section
 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
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 6.  The Company has not accepted any deposits from the public during
 the year.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of the Companys business.
 
 8.  We have broadly reviewed the Cost records maintained by the Company
 for generation and captive consumption of power pursuant to the Rules
 made by the Central Government for the maintenance of the 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, however, not made a detailed examination
 of the records with a view to determining whether they are accurate or
 complete. To the best of our knowledge and according to the information
 and explanations given to us, the Central Government has not prescribed
 the maintenance of cost records for any other products of the Company.
 
 9.  Statutory and Other Dues
 
 a) According to the information and explanations given to us, the
 Company has been regular in depositing undisputed statutory dues
 including Provident Fund, Investor Education and Protection Fund,
 Employees State Insurance, Income Tax, Wealth Tax, Sales Tax/VAT,
 Customs Duty, Service tax, Excise Duty, Cess and any other material
 statutory dues applicable to it with the appropriate authorities during
 the year.
 
 b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Investor
 Education and Protection Fund, Employees State Insurance, Income Tax,
 Wealth tax, Sales Tax/VAT, Customs Duty, Service tax, Excise Duty and
 Cess were in arrears, as at 31st March 2009 for a period of more than
 six months from the date they became payable.
 
 c) According to the information and explanations given to us, there are
 no dues of Income Tax, Wealth tax, Sales Tax/VAT, Customs Duty, Service
 tax, Excise Duty and Cess that have not been deposited on account of
 any dispute except as given below:
 
 10. As at the end of the year the company does not have accumulated
 losses and has not incurred cash loss during the current and in the
 immediately preceding financial year.
 
 11. According to the information and explanations given to us by the
 management, we are of the opinion that the Company has not defaulted in
 repayment of dues to Banks.
 
 12. According to the information and explanations given to us and based
 on our examination of documents and records, we are of the opinion that
 no loans or advances have been granted by the Company on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  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 are not applicable to the
 Company.
 
 14.  In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of clause (xiv) of the companies (Auditors Report) Order,
 2003 are not applicable to the Company.
 
 15.  In our opinion, the terms and conditions on which the Company has
 given guarantees for loans taken by others from Banks are not
 prejudicial to the interests of the Company.
 
 16. According to the information and explanations given to us, in our
 opinion, the term loans availed by the Company were, prima facie,
 applied by the Company during the year for the purpose for which they
 were raised.
 
 17. 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.
 
 18. The Company has not made preferential allotment of shares to
 parties and companies covered in the register maintained under section
 301 of the Companies Act, 1956.
 
 19. The company has created securities in respect of debentures issued
 during the year.
 
 20. The Company has not raised any money by public issues during the
 year.
 
 21. To the best of our knowledge and belief and according to the
 information and explanations given to us, no material fraud on or by
 the Company was noticed or reported during the year.
 
                                 For Deloitte Haskins & Sells
                                 Chartered Accountants
 
 Place : Chennai                  M.K. Ananthanarayanan
 Date : 29th April 2009                   Partner
                                   Membership No. 19521