Cummins India

1.  We have audited the attached Balance Sheet of Cummins India Limited
 as at March 31, 2009 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,
 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 said 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, 2009 and taken on record by the Board of Directors, no
 director of the Company is disqualified as on March 31, 2009 from being
 appointed as a director as referred to in Section 274(1 )(g) 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 Schedules 1 to 12 annexed 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, 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 AUDITORS REPORT
 
 [Referred to in paragraph 3 of the Auditors Report of even date to the
 members of Cummins India Limited on the financial statements for the
 year ended March 31, 2009]
 
 1.  (a) The company is maintaining proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) The fixed assets of the Company have been 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. As
 explained to us, no material discrepancies were noticed between the
 book records and the physical inventory on such verification. In
 respect of certain assets lying with third parties, confirmations have
 been received in majority cases.
 
 (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 (excluding stocks with third parties) has been
 physically verified by the management during the
 
 year. In respect of inventory lying with third parties, these have been
 substantially confirmed by them. In our opinion, the frequency of
 verification is reasonable.
 
 (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) 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 Act.
 
 (b) 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 Act.
 
 4.  In our opinion and according to the information and explanations
 given to us, having regard to the explanation that certain items
 purchased are of special nature for which suitable alternative sources
 do not exist for obtaining comparative quotations, 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 carried out in
 accordance with the auditing standards generally accepted in India 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.  In our opinion and according to the information and explanations
 given to us, there are no contracts or arrangements that need to be
 entered into the register in pursuance of Section 301 of the Act.
 
 6.  In our opinion and according to the information and explanations
 given to us, the Company has complied with 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 which are matured and are remaining
 unpaid as at March 31, 2009. 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, there are no dues of income-tax,
 sales-tax, wealth tax, service tax, customs duty, excise duty and cess
 as at March 31, 2009 which have not been deposited on account of a
 dispute, except as follows -
 
 Name of the             Nature of dues                 Amount
 statute                                            (Rs. 000)
 
 The Central Sales       Disallowance of                53,822
 Tax Act, 1956           Sales Tax declaration
 (C.S.T) / Bombay        forms, disallowances
 Sales Tax Act,          of set off claimed
 1959 (B.S.T)            under rule 41D and
                         42H and interest
                         thereon
 
 The Central Sales       Taxation of sales              50,178
 Tax Act, 1956           turnover under B.S.T
 (C.S.T) / Bombay        Act and disallowance of
 Sales Tax Act,          claim of inter state sale
 1959 (B.S.T)            u/s 3(a) of C.S.T Act,
                         1956
 
 The Central Excise      Disallowance of credit          1,395
 Act, 1944               taken on inputs
 
 The Maharashtra         Demand on account of           15,492
 Sales tax on            Purchase tax/ Works
 Transfer of             contract tax and
 property in Goods       surcharge thereon
 involved in the
 Execution of
 Works Contracts
 (Re-enacted) Act,
 1989
 
 VAT Act, 2002           Additional demand on            5,153
                         account of non receipt
                         of C Forms
 
 Period (Financial               Forum where the
 Year) to which                  dispute is
 the amount                      pending
 relates
 
 1999-00 to                     Maharashtra Sales
 2003-04                        Tax Tribunal, Mumbai
                                / Joint Commissioner
                                of Sales Tax
                                (Appeals) - Pune
 
 2003-04                        Joint Commissioner
                                of Sales Tax
                                (Appeals) - Pune
 
 2004-05                        Central Excise and
                                Service Tax Appellate
                                Tribunal (Mumbai /
                                Ahmedabad)
 
 1999-2000                      Assistant Registrar,
                                Maharashtra Sales
                                Tax Tribunal, Mumbai
 
 2005-2006                      Deputy Commissioner
                                (Appeals), Sales Tax
 
 10.  The Company has no accumulated losses as at March 31, 2009 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 as at the balance sheet date.
 
 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.  The provisions of any special statute applicable to chit fund /
 nidhi / mutual benefit fund/societies are not applicable to the
 Company.
 
 14.  In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 15.  In our opinion and according to the information and explanations
 given to us, the Company has not given any guarantee for loans taken by
 others from banks or financial institutions during the year.
 
 16.  The Company has not obtained any term loans during the year.
 
 17.  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.
 
 18.  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.
 
 19.  The Company has not issued any debentures.
 
 20.  The Company has not raised any money by public issues during the
 year.
 
 21.  During the course of our examination of the books and records of
 the Company, carried out in accordance with the auditing standards
 generally accepted in India, and according to the information and
 explanations given to us, we have neither come across any instance of
 fraud by the Company, noticed or reported during the year, nor have we
 been informed of such case by the management. Fraud on the Company,
 involving theft of material and fixed assets, aggregating to Rs. 2,660
 (000) were noticed and reported during the year. However, materials /
 amount aggregating to Rs. 2,652 (000) were recovered during the year.
 
                                                      Vasant Gujarathi
                                                               Partner
                                               Membership Number 17866
                                                  For and on behalf of
 Place : Pune                                         Price Waterhouse
 Date  : May 26, 2009                            Chartered Accountants