We have audited the attached Balance Sheet of De Nora India Limited
 (''the Company'') as at 31 December 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.
 
 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.
 
 As required by the Companies (Auditor''s Report) Order, 2003 (''the
 Order'') issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956 (''the Act''),
 we enclose in the Annexure a statement on the matters specified in
 paragraphs 4 and 5 of the said Order.
 
 Further to our comments in the Annexure referred to 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, Statement of profit and Loss and Cash flow
 statement dealt with by this report are in agreement with the books of
 account;
 
 d) 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 Act;
 
 e) on the basis of written representations received from the directors
 as at 31 December 2012 and taken on record by the Board of Directors,
 we report that none of the directors is disqualified as at 31 December
 2012 from being appointed as a director in terms of clause (g) of
 sub-section (1) of Section 274 of the Act; and
 
 f) 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 Act, in the manner so required 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 31 December 2012;
 
 ii) in the case of the Statement of Profit and Loss, 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 - 31 December 2012
 
 (Referred to in 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 Company has a regular programme of physical verification of its
 fixed assets by which all fixed assets are verified in a phased manner
 over a period of three years. In our opinion, this periodicity of
 physical verification is reasonable having regard to the size of the
 Company and the nature of its assets. In accordance with this
 programme, certain fixed assets of the Company have been physically
 verified during the year.  No material discrepancies were noticed on
 such verification.
 
 (c) The Company has not disposed off any fixed assets during the year.
 
 ii (a) The inventory, except goods-in-transit, has been physically
 verified by the management during the year. In our opinion, the
 frequency of such verification is reasonable.
 
 (b) The procedures for the 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) The Company is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 iii The Company has neither granted nor taken any loans, secured or
 unsecured, to or from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956 (''the
 Act'').
 
 iv In our opinion and according to the information and explanations
 given to us, and having regard to the explanation that purchases of
 certain items of inventories are for the Company''s specialised
 requirements and similarly certain items of inventories sold and
 services rendered are for the specialised requirements of the buyers
 for which suitable alternative sources are not available to obtain
 comparable quotations, there is an adequate internal control system
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of inventories and fixed assets and
 with regard to the sale of goods and services.  In our opinion and
 according to the information and explanations given to us, we have not
 observed any material weakness in the internal control system during
 the course of the audit.
 
 v (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 for purchase and sale of certain items of
 inventories and sale of services which are made in pursuance of
 contracts and arrangements referred to in (a) above and exceeding the
 value of Rs. 5 lakh with any party during the year are of a specialised
 nature for which suitable alternative sources are not available to
 obtain comparable quotations. However, on the basis of information and
 explanations provided, the same appear reasonable.
 
 vi According to the information and explanations given to us, the
 Company has not accepted any deposits from the public.
 
 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 prescribed by the Central Government for
 maintenance of cost records under Section 209(1)(d) of the Act and are
 of the opinion that prima facie, the prescribed accounts and records
 have been made and maintained.  However, we have not made a detailed
 examination of the records.
 
 ix (a) According to the information and explanations given to us and on
 the basis of our examination of the records of the Company, the Company
 has been generally regular in depositing amounts deducted/accrued in
 the books of account in respect of undisputed statutory dues including
 Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax,
 Service Tax, Customs Duty, Excise Duty and other material statutory
 dues with the appropriate authorities. As explained to us, the Company
 did not have any dues on account of Wealth Tax and Investor Education
 and Protection Fund.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Employees''
 State Insurance, Income Tax, Sales Tax, Service Tax, Customs Duty,
 Excise Duty and other material statutory dues were in arrears as at 31
 December 2012 for a period of more than six months from the date they
 became payable.
 
 (b) According to the information and explanations given to us, there
 are no dues of Income Tax, Sales Tax, Service Tax and Customs Duty,
 which have not been deposited with the appropriate authorities on
 account of disputes.
 
 According to the information and explanations given to us, the
 following dues of Excise Duty have not been deposited by the Company on
 account of disputes:
 
                                             Period to
 Name                                                     Forum where
            Nature of             Amount     which the   
 of the                                                   dispute is
            the Dues                 Rs.     amount 
 Statute                                                  pending relates
 
 Central    Excise              1,261,980    2003-2007    Additional
 Excise     duty on 
                                  205,610    2006-2007    Commissioner
 Act, 1944  assessable                                    of Central
            value                                         Excise, Goa
            consequent to 
            the benefit 
            availed under 
            the Goa Value 
            Added Tax
            Deferment-cum-net 
            present value
            compulsory
            payment
            Scheme,2005
 
 x The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the financial year
 and in the immediately preceding financial year.
 
 xi In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to its
 bankers. The Company did not have any outstanding dues to any financial
 institution or debentureholders during the year.
 
 xii According to the information and explanations given to us, 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 In our opinion and according to information and explanations given
 to us, the Company is not a chit fund or a nidhi / mutual benefit fund
 / society.
 
 xiv According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 xv 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.
 
 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 are of
 the opinion that the funds raised on short term basis have not been
 used for long term investment.
 
 xviii The Company has not made any preferential allotment of shares to
 companies/firms/parties covered in the register maintained under
 section 301 of the Act.
 
 xix The Company did not have any outstanding deben- tures during the
 year.
 
 xx The Company has not raised any money by public issues.
 
 xxi According to the information and explanations given to us, no fraud
 on or by the Company has been noticed or reported during the course of
 our audit.
 
                                               For B S R and Associates
 
                                                  Chartered Accountants 
 
                                       Firm''s Registration No.: 128901W
 
                                                       Bhavesh Dhupelia
 
 Mumbai                                                         Partner
 
 21 February, 2013                               Membership No.: 042070