1.  We have audited the attached Balance Sheet of Federal-Mogul Goetze
 (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 (collectively referred as the
 ''financial statements''). 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
 (''the Order'') (as amended) 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 Order.
 
 4.  As detailed in note 47 of the accompanying financial statements,
 the Company is pursuing a matter regarding certain discrepancies noted
 in availing sales tax benefits. The matter is currently pending with
 the appropriate authorities, management based on certain internal
 assessment has accrued a provision to an extent of Rs. 625.81 lacs
 (including estimated interest and penalties) to meet future tax
 obligations. Out of this provision, the Company has deposited Rs 398.03
 lacs with the appropriate authorities during the year.  However, the
 extent of exact future liabilities that may arise is presently not
 determinable.  Accordingly, we are unable to comment upon the adequacy
 of provision recorded in this respect and the consequential impact of
 the outcome of the proceedings.
 
 5.  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 financial statements dealt with by this report are in agreement
 with the books of account;
 
 (d) On the basis of written representations received from the
 directors, as on 31 December 2012 and taken on record by the Board of
 Directors, none of the directors is disqualified as on 31 December 2012
 from being appointed as a director in terms of clause (g) of sub-
 section (1) of Section 274 of the Act;
 
 (e) Subject to our comments in Para 4 above, in our opinion and to the
 best of our information and according to the explanations given to us,
 the financial statements dealt with by this report comply with the
 accounting standards referred to in sub-section (3C) of Section 211 of
 the Act and 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, in the case of:
 
 (i) the Balance Sheet, of the state of affairs of the Company as at 31
 December 2012;
 
 (ii) the Statement of Profit and Loss, of the loss for the year ended
 on that date; and
 
 (iii) the Cash Flow Statement, of the cash flows for the year ended on
 that date.
 
 Annexure to the Auditors'' Report of even date to the members of
 Federal- Mogul Goetze (India) Limited, on the financial statements for
 the year ended 31 December 2012
 
 Based on the audit procedures performed for the purpose of reporting a
 true and fair view on the financial statements of the Company and
 taking into consideration the information and explanations given to us
 and the books of account and other records examined by us in the normal
 course of audit, we report that:
 
 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 program of physical verification of its
 fixed assets under which fixed assets are verified in a phased manner
 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.
 No material discrepancies were noticed on such verification.
 
 (c) In our opinion, a substantial part of fixed assets has not been
 disposed off 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) The Company has not granted any loan, secured or unsecured to
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.  Accordingly, the provisions of clauses
 4(iii)(b) to 4(iii)(d) of the Order are not applicable.
 
 (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. Accordingly, the provisions of clauses
 4(iii)(f) and 4(iii)(g) of the Order are not applicable.
 
 iv.  In our opinion, 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.
 
 v.  (a) The Company has not entered into any contracts or arrangements
 referred to in Section 301 of the Act. Accordingly, the provisions of
 clause 4(v) of the Order are not applicable.
 
 vi.  The Company has not accepted any deposits from the public within
 the meaning of Sections 58A and 58AA of the Act and the Companies
 (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of
 clause 4(vi) of the Order are not applicable.
 
 vii. In our opinion, the Company has an internal audit system
 commensurate with its size and the nature of its business.
 
 viii.  We have broadly reviewed the cost records maintained by the
 Company pursuant to the Companies (Cost Accounting Records) Rules, 2011
 prescribed by the Central Government under Section 209(1)(d) of the
 Companies Act, 1956 and are of the opinion that prima facie the
 prescribed cost records have been maintained. We have, however, not
 done a detailed examination of the cost records with a view to
 determine whether they are accurate or complete.
 
 ix.  a) Undisputed statutory dues including provident fund, investor
 education and protection fund, employees'' state insurance, income-tax,
 sales- tax, wealth-tax, service-tax, custom duty, excise duty, cess and
 other material statutory dues, as applicable, have generally been
 regularly deposited with the appropriate authorities, except in case of
 Undisputed amounts payable in respect of Central Sales Tax, which is
 outstanding at the year-end for a period of more than six months from
 the date they became payable are as follows:
 
 Name of      Nature of      Amount     Period to     Due Date  Date of
 the statute  the dues        (Rs)      which the               Payment
                                        amount relates
 
 Central      Liability       236.78    FY 2005-06 to      -       -
 Sales Tax    related         lacs      FY 2008-09 
              to CST
 
 b) The dues outstanding in respect of sales-tax, income-tax, custom
 duty, wealth-tax, excise duty, cess on account of any dispute, are as
 follows:
 
 Name of the          Nature of dues                           Amount 
 statute                                                      (Rs. Lacs)
  
 The Central Excise 
 Act,1944             Trade discount                            33.74
 
 The Central Excise 
 Act,1944             Excise duty on turnover discount          42.71
 
 The Central Excise 
 Act,1944             Excise duty on turnover discount         214.50
 
 The Central Excise 
 Act,1944             Cenvat credit availed twice                5.04
 
 The Central Excise 
 Act,1944             Demand on removal of non-saleable 
                      stock                                      8.57 
                      removed from RG-1
 
 The Central Excise 
 Act,1944             Excise duty on capital goods               3.19
 
 The Central Excise 
 Act,1944             Classification of Light metal 
                      cylinder casting                           6.97
 
 The Central Excise 
 Act,1944             Demand on sale of various types of
                      scrap                                      3.33
 
 The Central Excise 
 Act,1944             Demand in respect of Modvat credits 
                      on Input and Capital goods                 6.17
 
 The Central Excise 
 Act,1944             Modvat credit on grinding wheels, 
                      stones, honing sticks                      9.34
 
 The Central Excise 
 Act,1944             Interest on reversal of SAD               14.02
 
 The Central Excise 
 Act,1944             Conversion of Aluminum Scrap into Ingots  15.14
                      from Colts department
 
 Finance Act, 1994 
 (Service Tax)        Input tax credit on various expenses       0.09
 
 Finance Act, 1994 
 (Service Tax)        Input tax credit on various expenses      79.02
 
 Finance Act, 1994 
 (Service Tax)        Input tax credit on various expenses     895.38
 
 Finance Act, 1994 
 (Service Tax)        Input tax credit on various expenses     153.84
 
 Finance Act, 1994
 (Service Tax)        Disallowance of service tax credit on     96.11 
                      various services
 
 Finance Act, 1994 
 (Service Tax)        Disallowance of service tax credit on     19.18
                      various services
 
 Finance Act, 1994 
 (Service Tax)        Input credit on various services           5.09
 
 Finance Act, 1994 
 (Service Tax)        Service tax on royalty and technical
                      know how                                  39.95
 
 Finance Act, 1994 
 (Service Tax)        Payment of Service Tax under GTA on       67.02 
                      inwards/outwards freight
 
 Finance Act, 1994 
 (Service Tax)        Availment of Cenvat on Job work charges  152.21
 
 Finance Act, 1994 
 (Service Tax)        Payment of Service Tax under GTA          78.14
 
 Finance Act, 1994 
 (Service Tax)        Input tax credit on various expenses       4.28
 
 Karnataka VAT Act, 
 2003                 Difference in VAT rates 
                     (classification issue)                    301.38
 
 Karnataka VAT Act,
 2003                 Difference in VAT rates 
                     (classification issue)                    278.51
 
 Name of the 
 Statute             Period to which the  Forum where dispute is pending
                     amount relates
 
 The Central Excise 
 Act,1944            2000 - 2004          Joint Commissioner of Central
                                          Excise, Banguluru
 
 The Central Excise 
 Act,1944            2000 - 2003          Central Excise and Service Tax
                                          Appellate Tribunal, Chennai
 
 The Central Excise 
 Act,1944            2001 - 2006          Central Excise and Service Tax
                                          Appellate Tribunal Chandigarh 
 
 The Central Excise 
 Act,1944            2005-07              Central Excise and Service Tax
                                          Appellate Tribunal, Banguluru
 
 The Central Excise 
 Act,1944            July 2005 to         Central Excise and Service Tax
                                          Appellate Tribunal, Banguluru 
                     December 2005
 
 The Central Excise 
 Act,1944            2010-11              Assistant Commissioner 
                                         (Central Excise), Bhiwadi, 
                                          Rajasthan
 
 The Central Excise 
 Act,1944            1998-1999            Joint Commissioner of Central
                                          Excise, Patiala Punjab
 
 The Central Excise 
 Act,1944            2001-2002            Joint Commissioner of Central
                                          Excise, Patiala Punjab
 
 The Central Excise 
 Act,1944            1995-1996,1997-1998, Joint Commissioner of Central
                                          Excise, Patiala Punjab 
                     1998-1999,2003-2004
 
 The Central Excise 
 Act,1944            1987-1990            Honorable High Court of Punjab
                                          and Haryana
 
 The Central Excise 
 Act,1944            2000-2001            Central Excise & Service Tax 
                                          Appellate Tribunal, Chandigarh
 
 The Central Excise 
 Act,1944            2000-2002            Honorable Supreme Court
 
 Finance Act, 1994 
 (Service Tax)       2008-2009            Commissioner (Appeals),Jaipur,
                                          Rajasthan
 
 Finance Act, 1994 
 (Service Tax)       2009-2010 to 
                     2011-2012            Superintendent, Bhiwadi, 
                                          Rajasthan
 
 Finance Act, 1994 
 (Service Tax)       2005-2011            Central Excise and Service 
                                          Tax Appellate Tribunal, 
                                          Banguluru
 
 Finance Act, 1994 
 (Service Tax)       2010-12              Commissioner of Central
                                          Excise, Banguluru
 
 Finance Act, 1994 
 (Service Tax)       2005-2011            Joint Commissioner of Central
                                          Excise, Patiala, Punjab
 
 Finance Act, 1994 
 (Service Tax)       2006-2007            Central Excise and Service Tax
                                          Appellate Tribunal, Chandigarh
 
 Finance Act, 1994 
 (Service Tax)       2008-09              Superintendent Audit, Patiala,
                                          Punjab
 
 Finance Act, 1994 
 (Service Tax)       1999-2005            Joint Commissioner of Central
                                          Excise, Patiala, Punjab
 
 Finance Act, 1994 
 (Service Tax)       2005-2008            Joint Commissioner of Central 
                                          Excise, Patiala, Punjab
 
 Finance Act, 1994 
 (Service Tax)       2011-2012            Commissioner Central Excise,
                                          Banguluru
 
 Finance Act, 1994 
 (Service Tax)       2009-2012            Superintendent
 
 Finance Act, 1994 
 (Service Tax)       2011-2012            Superintendent
 
 Karnataka VAT Act,
 2003                1998-1999 to         Honorable High Court of
                                          Karnataka
                     2001-2002 and 
                     2007-08
 
 Karnataka VAT Act,
 2003                2005-06              Honorable High Court of
                                          Karnataka
 
 Name of the           Nature of dues                           Amount 
 statute                                                      (Rs. Lacs)
 
 Income tax Act, 1961  Disallowance of expenditure in 
                       relation to exempt income                   3.05
 
 Income tax Act, 1961  Disallowance of expenditure in 
                       relation to exempt income                  10.59
 
 Income tax Act, 1961  Interest free loan to subsidiary          105.48
 
 Income tax Act, 1961  Disallowance of development 
                       expenditure treated as                     68.45
                       capital in nature
 
 Income tax Act, 1961  Disallowance of development 
                       expenditure treated as                     11.61
                       capital in nature
 
 Income tax Act, 1961  Disallowance of prior period expenses      92.64
 
 Income tax Act, 1961  Disallowance of prior period expenses      57.57
 
 Income tax Act, 1961  Depreciation not allowed on assets of
                       inactive Vegetable Oil Division            10.17
 
 Income tax Act, 1961  Depreciation not allowed on assets of 
                       inactive Vegetable Oil Division             9.53
 
 Income tax Act, 1961  Loss in relation to diminution in 
                       value of shares disallowed                 12.39
 
 Income tax Act, 1961  Disallowance of Commission and 
                       brokerage expenses for                      6.52 
                       facilitating loan funds
 
 Income tax Act, 1961  Disallowance of Commission and
                       brokerage expenses for                     37.76 
                       facilitating loan funds
 
 Income tax Act, 1961  Disallowance of loan processing fees 
                       paid to bank                               33.99
 
 Income tax Act, 1961  Disallowance of foreign exchange 
                       fluctuation loss                            5.04 
 
 Income tax Act, 1961  Brought forward losses of the 
                       amalgamating company denied             5,674.45
 
 Income tax Act, 1961  Disallowance of filing fees for
                       increasing authorized share                 2.21
                       capital of the Company
 
 Income tax Act, 1961  Disallowance for amalgamating expenses      0.69
 
 Income tax Act, 1961  Provision for expenses disallowed          85.17
 
 Income tax Act, 1961  Provision for expenses disallowed          57.64
 
 Income tax Act, 1961  Disallowance of proportionate royalty
                       expense                                    39.52
 
 Income tax Act, 1961  Disallowance of proportionate royalty
                       expense                                   103.47
 
 Income tax Act, 1961  Distribution of gift coupons to 
                       shareholders at                            16.54
                       Annual General Meeting
 
 Income tax Act, 1961  Disallowance of exemption on dividend      66.55
 
 Income tax Act, 1961  Addition of Revaluation Reserves to 
                       book profits                               16.71 
 
 Income tax Act, 1961  Provision for diminution in the value 
                       asset added to book profits                38.75
 
 Income tax Act, 1961  Apportionment of common
                       administrative costs                        1.52
 
 Income tax Act, 1961  Disallowance of lease rent expenses       345.80
 
 Income tax Act, 1961  Applicability of interest u/s 234D          0.51
 
 Income tax Act, 1961  Disallowance of expenditure in relation 
                       to exempt income                           21.21
 
 Income tax Act, 1961  Addition to Revaluation Reserves to 
                       book profits                               17.65
 
 Income tax Act, 1961  Loss in relation to diminution in 
                       value of shares disallowed                 19.23
 
 Income tax Act, 1961  Disallowance of Club expenses               2.80
 
 Delhi VAT             VAT on assets transaferred to Anil Nanda   64.98
 
 UP VAT                Difference in VAT rates
                      (classification issue)                      82.78
 
 Karnataka Tax on 
 Entry of Goods 
 Act, 1979             Entry tax on import of capital goods      147.67
 
 Karnataka Tax on
 Entry of Goods 
 Act, 1979             Entry tax on import of capital goods      116.52
 
 Karnataka Tax on 
 Entry of Goods 
 Act, 1979             Entry tax on import of capital goods      118.00
 
 Karnataka Tax on 
 Entry of Goods 
 Act, 1979             Entry tax on import of capital goods       12.43
 
 Karnataka Tax on
 Entry of Goods 
 Act, 1979             Entry tax on import of capital goods       16.03
 
 Name of the 
 Statute               Period to which 
                       the              Forum where dispute is pending
                       amount relates
 
 Income tax Act, 1961 2000-2001         Honorable High Court
 
 Income tax Act, 1961 2001-2002 & 
                      2004-05           Commissioner Income Tax (Appeals)
 
 Income tax Act, 1961 2006-07 & 
                      2007-2008         Commissioner Income Tax (Appeals)
 
 Income tax Act, 1961 2001-2002         Commissioner Income Tax (Appeals)
 
 Income tax Act, 1961 2002-2003         Income Tax Appellate Tribunal
 
 Income tax Act, 1961 2001-2002 & 
                      2007-2008         Commissioner Income Tax (Appeals)
 
 Income tax Act, 1961 2002-2003         Income Tax Appellate Tribunal
 
 Income tax Act, 1961 2001-2002         Commissioner Income Tax (Appeals)
 
 Income tax Act, 1961 2002-2003         Income Tax Appellate Tribunal
 
 Income tax Act, 1961 2001-2002         Commissioner Income Tax (Appeals)
 
 Income tax Act, 1961 2001-2002         Commissioner Income Tax (Appeals)
 
 Income tax Act, 1961 2002-2003         Income Tax Appellate Tribunal
 
 Income tax Act, 1961 2002-2003         Income Tax Appellate Tribunal
 
 Income tax Act, 1961 2002-2003         Income Tax Appellate Tribunal
 
 Income tax Act, 1961 2002-2003         Income Tax Appellate Tribunal
 
 Income tax Act, 1961 2002-2003         Income Tax Appellate Tribunal
 
 Income tax Act, 1961 2002-03           Income Tax Appellate Tribunal
 
 Income tax Act, 1961 1997-1998         Honorable High Court
 
 Income tax Act, 1961 2002-2003         Income Tax Appellate Tribunal
 
 Income tax Act, 1961 2003-2004 & 
                      2005-2006         Income Tax Appellate Tribunal
 
 Income tax Act, 1961 2004-2005 & 
                      2007-2008         Commissioner Income Tax (Appeals)
 
 Income tax Act, 1961 1995-1996 &
                      1996-1997         Honorable High Court
 
 Income tax Act, 1961 1998-1999         Honorable High Court
 
 Income tax Act, 1961 1998-1999         Honorable High Court
 
 Income tax Act, 1961 2005-2006         Income Tax Appellate Tribunal 
 
 Income tax Act, 1961 1997-1998         Honorable High Court
 
 Income tax Act, 1961 1997-1998         Honorable High Court
 
 Income tax Act, 1961 2000-2001         Honorable High Court
 
 Income tax Act, 1961 1999-2000         Honorable High Court
 
 Income tax Act, 1961 1999-2000         Honorable High Court 
 
 Income tax Act, 1961 2004-2005         Commissioner Income Tax (Appeals)
 
 Income tax Act, 1961 2007-2008         Commissioner Income Tax (Appeals) 
 
 Delhi VAT            2007-2008         Commissioner (Appeals), Delhi 
 
 UP VAT               2007-2008         Commissioner (Appeals), Ghaziabad
 
 Karnataka Tax on
 Entry of Goods 
 Act, 1979            2006-2007         Honorable Supreme Court
 
 Karnataka Tax on
 Entry of Goods 
 Act, 1979            2007-2008         Honorable Supreme Court
 
 Karnataka Tax on
 Entry of Goods 
 Act, 1979            2008-2009         Honorable Supreme Court
 
 Karnataka Tax on
 Entry of Goods 
 Act, 1979            2009-2010         Honorable Supreme Court
 
 Karnataka Tax on
 Entry of Goods 
 Act, 1979            2010-2011         Honorable Supreme Court
 
 x.  In our opinion, the Company has no accumulated losses at the end of
 the financial year and it has not incurred cash losses in the current
 and the immediately preceding financial year.
 
 xi.  The Company has not defaulted in repayment of dues to any bank or
 financial institution during the year. The Company did not have any
 outstanding debentures during the year.
 
 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.
 Accordingly, the provisions of clause 4(xii) of the Order are not
 applicable.
 
 xiii.  In our opinion, the Company is not a chit fund or a nidhi/
 mutual benefit fund/ society.  Accordingly, the provisions of clause
 4(xiii) of the Order are not applicable.
 
 xiv. In our opinion, the Company is not dealing or trading in shares,
 securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Order are not applicable.
 
 xv.  In our opinion, the terms and conditions on which the Company has
 given guarantee for loans taken by others from banks or financial
 institutions are not, prima facie, prejudicial to the interest of the
 Company.
 
 xvi. In our opinion, the Company has applied the term loans for the
 purpose for which these loans were obtained.
 
 xvii.  In our opinion, the Company has used funds raised on short-term
 basis for long-term investment. The Company has accepted short term
 borrowings amounting to Rs 5242.21 which are both repayable on demand
 or within one year and such funds have been invested for acquiring
 non-current assets of the Company.
 
 xviii.  During the year, the Company has not made any preferential
 allotment of shares to parties or companies covered in the register
 maintained under Section 301 of the Act. Accordingly, the provisions of
 clause 4(xviii) of the Order are not applicable.
 
 xix. The Company has neither issued nor had any outstanding debentures
 during the year. Accordingly, the provisions of clause 4(xix) of the
 Order are not applicable.
 
 xx.  The Company has not raised any money by public issues during the
 year. Accordingly, the provisions of clause 4(xx) of the Order are not
 applicable.
 
 xxi. According to the information and explanations given to us ana as
 described in note 44 to the financial statements, there were certain
 discrepancies in respect of availing sales tax benefits at one of the
 units of the Company which, at present, are being further investigated
 by management. No fraud on or by the Company has been noticed or
 reported during the period covered by our audit other than the matter
 mentioned above.
 
                                           For Walker, Chandiok & Co.
 
                                               Chartered Accountants
 
                                      Firm Registration No.: 001076N
 
                                                     per David Jones 
 
                                                             Partner
 
 Place : New Delhi                                        Membership
 
 Date : February 28, 2013                                 No.: 98113