We have audited the attached Balance Sheet of Finolex Cables Limited as
 at 31st March 2011, and also the Profit and Loss Account and 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.
 
 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.
 
 We report as follows:
 
 1.  As required by the Companies (Auditors Report) Order, 2003, issued
 by the Central Government of India, in terms of Section 227(4A) of the
 Companies Act, 1956, we enclose in the Annexure a statement on the
 matters specified in the paragraphs 4 and 5 of the said Order.
 
 2.  Further to our comments in the Annexure referred to in paragraph 1
 above:
 
 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 the books
 and proper returns adequate for the purposes of our audit have been
 received from the branches not visited by us;
 
 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
 Companies Act, 1956;
 
 e) On the basis of the written representations received from the
 Directors as on 31st March, 2011 and taken on record by the Board of
 Directors, we report that none of the Directors is disqualified as on
 31st March, 2011 from being appointed as Director in terms of clause
 (g) of sub section (1) of Section 274 of the Companies Act, 1956;
 
 f) In our opinion, and to the best of our information and according to
 the explanations given to us, the said accounts, read together with the
 Companys Accounting Policies and the Notes thereto 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:
 
 i) in the case of the Balance Sheet, of the state of affairs of the
 Company as on 31st March, 2011
 
 ii) in the case of the Profit and Loss Account, of the Profit of the
 Company for the year ended on that date; and
 
 iii) in the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 Annexure to the Auditors Report
 Referred to in paragraph 1 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) All the assets have not been physically verified by the management
 during the year but there is a regular programme of verification, which
 in our opinion, is reasonable having regard to the size of the Company
 and the nature of its assets. The Company is still in the process of
 completing the reconciliation of Physical inventory of Fixed Assets
 with book records.
 
 c) During the year, Company has not disposed of any substantial/major
 part of fixed assets.
 
 ii.  a) As explained to us, the inventory has been physically verified
 during the year by the management. 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 inventory
 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 and on the basis of our examination of the records of
 inventory, the Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to the book records were not material and have been properly dealt with
 in the books of account.
 
 iii.  a) According to the information and explanations given to us and
 on the basis of our examination Company has granted a loan to the
 following party covered in the Register maintained under Section 301 of
 the Companies Act, 1956;
 
                                     Maximum Amount      Outstanding as 
                                                          on 31/3/2011
 Name of the Party      Relationship  (Rs.Million)        (Rs.Million)
 
 Finolex 
 Infrastructure Ltd.     Associate 
                         Company          39.60               39.60
 
 b) According to the information and explanations given to us, and as
 represented by the Company, the rate of interest and other terms and
 conditions of loan granted to the above party are not prima facie
 prejudicial to the interest of the Company.
 
 c) According to the information and explanations given to us, Company
 has been regular in receipt of interest to whom the loan is granted.
 
 d) According to the information and explanations given to us, there is
 no overdue amount of loan granted from the parties listed in the
 Register maintained under Section 301 of the Companies Act, 1956.
 
 iv. In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 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. During the course of our audit, no
 continuing failure to correct major weakness has been noticed in the
 internal controls.
 
 v.  In respect of transactions entered in the register maintained in
 pursuance of section 301 of the Companies Act 1956,
 
 a) Based on audit procedures applied by us, to the best of our
 knowledge and belief and according to the information and explanations
 given to us, we are of the opinion that the particulars of contracts or
 arrangements have been entered in the register required to be
 maintained under Section 301.
 
 b) According to the information and explanations given to us and
 excluding certain transactions of purchase of goods and material of
 special nature for which alternate quotations are not available, in our
 opinion, the contracts or arrangements have been made at prices which
 are prima facie reasonable having regard to the prevailing market
 prices at the relevant time.
 
 v. In our opinion and according to the information and explanations
 given to us, the Company has not accepted deposits from the public and
 therefore, the provisions of Section 58A and 58AA or any other relevant
 provisions of the Companies Act, 1956 and Rules there under are not
 applicable to the Company.
 
 vi.  In our opinion, the Company has an internal audit system
 commensurate with the size and the nature of its business.
 
 vii. We have broadly reviewed the books of account maintained by the
 Company relating to the manufacture of cables, conductors and compact
 florescent lamps pursuant to the rules made by the Central Government
 for the 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 maintajned. We have not,
 however, made a detailed examination of the records with a view to
 determining whether they are accurate or complete.
 
 ix. a) According to the records of the Company and 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, Sales Tax,
 Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other
 statutory dues with the appropriate authorities during the year.
 
 b) According to the records of the Company and information and
 explanations given to us, dues of Income Tax, Sales Tax, Wealth Tax,
 Service Tax, Customs Duty, Excise Duty and cess which have not been
 deposited on account of disputes and the forum where dispute is pending
 as under:
 
 Name of 
 Statue   Nature of Dues    Amount   Period to which Forum where dispute
                                                          is pending
                            (Rs.in 
                           Million)  amount relates
 
 Sales 
 Tax Act  Sales Tax demand   4.60      F.Y.1991-92    High Court
 
          Sales Tax demand  21.83      F.Y.1992-93    Appellate Tribunal
 
          Sales Tax demand  24.36      F.Y.1993-94    Dy. Commissioner 
                                                     (Appeals)
 
          Sales Tax demand   0.08      F.Y.1999-00    Appellate Tribunal
 
          Sales Tax demand   0.56      F.Y.2001-02    Dy. Commissioner 
                                                     (Appeals)
 
          Sales Tax demand   4.95      F.Y.2002-03    Jt. Commissioner 
                                                     (Appeals)
          Sales Tax demand   2.20      F.Y.2002-03    Asst.Comm (Appeals)
 
          Sales Tax demand   2.61      F.Y.2003-04    Jt, Commissioner 
                                                     (Appeals)
 
          Sales Tax demand   3.16      F.Y.2003-04    Dy. Commissioner
 
          Sales Tax demand  12.24      F.Y.2003-04    Appellate Tribunal
 
          Sales Tax demand   6.56      F.Y.2004-05    Dy. Commissioner
 
          Sales Tax demand  11.46      F.Y.2004-05    Asst.Comm (Appeals)
 
          Sales Tax demand  31.18      F.Y.2005-06    Asst.Comm (Appeals)
 
          Sales Tax demand 345.55      F.Y.2006-07    Asst.Comm (Appeals)
 
 x. The Company does not have accumulated losses as at the end of the
 year and the Company has not incurred cash losses during current and
 the immediately preceding financial year.
 
 xi. Based on our audit procedures and on the basis of information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in the repayment of dues to financial
 institutions, banks and debenture holders.
 
 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. The provisions of any Special Statute applicable to Chit Fund,
 Nidhi or Mutual Benefit Fund/Societies are not applicable to the
 Company.
 
 xiv. (a) Based on the records examined by us and according to the
 information and explanations given to us, we are of the opinion that
 the Company is maintaining proper record of the transactions and
 contracts of dealing in shares and securities and that timely entries
 have been made in these records.
 
 (b) Based on our audit procedures and to the best of our knowledge and
 belief and according to the information and explanation given to us,
 the shares and securities have been held by the Company in its own
 name.
 
 xv. According to the information and explanations given to us, the
 Company has not given any guarantee for loan taken by others from banks
 and financial institutions.
 
 xvi. To the best of our knowledge and belief and according to the
 information and explanation given to us, proceeds from term loans
 availed/debentures issued by the Company were, prima facie, applied by
 the Company during the year for the purposes for which the loans were
 obtained.
 
 xvii. According to the Cash Flow Statement and records examined by us
 and according to the information and explanations given to us, on
 overall basis, funds raised on short-term basis have, prima facie, not
 been used during the year for long-term investment.
 
 xviii. The Company has not made any preferential allotment to parties
 and companies covered in the register maintained under Section 301 of
 the Companies Act, 1956, during the year and the question of whether
 the price at which the shares have been issued is prejudicial to the
 interest of the Company does not arise.
 
 xix. According to the information and explanations given to us and the
 records examined by us, security or charge has been created in respect
 of the debentures issued.
 
 xx. The Company has not raised money by any public issues during the
 year and hence the question of disclosure and verification of end use
 of such money does not arise.
 
 xxi. To the best of our knowledge and belief and according to the
 information and explanation given to us, no fraud on or by the Company
 was noticed or reported during the year.
 
 
 
 
                                               For B. K. Khare & Co.
 
                                              Chartered Accountants
 
                                                      Santosh Parab
 
                                                            Partner
 
 Place : Pune                                 Membership No. 047942
 
 Dated : 3rd May, 2011                 Firm Registration No.105102W