Grasim Industries

1.  We have audited the attached Balance Sheet of GRASIM INDUSTRIES
 LIMITED as at 31st March, 2009, and also the Profit & Loss Account and
 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 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 the 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 (the
 order), issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956, we annex
 hereto a statement on the matters specified in paragraphs 4 and 5 of
 the Order.
 
 4.  On the basis of written representations received on 31st March,
 2009, from the Directors of the Company 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.
 
 5.  Further to our comments in the Annexure to paragraph 3 of 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 purpose of our
 audit;
 
 b) In our opinion, proper books of account as required by law have been
 kept by the Company so far as it appears from our examination of those
 books. Proper returns adequate for the purpose of our audit have been
 received from the branches not visited by us;
 
 c) The reports on accounts of the branches audited by other Auditors
 have been forwarded to us, and have been appropriately dealt by us in
 preparing our report;
 
 d) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account
 and with the audited returns from the branches;
 
 e) In our opinion, the Balance Sheet, Profit & 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;
 
 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
 notes thereon as appearing in Schedule of Accounting Policies and Notes
 on Accounts 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 Balance Sheet, of the state of affairs of the Company
 as at 31st March, 2009;
 
 ii) in the case of the Profit & Loss Account, of the profit 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 AUDITORS REPORT
 
 (Referred to in paragraph 3 of our report of even date)
 
 1.  (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) Fixed Assets have been physically verified by the management
 according to the regular programme of periodical verification in phased
 manner, which, in our opinion, is reasonable having regard to the size
 of the Company and the nature of its fixed assets. The discrepancies
 noticed on such physical verification were not material.
 
 (c) No substantial part of fixed assets has been disposed off during
 the year, which has bearing on the going concern status of the Company.
 
 2.  (a) As explained to us, inventories were physically verified during
 the year by the management at reasonable intervals.
 
 (b) In our opinion and according to 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 nature of its business.
 
 (c) The Company is maintaining proper records of its inventories, and
 no material discrepancies were noticed on physical verification.
 
 3.  The Company has neither granted nor taken any secured or unsecured
 loans to and from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 Accordingly, the Clauses 4(iii)(b) to (g) of the Order are not
 applicable.
 
 4.  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 the nature of its
 business with regard to purchase of inventory, fixed assets and for the
 sale of goods. During the course of our audit, we have not observed any
 continuing failure to correct major weaknesses in internal control.
 
 5.  In our opinion and according to the information and explanations
 given to us, there are no transactions that need to be entered into a
 register maintained under Section 301 of the Companies Act, 1956.
 Accordingly, the Clause 4(v)(b) of the Order is not applicable.
 
 6.  In our opinion and according to the information and explanations
 given to us, the Company has not accepted deposits in terms of the
 provision of Section 58A and Section 58AA of the Companies Act, 1956.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with the size of the Company and nature of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 Company 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, in respect of the Companys products to which the said rules
 are made applicable, and are of the opinion that prima facie the
 prescribed records have been made and maintained. We have, however, not
 made a detailed examination of the said records with a view to
 determine whether they are accurate or complete.
 
 9.  (a) In our opinion and according to the information and
 explanations given to us, undisputed statutory dues including Provident
 Fund, Investors Education and Protection Fund, Employees State
 Insurance, Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty,
 Service Tax, Cess and any other statutory dues have been regularly
 deposited in time during the Year with the appropriate authorities.
 
 (b) (i) In our opinion and according to the information and
 explanations given to us, no undisputed amounts payable in respect of
 aforesaid dues were outstanding as at 31st March, 2009, for a period of
 more than six months from the day they became payable.
 
 (ii) In our opinion and according to the information and explanations
 given to us, the dues in respect of Sales Tax, Income Tax, Custom Duty,
 Excise Duty, Service Tax and Cess that have not been deposited with the
 appropriate authorities on account of dispute and the forum where the
 dispute is pending are given below:
 
 (Rs. in Crores)
 
 Sr.No. Name of the Statute Forum where dispute       Amount      Period
         (Nature of Dues)             is pending
 
 1        Sale Tax Act and  Supreme Court, High Court  54.78   1994-2009
 Value Added Tax Act (Tax)  Tribunal                    2.80   1988-2009
                            Appellate Authorities      22.62   1990-2009
 
 2        Income Tax Act, 
          1961 (Tax)        Supreme Court, High Court   0.57   2006-2009
 
 3        Customs Act, 
          1962 (Duty)       Appellate Authorities       0.01   1985-2006
                            Assessing Authorities      12.04   1991-2008
 
 4        Central Excise 
          Act, 1944         Supreme Court, High Court  28.26   1991-2009
         (Duty/Penalty)     Tribunal                   28.70   1994-2009
                            Appellate Authorities      10.97   1994-2009
                            Assessing Authorities      17.28   1991-2009
 
 5        Service Tax 
          Under the         Supreme Court, High Court   1.80   2003-2007
          Finance Act, 1994 (Tax)     Tribunal         11.77   1997-2009
                            Appellate Authorities       2.51   2005-2008
                            Assessing Authorities       2.29   2005-2009
 
 6        Cess under 
          Various Acts      Supreme Court, High Court  65.42   2004-2008
         (Cess/Interest)    Assessing Authorities       1.98   2003-2009
 
 10.  The Company does not have accumulated losses as at the end of the
 financial year, and has not incurred cash losses in the current
 financial year and the immediately preceding financial year.
 
 11.  The Company has not defaulted in repayment of any dues to
 financial institutions or banks or debenture holders.
 
 12.  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.
 
 13.  The Company is not a chit fund or a nidhi/mutual fund/society,
 therefore, the Clause 4(xiii) of the Order 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. Therefore, the
 provisions of Clause 4(xiv) of the Order are not applicable to the
 Company.
 
 15.  In our opinion, on the basis of information and explanations given
 to us, the term and conditions on which the Company has given
 guarantees for loan taken by others from bank and other financial
 institution are not prima facie prejudicial to the interest of the
 Company.
 
 16.  In our opinion, on the basis of information and explanations given
 to us, the term loans were applied for the purpose for which the loans
 were obtained.
 
 17.  According to information and explanations given to us, and on an
 overall examination of the Balance Sheet of the Company, fund raised on
 short term basis have, prima facie, not been used during the Year for
 long term investment.
 
 18.  The Company has not made any preferential allotment of shares to
 any parties or companies covered in the register maintained under
 Section 301 of the Companies Act, 1956, during the year.
 
 19.  On the basis of records made available to us, the Company has
 created securities in respect of debenture issued/outstanding during
 the year.
 
 20.  The Company has not raised any money through a public issue during
 the year.
 
 21.  Based upon the audit procedures performed and on the basis of
 information and explanations provided by the management, we report that
 no fraud on or by the Company has been noticed or reported during the
 course of the audit.
 
 
                                                For G.P. KAPADIA & CO.,
                                                Chartered Accountants
 
                                                        ATUL B. DESAI
 Place: Mumbai                                                Partner
 Date : May 19, 2009                           (Membership No. 30850)