Greaves Cotton

We have audited the attached balance sheet of Greaves Cotton Limited,
 as at 30 June 2009 and the annexed profit and loss account and the cash
 flow statement for the year ended on that date, in which are
 incorporated the audited accounts of the U.K. Branch audited by another
 auditor. 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. These 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.
 
 In accordance with the provisions of section 227 of the Companies Act,
 1956, we report that:
 
 (1) As required by the Companies (Auditors Report) Order, 2003, issued
 by the central government of India under sub- section (4A) of section
 227 of the Companies Act, 1956, 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 enclose
 in the Annexure a statement on the matters specified in paragraphs 4
 and 5 of the said Order.
 
 (2) 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 and proper returns adequate for the purposes of our audit
 have been received from 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) the report on the accounts of the branch, audited by another
 auditor has been produced to us and the same has been considered in
 preparing our report; and
 
 (f) on the basis of the written representations received from directors
 as on 30 June 2009, and taken on record by the board of directors, we
 report that none of the directors is disqualified as on 30 June 2009,
 from being appointed as a director in terms of clause (g) of
 sub-section (1) of section 274 of the Companies Act, 1956.
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the said accounts, read together with
 significant accounting policies in schedule O and notes on accounts in
 schedule P, 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:
 
 1) in the case of the balance sheet, of the state of affairs of the
 Company as at 30 June 2009;
 
 2) in the case of the profit and loss account, of the profit for the
 year ended on that date; and
 
 3) in the case of the cash flow statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT (Referred to paragraph (1) of our
 report of even date)
 
 1 (a) The Company is maintaining proper records to show full
 particulars including quantitative details and situation of all fixed
 assets.
 
 (b) As explained to us, the fixed assets have been physically verified
 by management in accordance with a phased programme of verification
 which in our opinion is reasonable considering the size and the nature
 of its business. The frequency of verification is reasonable and no
 material discrepancies have been noticed on such physical verification.
 
 (c) The Company has not disposed off any substantial part of its fixed
 assets so as to affect its going concern status.
 
 2 (a) As explained to us, inventories have been physically verified by
 the management at reasonable intervals during the year. In our opinion,
 the frequency of such verification is reasonable.
 
 (b) As per the information given to us, the procedures of physical
 verification of inventory followed by the management are, in our
 opinion, 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, which were not material, have been properly dealt
 with in the books of account.
 
 3 (a) According to the information and explanations given to us, the
 Company has not granted any loans, secured or
 
 unsecured, to companies, firms and other parties covered in the
 register maintained under section 301 of the Companies Act, 1956.
 Accordingly, paragraphs 4(iii) (b), (c) and (d) of the Order are not
 applicable.
 
 (b) According to the information and explanations given to us, the
 Company has not taken any loans, secured or unsecured, from companies,
 firms and other parties covered in the register maintained under
 section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii)
 (0 and (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 systems commensurate
 with the size of the Company and the nature of its business for
 purchase of inventory, fixed assets and for sale of goods and services.
 During the course of our audit we have not observed any continuing
 failure to correct major weaknesses in internal control systems.
 
 5 (a) According to the information and explanations given to us, we are
 of the opinion that the particulars of contracts or
 
 arrangements that need to be entered in the register maintained under
 section 301 of the Companies Act, 1956 have been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956 and exceeding the value of rupees five lakhs in
 respect of any party during the year, have been made at prices which
 are reasonable having regard to the prevailing market prices at the
 relevant time.
 
 6 The Company has accepted deposits from the public and in our opinion
 and according to the information and explanations given to us, the
 directives issued by the Reserve Bank of India and the provisions of
 section 58A, 58AA and other relevant provisions of the Companies Act,
 1956 and the rules framed thereunder, where applicable have been
 complied with. We have been informed by the Company that no order has
 been passed by the Company Law Board or National Company Law Tribunal
 or the Reserve Bank of India or any court or any other tribunal.
 
 7 In our opinion, the Company has an internal audit system commensurate
 with the size and nature of its business.
 
 8 In our opinion and according to the information and explanations
 given to us, the Company is maintaining accounts and records as
 prescribed by the central government under section 209(1 )(d) of the
 Companies Act, 1956 in respect of diesel engines, power driven pumps
 and internal combustion engines and we are of the opinion that prima
 facie the prescribed accounts and records have been made and maintained
 though the contents of these accounts have not been examined by us.
 
 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 with
 appropriate authorities 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 to
 it.  According to the information and explanations given to us, there
 were no undisputed amounts payable in respect of 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 statutory dues outstanding as at 30 June 2009 for
 a period of more than six months from the date they became payable.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, the particulars of sales tax,
 excise duty and income tax as at 30 June 2009 which have not been
 deposited on account of a dispute pending, are as under:
 
 Sr.  Name of the      Nature of      Amount    Period to which the
 No.     statute      disputed dues