1.  We have audited the attached Balance Sheet of Havells India Limited
 (''the Company'') as at March 31, 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.
 
 2.  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.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 (as
 amended) issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose
 in the Annexure a statement on the matters specified in paragraphs 4
 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that:
 
 i) 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;
 
 ii) 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;
 
 iii) 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;
 
 iv) 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 Companies Act, 1956;
 
 v) on the basis of the written representations received from the
 directors, as on March 31, 2012, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2012 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956;
 
 vi) 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 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;
 
 a) in the case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2012;
 
 b) in the case of the statement of profit and loss, of the profit for
 the year ended on that date; and
 
 c) in the case of cash flow statement, of the cash flows for the year
 ended on that date.
 
 Annexure referred to in paragraph 3 of our report of even date Re:
 Havells India Limited (''the Company'')
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All fixed assets were physically verified by the management in the
 current year in accordance with a planned programme of verifying them
 once in two 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) There was no substantial disposal of fixed assets 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) According to the information and explanations given to us,
 the Company has not granted any loans, secured or unsecured to
 companies, firms or other parties covered in the register maintained
 under section 301 of the Companies Act, 1956. Accordingly, provisions
 of clauses 4(iii) (a) to (d) of the Companies (Auditor''s Report) Order,
 2003 (as amended) are not applicable to the Company and hence not
 commented upon.
 
 (b) According to the information and explanations given to us, 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 Companies Act, 1956. Accordingly, provisions of clauses
 4(iii) (e) to (g) of the Companies (Auditor''s Report) Order, 2003 (as
 amended) are not applicable to the Company and hence not commented
 upon.
 
 (iv) In our opinion and according to the information and explanations
 given to us, 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. The
 Company''s activity does not involve any sale of services. During the
 course of our audit, we have not observed any major weakness or
 continuing failure to correct any major weakness in the internal
 control system of the Company in respect of these areas.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in section 301 of the Companies Act, 1956 that
 need to be entered into the register maintained under section 301 have
 been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements and exceeding the value of Rupees five lakhs have been
 entered into during the financial year at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 
 (vi) 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 made by the Central Government for the
 maintenance of cost records under section 209(1)(d) of the Companies
 Act, 1956, related to the manufacture of electrical goods, and are of
 the opinion that prima facie, the prescribed accounts and records have
 been made and maintained.
 
 (ix) (a) 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, customs
 duty, excise duty, cess and other material statutory dues applicable to
 it.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees'' state insurance, income-tax,
 wealth- tax, service tax, sales-tax, customs duty, excise duty, cess
 and other undisputed statutory dues were outstanding, at the year end,
 for a period of more than six months from the date they became payable.
 
 (c) According to the records of the Company, the dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and cess on account of any dispute, are as follows.
 
 Name of the    Nature of the    Amount     Period to      Forum where
 Statute        Dues            (Rs. in 
                                 crores)    which the      dispute is
                                            amount 
                                            relates        pending
 
 Income-Tax 
 Act            Disallowances 
                and                1.37     AY 2006-07     Income Tax
 1961           additions to                to             Appellate
                taxable income.             AY 2007-08     Tribunal, 
                                                           New Delhi
 
 Income-Tax 
 Act,           Disallowances 
                and                0.36     AY 2005-06     High Court of
                                                           Delhi
 1961           additions to 
                taxable income.
 
 Central 
 excise Act,    Excise duty 
                demand/            6.19     FY 1987-88     Commissioner
 1944           disallowance of             to             Appeals
                Cenvat credit on            FY 2009-10    (Ecise & 
                                                           Custom) 
                various items.
 
 Central 
 excise Act,    Excise duty 
                demand/            3.59     FY 1994-95     CESTAT,
 1944           disallowance of             to             New Delhi
                Cenvat credit on            FY 2010-11 
                various items.
 
 Sales Tax/ VAT Sales tax / VAT    5.49     FY 2008-09     High Court,
                demand on various           to             Patna
                matters.                    FY 2010-11
 
 Sales Tax/ VAT Sales tax / VAT    0.09     FY 2005-06     Deputy
                demand on various           to             Commissioner
                matters.                    FY 2009-10    (Appeals),
                                                           Ernakulum
 
 Sales Tax/ VAT Sales tax / VAT    0.01     FY 2003-04     Joint 
                                                           Commissioner
                demand on various           to            (Appeals),
                matters.                    FY 2006-07     Faridabad
 
 Sales Tax/ VAT Sales tax / VAT    0.93     FY 2005-06     Additional
                demand on various           to             Commissioner
                matters.                    FY 2010-11    (Appeals),
                                                           Noida
 
 Sales Tax/ VAT Sales tax / VAT    0.27     FY 2007-08     Commissioner
                demand on various           to            (Appeals)
                matters.                    FY 2008-09
 
 Sales Tax/ VAT Sales tax / VAT    0.88     FY 2008-09     Special
                demand on various                          Commissioner
                matters.                                  (Appeals),
                                                           Chennai
 
 Sales Tax/ VAT Sales tax / VAT    0.36     FY 2005-06     Tribunal
                demand on various           FY 2007-08    (Commercial 
                                                           Tax)
                matters.                    &
                                            FY 2008-09
 
 
 Custom Act     Customs demand on  0.22     FY 2006-07     CESTAT,
                various matters.                           New Delhi
 
 The Rajasthan
 tax            Demand of entry 
                tax                0.75     FY 2010-11     High Court of
 of entry of
 goods          in the state of             &              Rajasthan
 into local
 areas Act,     Rajasthan on                FY 2011-12   
 
 1999           purchase of few
                items.
 
 The Himachal   Demand of entry 
                tax                0.85     FY 2010-11     High Court of
 Pradesh tax of in the state of             &              Himachal
 entry of goods 
 into           Himachal Pradesh
                on                          FY 2011-12     Pradesh 
 local areas
 Act,           purchase of few
 2010           items.
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to banks. The Company
 has no outstanding dues to financial institutions or debenture holders.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi/
 mutual benefit fund/ society. Therefore, the provisions of clause
 4(xiii) of the Companies (Auditor''s Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 (xv) According to the information and explanations given to us, the
 Company has given guarantee for loans taken by its subsidiaries from
 banks and financial institutions, the terms and conditions whereof, in
 our opinion, are not prima-facie prejudicial to the interest of the
 Company.
 
 (xvi) Based on the information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that no funds raised on short-term basis have been used for long-term
 investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties or companies covered in the register maintained under
 section 301 of the Companies Act, 1956
 
 (xix) The Company did not have any outstanding debentures during the
 year.
 
 (xx) The Company has not raised money by way of public issue of shares/
 debentures in the current year.
 
 (xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations given by the management, we report
 that no fraud on or by the Company has been noticed or reported during
 the year.
 
 For S.R. BATLIBOI & CO.               For V.R. BANSAL & ASSOCIATES
 
 Firm registration number: 301003E     Firm registration number: 016534N
 
 Chartered Accountants                 Chartered Accountants
 
 per Manoj Gupta                       per V.P. Bansal
 
 Partner                               Partner
 
 Membership No.: 83906                 Membership No.: 8843
 
 Place : Noida 
 
 Date : May 30, 2012