We have audited the attached Balance Sheet of Henkel SPIC India Ltd. as
 at 31st December 2003 and also the Profit and Loss account of the
 company for the year ended on that date annexed thereto and Cash Flow
 Statement for the year ended on that date. 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.
 
 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 include,?
 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.
 
 As required by the Companies (Auditor's Report) Order, 2003 issued by
 the Department of Company Affairs on 12th June 2003 in terms of
 sub-section 4(A) 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 to the extent applicable to the company.
 
 Further to our comments in the Annexure referred to above, we report
 that:
 
 a) We have obtained all the information and explanation, 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 appears from our examination of those
 books.
 
 c) The Balance Sheet and Profit and Loss Account dealt with by this
 report are in agreement with the books of account.
 
 d) In our opinion, the Balance Sheet and Profit and Loss Account 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 written representation received from the directors,
 as on 31st December 2003, and taken, or record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31st December 2003 from being appointed as a director in terms of
 Clause (g) of Subsection (1) of Section 274 of the Companies Act, 1956.
 
 f) The Company has not provided for the cess payable under section 441
 A of the Companies Act, 1956 as the notification regarding rate and
 mode of payment have not been received.
 
 g) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts together with the notes
 thereon, give the information required by the Companies Act, 1956 in
 the manner so required, subject to the Note 13 regarding capitalisation
 of interest on Term Loans 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 December 2003 and
 
 ii) in the case Profit and Loss Account, of the Profit for the year
 ended on that date.
 
 iii) in the case of cash flow statement of the cash flow for the year
 ended on that date.
 
                                             For M/s. CNGSN & ASSOCIATE
                                                  CHARTERED ACCOUNTANTS
 
 Chennai                                                C.N. GANGADARAN
 Dated : 2nd February 2004                                      PARTNER
 
 ANNEXURE TO THE AUDITORS' REPORT
 
 Annexure referred to in paragraph 3 of the report of even date of the
 Auditors to the members of Henkel SPIC India Limited on the accounts
 for the year ended 31st December 2003.
 
 1. The Company is maintaining proper records, showing full particulars
 including quantitative details and situation of fixed assets.
 
 2. The Company has a phased programme of physical verification of all
 fixed assets over a period of three years, which in our opinion
 reasonable having regard to the size of the Company and the nature of
 its business. In accordance with this program, part of fixed assets
 have been physically verified by the management during the year and no
 material discrepancies have been noticed on such verification.
 
 3. No substantial part of the fixed assets have been disposed off 
 during the year.
 
 4. Physical verification of inventory was conducted at reasonable
 intervals by the management during the year.
 
 5. In our opinion, procedures for 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.
 
 6. The company is maintaining proper records of inventory and the
 discrepancies noticed on verification were not material.
 
 7. The Company has neither taken nor given loans, secured or unsecured
 from/to companies, firm or other parties listed in the Register
 maintained under Section 301 of the Companies Act, 1956.
 
 8. 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 regards to purchase of inventories and fixed assets and
 for the sale of goods.
 
 9. The transactions that need to be entered into a register in
 pursuance of section 301 of the Companies Act, 1956 have been duly
 entered.
 
 10. According to the information and explanation given to us,
 transactions which have been entered in pursuance of contracts or
 arrangements entered in the register maintained under Section 301 of
 the Companies Act, 1956 and aggregating to Rs.5 lacs or more, have been
 made at prices which are reasonable, having regard to the prevailing
 market prices at the relevant time.
 
 11. The Company has not accepted any Fixed Deposits from the public
 during the year and therefore, the question of compliance with the
 directives issued by the Reserve Bank of India and the provisions of
 section 58A and 58AA of the Companies Act, 1956 and the rules framed
 there under does not arise.
 
 12. In our opinion, the Company has an adequate internal audit system
 commensurate with its size and nature of its business.
 
 13. We have broadly reviewed the books of accounts maintained by the
 Company pursuant to the rules prescribed 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 made and maintained. We have
 not, however, made detailed examination of the records with a view to
 satisfy ourselves that the records are complete and correct.
 
 14. According to the, records of the company, undisputed statutory dues
 including Provident fund, employees state insurance fund, income-tax,
 wealth tax, sale tax, customs duty, excise duty and other statutory
 dues have been deposited regularly during the year with the appropriate
 authorities. According to the information and explanation given to us,
 there are no undisputed amounts payable which are outstanding as on
 31st December 2003 for a period of more than six months from the date
 they became payable.
 
 15. Rs.3.3 lakhs in respect of excise duty relating to earlier years
 are under appeal before CESTAT and Commissioner (Appeals).
 
 16. At the end of the financial year, the accumulated loss of the
 company is less than 50% of its Net Worth. The company has not incurred
 cash loss during the financial year and in the immediately preceding
 financial year also.
 
 17. On the basis of examination of books of accounts carried out by us
 and according to information and explanation given to us, the company
 has not defaulted repayment of dues to Banks during the year.
 
 18. No loans or advances have been granted by the company against
 pledge of securities.
 
 19. According to the Information and explanation given to us, the
 company has given a Corporate Guarantee during the year, the terms and
 conditions thereof are not prejudicial to the interests of the company.
 
 20. The company has not received any Term Loan during the year and
 therefore the question of application for the purpose for which they
 were obtained does not arise.
 
 21. According to the information and explanations give to us by the
 management, the funds raised on short term basis have not been used for
 long term investment and vice-versa.
 
 22. During the year 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.
 
 23. The company has not issued any debentures during the year and
 therefore the question of creation of securities does not arise.
 
                                           For M/s. CNGSN & ASSOCIATES
                                                 CHARTERED ACCOUNTANTS
 
 Chennai                       
 Dated : 2nd February 2004