1.  We have audited the attached Balance Sheet of Hindustan Composites
 Limited as at 31 st March, 2011, the Profit & Loss Account and also the
 Cash Flow Statement of the Company 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 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 misstatements. 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 (Auditor''s Report) Order, 2003 issued
 by the Central Government of India in terms of sub-section (4A) of ,
 Section 227 of the Companies Act, 1956 (hereinafter referred to as the
 ''Act''), 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 in paragraph
 (3) 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 it appears from our examination of those
 books;
 
 c) The Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 d) In our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report comply with the
 Accounting Standards referred to in Section 211(3C)oftheAct, to the
 extent applicable;
 
 e) On the basis of 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 a Director in terms of Section 274 (1 )(g)
 of the Act;
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements read
 togetherwith Significant Accounting Policies and notes to accounts
 appearing in Schedule 18 and those appearing elsewhere in the financial
 statements, give the information required by the Act, in the manner so
 required and give a true and fair view in conformity with the
 accounting principles accepted in India:
 
 i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31 st 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 the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
  
 ANNEXURE TO THE AUDITORS'' REPORT
 
 Annexure referred to in paragraph 3 of our report of even date to the
 Members of HINDUSTAN COMPOSITES LIMITED on the financial statements as
 at and for the year ended 31 st March, 2011
 
 On the basis of such checks as we considered appropriate and according
 to the information and explanations given to us during the course of
 audit, we state that:
 
 1.  The Company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets. There is
 a phased programme of physical verification of all fixed assets over a
 period of three years, based on which physical verification of certain
 fixed assets was carried out during the year which, in our opinion, is
 reasonable considering the size of the Company and nature of its fixed
 assets. The discrepancies noticed on such physical verification were
 not material and the same have been properly dealt with in the books of
 account. Substantial part of fixed assets viz. Land & Building at Jalna
 was disposed off during the year, which has not affected the going
 concern status of the Company.
 
 2.  a) The inventory has been physically verified by the management at
 reasonable intervals during the year.  Inventory lying with third
 parties and in - transit is being verified by the management with
 reference to confirmations or statements of account or subsequent
 receipt of goods.
 
 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 nature of its business.
 
 c) The Company is maintaining proper records of inventory. The
 discrepancies noticed on verification of inventory between the physical
 stock and book records were not material and have been properly dealt
 with in the books of account.
 
 3.  (a) During the year, the Company has given unsecured loan, to
 companies, covered in the register maintained under Section 301 of the
 Act. The maximum amount outstanding during the year was Rs. 1204.5 lacs
 and the year end balance is Rs. 404.5 lacs. The rate of interest and
 other terms and conditions of loan given, prima facie, are not
 prejudicial to the interest of the Company.
 
 (b) The Company has not taken any unsecured loan from a Company covered
 in the register maintained under Section 301 of the Act.
 
 4.  In our opinion and explanations given to us, having regard to the
 explanation that some of the items purchased / sold are of special
 nature and suitable alternative sources do not exist for obtaining
 comparable quotations, there is an adequate internal control system
 commensurate with the size of the Company and the nature of its
 business for the purchase of inventories and fixed assets and for the
 sale of goods. During the course of our audit, no major weaknesses have
 been noticed in the internal control system.
 
 5.  (a) According to the information and explanations given to us, we
 are of the opinion that particulars of contracts or arrangements that
 need to be entered in the register maintained under section 301 of the
 Act have been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions have been made in pursuance of contracts
 or arrangements entered in the register maintained under section 301 of
 the Act and exceeding Rupees five lacs or more 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 not accepted any deposits within the meaning of
 Section 58A, 58AA or any other relevant provisions of the Act and Rules
 framed thereunder.
 
 7.  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 cost records 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 Act in
 respect of Automotive parts and are of the opinion that, prima facie,
 the prescribed records have been made and maintained. However, we are
 not required to make a detailed examination of the records with a view
 to determine whether they are accurate or complete.
 
 9.  a) According to the information and explanations given to us and
 according to the books and records as produced and examined by
 us, the 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 as applicable have generally been
 regularly deposited by the Company during the year with the appropriate
 authorities and there were no arrears as at 31 st March, 2011 for a
 period of more than six months from the date they became payable.
 
 b) According to the records of the Company and the information and
 explanations given to us by the management, there are no dues of Sales
 tax/ Income tax/ Excise duty/ Wealth tax/ Custom duty/ Cess which have
 not been deposited on account of disputes except: :
 
 Name of the        Nature of     Amount    Period to which   
 Statutes                        (Rs. in    amount relates
                                    lacs    
                                        
 Income Tax Act,    Income tax     18.26    2003-04 to 
 1961                                       2007-08 
 
 Central Sales      Sales tax       2.22    1997-98 to 
 Tax Act, 1956                              2003-04
 
 Central Sales      Sales tax       7.00    2001-02 to 
 Tax Act, 1956                              2004-05 
 
 
 Name of the Statutes     Forum Where Disputed
 
 Income Tax Act, 1961     C.I.T. (Appeals), Mumbai.
 
 Central Sales Tax        Deputy Commissioner of
 Act, 1956                Sales Tax (Appeal), Nagpur
 
 Central Sales Tax        Appellate Tribunal, Mumbai 
 Act, 1956
 
 10.  The Company does not have accumulated losses as at 31st March,
 2011 and has not incurred a cash loss during the financial year ended
 on that date. The Company had not incurred cash loss in the immediate
 preceding financial year.
 
 11.  In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 banks.
 
 12. In respect of loans granted against securities, the Company has
 maintained adequate documents and records.
 
 13.  In our opinion, the Company is not a chit fund or a nidhi /mutual
 benefit fund / society. Therefore, clause 4(xiii) of the Companies
 (Auditor''s Report) Order 2003 is not applicable to the Company.
 
 14.  In our opinion, during the year, the Company is not a dealer or
 trader in shares, securities, debentures and other investments.
 
 15.  According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 16.  According to the information and explanations given to us, the
 term loans were applied for the purposes for which the loans were
 obtained.
 
 17.  According to the information and explanations given to us and on
 an overall examination of the balance sheet and cash flow statement of
 the Company, in our opinion, the funds raised on short-term basis have,
 prima facie, not been used for long-term investment.
 
 18.  During the year, the Company has not made any preferential
 allotment of shares to parties and companies covered in the register
 maintained under Section 301 of the Act.
 
 19.  The Company has not issued any debentures during the year or in
 the recent past.
 
 20.  The Company has not raised any money by way of public issue during
 the year or in the recent past.
 
 21.  During the course of our examination of the books and records of
 the Company, carried out in accordance with the generally accepted
 auditing practice in India and according to the information and
 explanations given to us, we have neither come across any instance of
 fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by the management.
 
 
                                                  For LODHA & COMPANY
                                                Chartered Accountants
 
                                                      A. M. Hariharan
                                                              Partner
                                                 Membership No. 38323
                                         Firm Registration No 301051E
 
 Place: Mumbai 
 Dated: 25th May 2011