a) We have audited the attached Balance Sheet of Honda Siel Power
 Products Limited (“the Company”) as at 31 March 2011 and also the
 Profit and Loss Account and the Cash Flow Statement of the Company for
 the year ended on that date, (or “financial statements”), 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.
 
 b) 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 statements
 presentation.  We believe that our audit provides a reasonable basis
 for our opinion.
 
 c) 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 enclose
 in the Annexure, a statement on the matters specified in paragraphs 4
 and 5 of the said Order.
 
 d) 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, Profit and Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (iv) 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 sub-section (3C) of Section 211 of
 the Companies Act, 1956;
 
 (v) on the basis of written representations received from the Directors
 of the Company as on 31 March 2011 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31 March 2011 from being appointed as a Director in terms of clause (g)
 of sub-section (1) of Section 274 of the Companies Act, 1956;
 
 e) 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:
 
 i) in the case of the Balance Sheet, of the state of the affairs of the
 Company as at 31 March 2011;
 
 ii) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 iii) 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 in 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) As explained to us, the Company has a programme of physical
 verification of its fixed assets in a phased manner over a period of
 three years. In accordance with this programme, during the current
 year, physical verification of certain fixed assets has been carried
 out by the Company. In our opinion, this periodicity of physical
 verification 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) Fixed assets disposed off during the year were not substantial, and
 therefore, do not affect the going concern assumption.
 
 2.  (a) Inventories, except stock-in transit, have been physically
 verified by management during the year.  In our opinion, the frequency
 of such verification is reasonable. For stocks lying with third parties
 at the year-end, written confirmations have been obtained.
 
 (b) In our opinion, the procedures of physical verification of
 inventories followed by the management are reasonable and adequate in
 relation to the size of the Company and the nature of its business.
 
 (c) In our opinion, the Company is maintaining proper records of
 inventory. The discrepancies noticed on verification between the
 physical stocks and the book records were not material.
 
 3.  According to the information and explanations given to us, the
 Company has neither granted nor taken any loans, secured or unsecured
 to or from companies, firms or other parties covered in the register
 maintained under Section 301 of the Companies Act, 1956.
 
 4.  In our opinion and according to the information and explanations
 given to us, and having regard to the explanation that purchases of
 certain items of inventories and fixed assets are for the Companys
 specialised requirements and similarly certain goods sold and services
 rendered are for the specialised requirements of the buyers and
 suitable alternative sources are not available to obtain comparable
 quotations, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business with regard
 to purchase of inventories and fixed assets and with regard to the sale
 of goods and services. We have not observed any major weakness in the
 internal control system during the course of the audit.
 
 5.  (a) In our opinion and according to the information and
 explanations given to us, the particulars of contracts or arrangements
 referred to in section 301 of the Companies Act, 1956 have been entered
 in the register required to be maintained under that section.
 
 (b) In our opinion, and according to the information and explanations
 given to us, the transactions made in pursuance of contracts and
 arrangements referred to in (a) above and exceeding the value of Rs 5
 lacs are for sale of certain goods and services for the specialised
 requirements of the buyer and for which suitable alternative sources
 are not available to obtain comparable quotations. Hence it is not
 possible for us to comment whether above contracts or arrangements 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 from the public.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules prescribed by the Central Government for
 maintenance of cost records under clause (d) of sub-section (1) of
 Section 209 of the Companies Act, 1956 in respect of its products and
 are of the opinion that prima facie, the prescribed accounts and
 records have been made and maintained. However, we have not made a
 detailed examination of the records.
 
 9.  (a) According to the information and explanations given to us and
 on the basis of our examination of the records of the Company,
 undisputed statutory dues including Provident Fund, Investor Education
 and Protection Fund, Income tax, Wealth tax, Excise duty, Service tax,
 Customs duty, Cess and other material statutory dues have been
 regularly deposited with the appropriate authorities.  Sales tax, Entry
 Tax, Employees State Insurance and Professional tax have generally
 been regularly deposited with the appropriate authorities though there
 has been slight delay in a few cases.
 
 There were no dues on account of cess under section 441A of the
 Companies Act, 1956 since the date from which the aforesaid section
 comes into force has not yet been notified by the Central Government.
 
 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,
 Sales tax, Wealth tax, Service tax, Customs duty, Excise duty, Cess and
 other material statutory dues were in arrears as at 31 March 2011 for a
 period of more than six months from the date they became payable.
 
 (b) According to the information and explanations given to us, there
 are no dues of Wealth Tax, Cess and Customs Duty which have not been
 deposited with the appropriate authorities on account of any dispute.
 According to the information and explanations given to us, the
 following dues of Income-tax, Sales tax, Service tax and Excise duty
 have not been deposited by the Company on account of disputes:
 
                                            Period to
 
                               Amount       which
 
 Name of the 
 Statute       Nature of dues                           Forum where 
                                                        dispute is
                                                        pending/Remarks
 
                             (Rs in lakhs)*  amount
 
                                             relates
 
 Income-tax 
 Act , 1961   Penalty            36.89      1995-1996   Commissioner of 
 Income
                                                        tax (Appeals)
 
              Various 
              disallowances     125.94      1998-1999   Commissioner of 
 
                                                        Income tax
                                                        (Appeals)
 
              Various 
              disallowances      10.93      2001-2002   Income Tax 
                                                        Appellate 
                                                        Tribunal
 
              Various 
             disallowances       43.45      2002-2003   Income Tax 
                                                        Appellate 
                                                        Tribunal
 
              Various 
             disallowances       99.11      2002-2003   Commissioner of 
 
                                                        Income Tax
                                                        (Appeals)
 
              Various 
             disallowances      259.53      2003-2004   Commissioner of 
                                                         Income Tax
                                                        (Appeals)
 
              Various 
            disallowances       142.44      2003-2004    Income Tax 
 
                                                         Appellate 
                                                         Tribunal
 
              Various 
             disallowances      238.76      2004-2005   Commissioner 
 
                                                        of Income Tax
                                                        (Appeals)
 
              Various 
            disallowances       377.44      2005-2006   Commissioner of  
                                                         Income Tax
                                                         (Appeals)
 
 Various 
 Sales Tax 
 Acts        Disputes in sales 
             tax rates            31.76     1999-2000     High Court
 
                                            2000-2001
 
             Non- submission of 
             forms                 4.75     1988-1989     High Court. 
 
                                                          Sales Tax
                                                          Authorities 
 
                                                          have filed the
 
                                                          appeal
 
             Other disallowance    2.66     1999-2000     High Court
 
             Dispute on enhan
             - cement             33.44     2000-2002     Sales Tax 
 
                                                          Tribunal
 
             of sales and 
             rejection of                   2005-2006
 
             stock transfer
 
             Dispute on sales 
             tax rates            21.66     2007-2008     Sales Tax 
                                                          Tribunal
 
             Various disallo
              - wances            12.49     2004-2005     Joint 
 
                                                         Commissioner 
 
                                                         (Appeals)
 
                                            2005-2006
 
             Non Submission 
             of sales             21.40     2001-2004   Dy. Commissioner 
 
                                                          (Appeals)
 
             tax forms and 
             rejection of                   2007-2008
 
             stock transfer                 2008-2009
 
             Dispute due to 
             sales tax           640.45     2001-2005   Dy. Commissioner  
 
                                                          (Appeals)            rates
 
 Servicve 
 Tax         Service Tax on 
             royalty             75.40      1999-2004    Customs Excise
 
                                                         Service Tax 
                                                         Appellate 
                                                         Tribunal.
 
                                          The Company has got stay from 
                                          the Appellate Authority
 
             Service Tax on 
             Goods                1.55      1997-1998   Customs Excise 
                                                        Service Tax
                                                        Appellate 
 
                                                         Tribunal
             Transport
 
             In-eligibility of 
             Cenvat               6.65      2005-2007   Customs 
                                                        Excise Service 
                                                        Tax
                                                        Appellate 
                                                        Tribunal .
 
                                       Credit Department has filed the 
                                       appeal.
 
 * Includes penalty wherever indicated in the order
 
 10.  The Company does not have any accumulated losses and has not
 incurred cash losses in the financial year and in the immediately
 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. The Company did no have any outstanding debentures or any
 outstanding loans from any financial institution during the year.
 
 12.  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.  In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund or a nidhi / mutual benefit
 fund / society.
 
 14.  According to the information and explanations given to us, the
 Company is not dealing or trading 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, no term
 loan has been taken by the Company during the year.
 
 17.  According to the information and explanations given to us, and on
 an overall examination of the balance sheet of the Company, we are of
 the opinion that the fund raised on short-term basis have not been used
 for long-term investment.
 
 18.  The Company has not made any preferential allotment of shares
 during the year.
 
 19.  The Company has not issued any debentures during the year.
 
 20.  The Company has not raised any money by way of public issue during
 the year.
 
 21.  According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
                                                   For B S R & Co.
 
                                            Chartered Accountants
 
                                    Firm Registration No. 101248W
 
                                                  Vikram Aggarwal
 
                                                          Partner 
 
                                             Membership No. 089826
 
 Place : New Delhi 
 
 Date : 19 May 2011