1.  We have audited the attached Balance Sheet of Honeywell Automation
 India Limited (the Company), as at December 31, 2010, and the related
 Profit and Loss Account and Cash Flow Statement for the year ended on
 that date annexed thereto, which we have signed under reference to this
 report. 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.
 
 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 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 (Auditors Report) Order, 2003, as
 amended by the Companies (Auditors Report) (Amendment) Order, 2004
 (together the Order) issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 of The Companies Act, 1956 of
 India (the Act) 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 give 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 appears from our examination of
 those books;
 
 (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 Act;
 
 (e) On the basis of written representations received from the
 directors, as on December 31, 2010 and taken on record by the Board of
 Directors, none of the directors is disqualified as on December 31,
 2010 from being appointed as a director in terms of clause (g) of
 sub-section (1) of Section 274 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 together
 with the notes thereon and attached thereto give, in the prescribed
 manner, the information required by the Act, 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 affairs of the
 Company as at December 31, 2010;
 
 (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.
 
 [Referred to in paragraph 3 of the Auditors Report of even date to the
 members of Honeywell Automation India Limited on the financial
 statements for the year ended December 31, 2010]
 
 1.  (a) The Company is maintaining proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) The fixed assets are physically verified by the Management
 according to a phased programme designed to cover all the items over a
 period of five years, which in our opinion, is reasonable having regard
 to the size of the Company and the nature of its assets. Pursuant to
 the programme, a portion of the fixed assets has been physically
 verified by the Management during the year and no material
 discrepancies between the book records and the physical inventory have
 been noticed.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 off by the Company during the year.
 
 2.  (a) The inventory (excluding stocks with third parties) has been
 physically verified by the Management during the year. In respect of
 inventory lying with third parties, these have substantially been
 confirmed by them. In our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion, 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) On the basis of our examination of the inventory records, in our
 opinion, the Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 3.  (a) 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 Act.
 
 (b) 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 Act.
 
 4.  In our opinion and according to the information and explanations
 given to us, having regard to the explanation that certain items
 purchased are of special nature for which suitable alternative sources
 do not exist for obtaining comparative 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 inventory, fixed assets
 and for the sale of goods and services. Further, on the basis of our
 examination of the books and records of the Company, and according to
 the information and explanations given to us, we have neither come
 across nor have been informed of any continuing failure to correct
 major weaknesses in the aforesaid internal control system.
 
 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 Act 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 such contracts or
 arrangements 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 not accepted any deposits from the public within
 the meaning of Sections 58A and 58AA of the Act and the rules framed
 there under.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 Company in respect of products where, pursuant to the Rules made by the
 Central Government of India, the maintenance of cost records has been
 prescribed under clause (d) of sub-section (1) of Section 209 of the
 Act, and are of the opinion that prima facie, the prescribed accounts
 and records have been made and maintained. We have not, however, made 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
 the records of the Company examined by us, in our opinion, the Company
 is generally regular in depositing 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 with the appropriate authorities.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, the particulars of dues of
 income-tax, sales-tax, customs duty, excise duty and cess as at
 December 31, 2010 which have not been deposited on account of a
 dispute, are as follows -
 
 Name of the statute        Nature of dues             Amount*
                                                       (Rs.000)
 
 The Central Excise      Excise duty, including         1,899
 Act, 1944               applicable penalty
 
 The Customs Act,        Penalty                          753
 1962
 
 Maharashtra Sales       Sales Tax / Value Added Tax,  15,097
 Tax Act, 1960           including applicable interest
 
 Maharashtra Sales       Sales Tax                      9,974
 Tax Act, 1960
 
 Gujarat Sales           Sales Tax / Value Added Tax,     900
 Tax Act, 1969           including applicable interest
 
 Uttar Pradesh State     Inter-State Works Contract Tax 17,060
 Trade Tax Act, 1948
 and Uttar Pradesh
 Value Added Tax
 Act, 2008
 
 West Bengal Value       Value Added Tax                1,925
 Added Tax Act, 2003
 
 Rajasthan Sales Tax     Entry Tax                        867
 Act, 1994                                              4,130
 
 Income-tax Act, 1961    Income-tax including         281,481
                         applicable interest
 
 Income-tax Act, 1961    Income-tax including         184,554
                         applicable interest
 
 
 
 
 Name of the         Financial Year 
 Statue                to which      Forum where the dispute is pending
                     the amount 
                     relates
 
 The Central Excise
 Act, 1944            2002-03        Customs, Excise and Service Tax
                                     Appellate Tribunal
 
 The Customs Act,
 1962                 2006-07        Customs, Excise and Service Tax
                                     Appellate Tribunal
 
 Maharashtra Sales
 Tax Act, 1960        1999-00 to     Maharashtra Sales Tax
                      2001-02        Appellate Tribunal
 
 Maharashtra Sales
 Tax Act, 1960        2005-06        Deputy Commissioner of Sales Tax
                                     (MVAT)
 
 Gujarat Sales
 Tax Act, 1969        2000-01 and    Assistant Commissioner of Sales Tax
                      2001-02        (Appeals)
 
 Uttar Pradesh State
 Trade Tax Act, 1948
 and Uttar Pradesh
 Value Added Tax
 Act, 2008            2004-2005,     Joint Commissioner of Sales Tax
                      2007-2008,     (Appeals)
 
                      2009-2010
 
 West Bengal Value
 Added Tax Act, 2003  2005-06 to     Assistant Commissioner of Sales Tax
                      2006-07        (Appeals)
 
 
 Rajasthan Sales Tax
 Act, 1994            2002-2003      High Court, Rajasthan
                      2008-2009
 
            
 
 Income-tax Act, 1961 2005-2006      Income Tax Appellate Tribunal
 
 Income-tax Act, 1961 2006-2007      Commissioner of Income Tax
                                     (Appeals)
 
 *Net of amounts paid under protest or otherwise
 
 10.  The Company has no accumulated losses as at December 31, 2010 and
 it has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 11.  According to the records of the Company examined by us and the
 information and explanation given to us, the Company has not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holders as at the Balance Sheet date.
 
 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.  The provisions of any special statute applicable to chit fund /
 nidhi / mutual benefit fund/ societies are not applicable to the
 Company.
 
 14.  In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 15.  In our opinion and 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 during the year.
 
 16.  The Company has not obtained any term loans.
 
 17.  On the basis of an overall examination of the balance sheet of the
 Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short-term
 basis which have been used for long-term investment.
 
 18.  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 during the year.
 
 19.  The Company has not issued any debentures.
 
 20.  The Company has not raised any money by public issues during the
 year.
 
 21.  During the course of our examination of the books and records of
 the Company, carried out in accordance with the generally accepted
 auditing practices 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 Price Waterhouse & Co.
 
                                   Firm Registration No. 007567S
 
                                           Chartered Accountants
 
                                           Jeetendra Mirchandani
 
 Place : Mumbai                                          Partner
 
 Date : February 9, 2011                    Membership No. 48125