1.  We have audited the attached Balance Sheet of Lumax Industries
 Limited (the Company) as at March 31, 2011 and also the Profit and
 Loss account and the Cash Flow statement for the year ended on that
 date 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.
 
 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 (Auditors 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, 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, 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
 Companies Act, 1956.
 
 v. On the basis of the written representations received from the
 directors, as on March 31, 2011, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2011 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, 2011;
 
 b) in the case of the profit and loss account, 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:
 Lumax Industries 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 have not been physically verified by the
 management during the year but there is a regular programme of
 verifying them once in three years which, in our opinion, is reasonable
 having regard to the size of the Company and the nature of its assets.
 As informed, no material discrepancies were noticed on such
 verification.
 
 (c) There was no disposal of a substantial part 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, the
 provisions of clauses 4(iii)(a) to (d) of the Companies (Auditors
 Report) Order, 2003 (as amended) are not applicable to the Company.
 
 (e) 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, the provisions of clauses
 4(iii)(e) to (iii)(g) of the Companies (Auditors Report) Order, 2003
 (as amended) are not applicable to the Company and hence not commented
 upon.
 
 (iv) The Companys major purchases of inventory and fixed assets and
 major sales of components are stated to be of proprietary/ specialized
 nature, and hence, in such cases, the comparison of prices with the
 market rates or with purchases from/ sales to other parties cannot be
 made. Read with the above, 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 and services. The clause relating to sale of services
 is not applicable to the Company. During the course of our audit, no
 major weakness has been noticed in the internal control system in
 respect of these areas and accordingly the question on commenting on
 whether there is a continuing failure to correct major weakness in the
 internal control system of the Company does not arise.
 
 (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 Act that need to be
 entered into the register maintained under section 301 have been so
 entered.
 
 (b) In respect of transactions made in pursuance of such contracts or
 arrangements and exceeding value of Rupees five lakhs entered into
 during the financial year, as informed, because of the unique and
 specialized nature of the items involved and absence of any comparable
 prices, we are unable to comment whether the transactions were made at
 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, and are of the opinion that prima facie, the prescribed
 accounts and records have been made and maintained.
 
 (ix) (a) Undisputed statutory dues including provident fund, investor
 education and protection fund, or employees state insurance,
 income-tax, sales-tax, wealth-tax, service tax, customs duty and excise
 duty, cess and other material statutory dues have generally been
 regularly deposited with the appropriate authorities though there has
 been a slight delay in a few cases.
 
 Further, since the Central Governent has till date not prescribed the
 amount of cess payable under section 441 A of the Companies Act,1956,
 we are not in a position to comment upon the regularity or otherwise of
 the company in depositing the same.
 
 (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 material statutory dues 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    Nature of dues       Amount      Period      Forum
 the                              (Rs.)      to which    where
 statute                                      the         dispute is
                                              amount      pending
                                              relates
 
 The       Excise duty demand   7,255,448    July 1994    High Court,
 Central   against rejected                 to February   Chandigarh
 Excise    goods sent on 57
           (f)(4)                               1999
 Act, 1944 challans
 
 The 
 Central   Excise duty demand    2,026,701    1999-2000    Joint
 Excise    against excess credit                 to        Commissioner
 Act, 1944 taken against the                    2001-02    of Central
           material procured                              Excise- Gurgaon
           from 100% EOU
 
 Service 
 Tax,      Service tax demand    3,451,809    1999-2000    Joint
 Finance 
 Act,      raised on royalty and                  to       Commissioner
 1994      technical knowhow                   2002-03     of Service
                                                           Tax- Gurgaon
 
 Local 
 Area      Demand of tax on         84,185     2000-01     Joint
 Develop
 -ment     certain fixed assets                           Excise and
 Tax Act, 
 2005      including interest                             Taxation
                                                          Commissioner
                                                         (Appeals),
                                                          Faridabad
 
 Service 
 Tax,      Cenvat credit in        155,450     2006-07    Commissioner
 Finance 
 Act,      respect of                                     Appeals
 1994      service tax paid                              (Gurgaon)
           on the courier
           services, telephone
           services, delivery
           and crane operator
           services for the
           period 2006-07.
 
 Income 
 Tax       Income tax demand    31,275,736   AY 2007-08   Dispute
 Act, 1961 on various                                     Resolution
           disallowances                                  Panel
 
 There are no outstanding dues under dispute for provident fund,
 investor education and protection fund, employees state insurance and
 customs duty.
 
 (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 a financial
 institution, bank or debenture holders.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced before 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 (Auditors 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 (Auditors Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 (xvi) Based on 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 any money through a public issue during
 the 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 course of our audit.
 
 
 
                                     For S.R. BATLIBOI & ASSOCIATES
 
                                  Firm registration number: 101049W
 
                                              Chartered Accountants
 
                                                     per Sanjay Vij
 
 Place: Gurgaon                                             Partner
 
 Date: May 27, 2011                           Membership No.: 95169