1.  We have audited the attached Balance Sheet of Moser Baer India
 Limited (the Company) as at March 31, 2011, 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
 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 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 (Auditor''s Report) Order, 2003, as
 amended by the Companies (Auditor''s 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 further report that:
 
 i.  (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 3 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 after the year end 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
 of by the Company during the year.
 
 ii.  (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.
 
 iii. The Company has not granted/ taken any loans, secured or
 unsecured, to/ from companies, firms or other parties covered in the
 register maintained under Section 301 of the Act and accordingly
 clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f) and (iii)(g) of
 paragraph 4 of the Order are not applicable to the Company for the
 current year.
 
 iv. 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, 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.
 
 v.  (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.
 
 vi. 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.
 
 vii.  In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 viii. 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.
 
 ix.  (a) According to the information and explanations given to us and
 the records of the Company examined by us, in our opinion, except some
 delays in the deposit of dues of service tax, sales tax, professional
 tax and income tax, the Company is regular in depositing the undisputed
 statutory dues including provident fund, investor education and
 protection fund, employees'' state insurance, wealth tax, service tax,
 customs duty, excise duty, cess and other material statutory dues as
 applicable with the appropriate authorities. The extent of the arrears
 of statutory dues outstanding as at March 31, 2011 for a period of more
 than six months from the date they became payable are as follows:
 
 Name of the 
 statute           Nature of dues    Amount  Period to    Due Date
                                      (Rs.)  which the
                                               amount
                                              relates
 
 Income Tax Act,
 1961              Interest on delay 
                   of TDS             64,052   June''10    04.08.2010
 
 Central Sales 
 Tax Act, 1956     Central Sales Tax 239,248   2008-09,   Various (20th
                                                          of the
                                               2009-10    next month)
 
 Professional Tax 
 Act, 1975         Professional Tax   21,067    2008-09   Various
                                                          (last day of
                                                          next month)
 
 (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, wealth-tax, service-tax, customs duty, excise
 duty and cess as at March 31, 2011 which have not been deposited on
 account of a dispute are as follows:
 
 Name of the   Nature of dues     Amount  Period to  Forum where the
 statute                          (Rs.)   which the   dispute is
                                            amount
                                           relates      pending
 
 Central 
 Excise        Excise duty     9,749,862   2008-09   High Court, 
                                                     Allahabad
 Act, 1944
 
               Excise duty     1,650,802   2006-07   Additional
                                                     Commissioner,
                                                     Noida
 
 Customs Act, 
 1962          Customs duty  290,248,356   2006-07,  Commissioner, 
                                                     Customs &
                                           2007-08   Central Excise, 
                                                     Noida
 
 Customs 
 Act, 1962     Customs duty 
               and penalty 
               thereon         2,747,885   2001-02,  CESTAT, New Delhi
 
                              (4,500,696)  2010-11
 
               Customs duty   13,924,896   2007-08   CESTAT, Chennai
 
               Customs duty       59,124   2009-10   Assistant 
                                                     Commissioner,
                                                     CE Noida
 
               Customs duty       35,183   2008-09   Commissioner,
                                                     Appeals
 
 Finance Act, 
 1994          Service tax 
               and penalty 
               thereon           824,004   2000-02   Commissioner 
                                                     (Appeals),
                                                     Customs & Central
                                                     Excise,
                                                     Noida
 
               Service tax    72,043,193   2000-02,
                                           2003-04   Commissioner 
                                                     Customs &
                              (2,953,470)  2008-09   Central Excise,
                                                     Noida
 
               Service tax     5,440,788   1999-00   Deputy Commissioner
                                                     Customs & Central 
                                                     Excise, Noida
 
               Service tax 
               and penalty 
               thereon         3,920,092   2000-02   High Court, 
                                                     New Delhi
 
               Service tax 
               and penalty 
               thereon        63,316,764   2005-06   CESTAT, New Delhi
 
               Service tax     6,061,032   2008-09, 
                                           2009-10   Additional 
                                                     Commissioner,
                                           2010-11   Noida
 
 Central 
 Sales Tax     Sales tax      10,601,742   2006-07   Joint Commissioner
 Act, 1956                    (4,543,604)            (Appeals), Noida
 
               Sales tax         441,000   2007-08   Additional
                                                     Commissioner
                                                     (Appeals)
 
 UP Trade Tax  Sales tax         212,375   2004-05   Joint Commissioner
 Act, 1948                                           (Appeals), Noida
 
               Sales tax         195,050   2007-08   Commercial Tax 
                                                     Tribunal,
                                                     Noida Bench
 
               Sales tax         735,146   2007-08   Additional
                                                     Commissioner
                                                    (Appeals)
 
 Income Tax    Income tax     50,794,174   2004-05, 
                                           2005-06   Commissioner of
                                                     Income
 Act, 1961                   (34,500,000)  2006-07, 
                                           2007-08   Tax (Appeals)
 
 Notes:
 
 1.  The above details exclude appeals made by the Department to higher
 appellate authorities as there is no stay on the order passed by lower
 appellate authorities in favour of the Company and the amount is not
 ascertainable.
 
 2.  The figures in brackets represent amounts deposited under protest
 and demands shown against them are net of such deposits.
 
 x.  The Company has no accumulated losses as at March 31, 2011 and it
 has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 xi.  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 as at the
 balance sheet date.
 
 xii.  The Company has not granted any loans and advances on the basis
 of security by way of pledge of shares, debentures and other
 securities.
 
 xiii. The provisions of any special statute applicable to chit fund /
 nidhi / mutual benefit fund/ societies are not applicable to the
 Company.
 
 xiv.  In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 xv.  In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company, for loans taken by others from banks or financial institutions
 during the year, are not prejudicial to the interest of the Company.
 
 xvi.  In our opinion, and according to the information and explanations
 given to us, on an overall basis, the term loans have been applied for
 the purposes for which they were obtained.
 
 xvii. 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.
 
 xviii. 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.
 
 xix.  The Company has not issued any debentures and accordingly clause
 (xix) of paragraph 4 of the Order is not applicable to the Company for
 the current year.
 
 xx.  The Company has not raised any money by public issues during the
 year. The Management has disclosed the end use of money raised by a
 public issue in an earlier year (Refer Note 16 (b) of Schedule 22
 Part-B) which has been verified by us.
 
 xxi.  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.
 
 4.  Further to our comments 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 March 31, 2011 and taken on record by the Board of
 Directors, 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 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 March 31, 2011;
 
 (ii) in the case of the Profit and Loss Account, of the loss 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.
 
                                       For Price Waterhouse
 
                                       Firm Registration Number: 012754N
 
                                       Chartered Accountants
 
 Place: New Delhi                      Anuradha Tuli
 
 Date: August 25, 2011                 Partner
 
                                       Membership No: F-085611