Moser Baer (India)

1.  We have audited the attached Balance Sheet of Moser Baer India
 Limited as at March 31, 2009, 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,
 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 three 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
 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 taken/granted any loans, secured or
 unsecured, from/to companies, firms or other parties covered in the
 register maintained under Section 301 of the Act. As the Company has
 not taken/granted any loans, secured or unsecured, from/to companies,
 firms or other parties covered in the register maintained under Section
 301 of the Act, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f) and
 (iii)(g) of paragraph 4 of the Companies (Auditors Report) Order,
 2003, as amended by the Companies (Auditors Report) (Amendment) Order,
 2004 are not applicable to the Company for the current year.
 
 (iv) 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.
 
 (v) (a) According to the information and explanations given to us,
 there have been no contracts or arrangements referred to in Section 301
 of the Act during the year to be entered in the register required to be
 maintained under that Section. Accordingly, commenting on transactions
 made in pursuance of such contracts or arrangements does not arise.
 
 (b) As there are no contracts or arrangement referred to in section 301
 of the Act that need to be entered in the register to in section 301 of
 the Act during the year to be entered in the register required to be
 maintained under that section. Accordingly, commenting on transactions
 made in pursuance of such contracts or arrangements does not arise.
 
 (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) The Central Government of India has not prescribed the
 maintenance of cost records under clause (d) of sub-section (1) of
 Section 209 of the Act for any of the products of the Company.
 
 (ix) (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 except an amount of Rs
 7,116,392 towards value added tax which was outstanding for more than
 six months as at the year end and have been deposited subsequent to the
 year end.
 
 (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, 2009 which have not been deposited on
 account of a dispute, are as follows -
 
 Name of the           Nature of dues                  Amount      
 
 statute                                               (Rs.)      
 
                                                                  
 
 Tax on Entry of       Entry tax imposed on            106,059,645       
 Goods Act, 2000       purchase of capital goods
                       Entry tax imposed on             13,789,964       
                       purchase of diesel and cement    (1,255,028)
                       Entry tax imposed on                960,678      
                       purchase of diesel and cement      (686,502)
                       Entry tax imposed on              1,994,006       
                       purchase of diesel and cement             
 Central Excise Act,   Excise duty levied on the amount  2,255,310       
 1944 and Customs      of royalty charges for replicating (500,000)
 Act, 1962             CD-ROM.
                       Customs duty levied on import of  1,841,000       
                       aluminium sheets, toughened
                       glass, steel doors etc.
                       Additional Customs duty levied  420,627,008      
                       sales from Export Oriented Unit to              
                       Domestic Tariff Area
                       Export Duty demand on duty free   9,749,862      
                       Steel procured by MBIL SEZ from DTA       
 Service Tax           Service tax levied on services      824,004       
 (Finance Act,         provided by foreign supplier      
 1994) 
                                                         64,247,396    
                                                          5,440,786
                       Service Tax paid on Intellectual  63,316,764       
                       Property Rights being availed as    
                       cenvat credit
 Central Sales Tax     Central Sales Tax                 51,081,569       
 Act, 1956                                               (4,597,150)       
 
                                                                    
 
                                                         19,855,153       
 UP Trade Tax Act,     Local Sales Tax                    1,557,611     
 1948                                                                        
 
                                                          1,750,579       
 Income Tax Act,       Demands under section 201/201(1A) 62,731,147       
 1961                                                   (34,500,000)     
 
 
 
 Name of the          period to which relates      Forum to which 
                                                   dispute is pending         
 statute                                                  
                                                                 
 Tax on Entry of             1999-01            Supreme Court of India
 Goods Act, 2000       
                             2004-05            High Court, Lucknow
                             2003-04            Trade Tax Tribunal, Noida    
                             2005-06            Joint Commissioner,         
 Central Excise Act,         2001-02            Customs, Excise and
 1944 and Customs                               Service Tax Appellate
 Act, 1962                                      Tribunal
                            1999-00             Supreme Court of India
                            2006-07             Commissioner, Customs
                            2007-08             and Excise, Noida
                            2008-09             Specified Officer, SEZ
                                                Customs
 Service Tax                2000-02             Commissioner (Appeals),
 (Finance Act,                                  Customs & Central
 1994)                                          Excise, Noida
                            2000-02             Commissioner, Customs
                            2003-04             & Central Excise, Noida
                            1999-00             Deputy Commissioner,
                                                Customs & Central Excise,    
                            2005-06             Commissioner, Customs
                                                & Central Excise, Noida       
 Central Sales Tax          2003-04             Joint Commissioner,
 Act, 1956                  2004-05             (Appeals), Noida
                            2006-07
                            2005-06             Joint Commissioner, Noida
 UP Trade Tax Act,          2004-05             Joint Commissioner,
 1948                       2006-07             (Appeals), Noida
                            2005-06             Joint Commissioner, Noida
 Income Tax Act,       A.Y. 2004-05             Commissioner of Income
 1961                    to 2007-08             Tax (Appeals)
 
 Notes:
 
 1. The above details exclude Departmental Appeals to higher authorities
 as there is no stay on the order of lower authority favouring the
 Company and the amount is not ascertainable.
 
 2. The figures in brackets represent amount deposited under protests
 and demands shown against them are net of such deposits.
 
 (x) The Company has no accumulated losses as at March 31, 2009 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 or debenture
 holders 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) As the Company has not issued any debentures during the year and
 no debentures are outstanding as at the year end, clause (xix) of
 paragraph 4 of the Companies (Auditors Report) Order, 2003, as amended
 by the Companies (Auditors Report) (Amendment) Order, 2004 is not
 applicable to the Company for the current year.
 
 (xx) The management has disclosed the end use of money raised by public
 issues (Refer Note 17(b) of Schedule 22 Part- B) and the same 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, 2009 and taken on record by the Board of
 Directors, none of the directors is disqualified as on March 31, 2009
 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, 2009;
 
 (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.
 
                                                 Anuradha Tuli 
                                                       Partner
                                     Membership Number F-85611 
                                          For and on behalf of 
 Place: New Delhi.  
                                              Price Waterhouse
 Date: July 08, 2009                    Chartered Accountants