1.  We have audited the attached Balance Sheet of Munjal Showa 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:
 Munjal Showa 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 were physically verified by the management in the
 previous year in accordance with a planned 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. No material
 discrepancies were noticed on such verification.
 
 (c) There was no substantial disposal 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 clause 
 
 4(iii) (a) to (d) of the Companies (Auditors
 report) Order, 2003 (as amended) are not applicable to the Company and
 hence not commented upon.  
 
 (b) According to 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 clause 4
 
 (iii)(e) to (g) of the Order are not applicable to the Company and 
 hence not commented upon.  
 
 (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 and fixed assets and for the sale of goods. 
 The clause relating to sale of services is not applicable to the 
 Company. During the course of our audit, we have not observed any major 
 weakness or continuing failure to correct any major weakness in the 
 internal control system of the Company in respect of these areas. 
 
  (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 our opinion and according to the information and
 explanations given to us, the transactions made in pursuance of such
 contracts or arrangements exceeding value of Rupees five lakhs entered
 into during the financial year, 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, employees state insurance, income-tax,
 sales-tax, wealth-tax, service tax, customs duty, excise duty and other
 material statutory dues applicable to the Company have generally been
 regularly deposited with the appropriate authorities though there has
 been a slight delay in few cases.  Further, since the Central
 Government has till date not prescribed the amount of cess payable
 under Section 441A 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 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 the   Nature of    Amount   Period to which        Forum where
 statute          dues      (Rs.)    the amount relates     dispute is
                                                              pending
 
 Income Tax   Income Tax  39,203,700  F.Y. 2005-06         Income Tax
 Act, 1961      demand                                      Appellate
                                                            Tribunal
 
 Finance     Service Tax  12,364,172  April 2007 to          Custom,
                                                             Excise,
 Act, 1994   demand and               January 2009        Service Tax
             penalty                                        Appellate
                                                            Tribunal
 
             Service Tax   2,010,408  February 2009 to    Commissioner
                                                               of
             demand, 
             penalty                  Mar 2009              Central 
                                                             Excise
              and
             interest                                      (Appeals)
 
 (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 banks. The
 Company did not have any dues from any financial institution or any
 outstanding debentures during the year.  
 
 (xii) According to the information and explanations given to
 us and based on the documents and records produced to 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 respect of dealing/trading in shares, securities, debentures 
 and other investments, in our opinion and according to the information 
 and explanations given to us, proper records have been maintained
 of the transactions and contracts and timely entries have been made
 therein. These investments have been held by the Company, in its
 own name.  
 
 (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 year.
 
 
                                                 For S.R. BATLIBOI & CO.
                                           Firm Registration No. 301003E
                                                   Chartered Accountants
 
                                                       per Anil Gupta
 Place: Gurgaon                                               Partner
 Date: May 20, 2011                              Membership No.:87921