1. We have audited the attached Balance Sheet of Rane Brake Lining
 Limited (the Company) as at March 31, 2012, and the related Statement
 of Profit and Loss 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 give in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the Order.
 
 4. Long term foreign currency monetary liability aggregating 10,951,645
 USD is being stated at Rs. 512,027,070 at previously reported exchange
 rates as per the related currency swap agreements instead of being
 reinstated at the exchange rates prevailing at the year end as required
 by Accounting Standard (AS) 11 The Effects of Changes in Foreign
 Exchange Rates resulting in non recognition of exchange differences
 arising there from in the Statement of profit and loss. Had the
 aforesaid foreign currency monetary liability been reinstated as at the
 rates prevailing on March 31,2012, the reported Profit for the year
 would have been lower by Rs.46,287,793, Reserves and Surplus would have
 been lower by Rs.46,287,793 and the reported Earnings per share for the
 year ended March 31,2012 (including and excluding extraordinary items)
 would have been lower by Rs.5.85 per share and Term Loan (including
 repayable within one year under Other Current Liabilities) as at March
 31, 2012 would have been higher by Rs.  46,287,793.
 
 5. 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, except for the effect of the matter referred in
 paragraph 4 above 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, Statement of Profit and Loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (d) Except for the effect of the matter referred in paragraph 4 above,
 in our opinion, the Balance Sheet, Statement of Profit and Loss 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, 2012 and taken on record by the Board of
 Directors, none of the directors is disqualified as on March 31, 2012
 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, except for the effect of
 the matter referred in paragraph 4 above, 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, 2012;
 
 (ii) in the case of the Statement of Profit and Loss, 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.
 
 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 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.
 
 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 granted interest free unsecured loans, to one
 party covered in the register maintained under Section 301 of the Act.
 The maximum amount involved during the year and the year-end balance of
 such loans aggregated to Rs.7, 500,000 and Rs.7, 500,000, respectively.
 
 (b) In our opinion, the terms and conditions of such loans are not
 prima facie prejudicial to the interest of the Company.
 
 (c) No amount is due for repayment in respect of the above loan as at
 the balance sheet date.
 
 (d) In respect of the aforesaid loans, there is no overdue amount more
 than Rupees One Lakh.
 
 (e) 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, 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.
 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, no major weakness have been noticed or reported.
 
 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, in respect of the transactions made in pursuance to
 contracts and arrangements that exceeds in the value of Rupees Five
 Lakhs in respect of certain parties during the year, no comparable
 market prices are available as the related goods/ services are
 proprietary in nature.
 
 6. In our opinion, and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 58A and 58AA or any other relevant provisions of the Act and the
 Companies (Acceptance of Deposits) Rules, 1975, with regard to the
 deposits accepted from the public.  According to the information and
 explanations given to us, no order has been passed by the Company Law
 Board or National Company Law Tribunal or Reserve Bank of India or any
 Court or any other Tribunal on the Company in respect of the aforesaid
 deposits.
 
 7. In our opinion, the Company has an internal audit system
 commensurate with its size and the 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 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, wealth tax, service tax, customs duty and excise
 duty as at March 31, 2012, which have not been deposited on account of
 a dispute, are as follows:
 
 Name of      Nature of dues    Amount Period to which     Forum where
 the statute
                                (Rs.)  the amount relates  dispute is
                                                           pending
 Finance 
 Act, 1994    Service Tax 
              (including     24,09,774  August 2002 to     Customs,   
                                                           Excise and
 
              interest and
               penalty)                 March 2004         Service Tax 
                                                           Appellate
 
                                                           Tribunal, 
                                                           Chennai
 
 Finance Act, 
 1994         Service Tax 
              (including      16,69,756 September 2004 to  Customs, 
                                                           Excise And 
              interest 
              and penalty)              September 2006     Service Tax
                                                           Appellate
 
                                                           Tribunal, 
                                                           Chennai
 
 Finance Act, 
 1994         Service Tax 
              (including      74,10,847 May 2008 to        Commissioner 
                                                           of Central
 
              interest and 
              penalty)                  September 2008     Excise 
                                                           (Appeals),
 
                                                           Chennai
 
 Uttar 
 Pradesh 
 Trade        Sales Tax          91,875 April 2007 to      Joint 
                                                           Commissioner
 
 Tax Act,1948                           June 2007           (Appeal),
                                                             Kanpur
 
 Central 
 Sales Tax    Sales Tax        2,84,999 April 2004 to      Sales Tax 
                                                           Appellate
 
 Act, 1956                              March 2005         Tribunal, 
                                                           Hyderabad
 Central 
 Sales Tax    Sales Tax        7,63,347 April 2005 to      The Appellate 
                                                           Deputy
 
 Act, 1956                              March 2006         Commissioner 
                                                            of
 
                                                           Commercial 
                                                           Taxes,
 
                                                           Hyderabad
 
 Andhra 
 Pradesh      Sales Tax        4,41,711 April 2006 to      The Appellate 
                                                           Deputy
 
 Value Added 
 Tax                                    March 2010         Commissioner
                                                           of
 
 Act, 2005                                                 Commercial 
                                                           Taxes,
 
                                                           Hyderabad
 
 Central 
 Excise      Excise Duty       1,52,816 April 2003 to      Commissioner 
                                                           of  Central
 
 Act,1944                               March 2004         Excise 
                                                           (Appeals),
 
                                                           Chennai
 
 Central 
 Excise      Excise Duty 
             (including       61,75,344 April 2001 to      Customs,
                                                           Excise And
 
 Act, 1944   interest 
             and penalty)               March 2005         Service Tax 
                                                           Appellate
 
                                                           Tribunal,
                                                           Chennai
 
 Income Tax
 Act, 1961   Income Tax       95,94,808 April 1998 to      Commissioner 
 
                                        March 1999         of Income Tax 
                                                           (Appeals),
                                                           Chennai
 
 Income Tax 
 Act, 1961   Income Tax       45,58,320 April 2000 to      Commissioner 
 
                                        March 2001         of Income Tax 
                                                           (Appeals),
 
                                                           Chennai
 
 Income Tax 
 Act, 1961   Income Tax       25,42,902 April 2001 to      Commissioner 
 
                                        March 2002         of Income Tax 
                                                           (Appeals),
 
 
                                                            Chennai
 
 Income Tax
 Act, 1961   Income Tax        1,74,517 April 2003 to       High Court of
 
                                        March 2004          Judicature,
                                                            Madras
 
 Income Tax 
 Act, 1961   Income Tax     9,32,61,694 April 2004 to       Commissioner
                                                            of
 
                                        March 2005          Income Tax 
                                                            (Appeals),
 
                                                             Chennai
 
 Income Tax 
 Act, 1961   Income Tax       16,66,627 April 2005 to       Commissioner 
 
                                        March 2006          of Income Tax 
                                                            (Appeals),
 
                                                            Chennai
 
 Income Tax 
 Act, 1961   Income Tax       39,73,384 April 2006 to       Commissioner 
 
                                        March 2007          of Income Tax
                                                            (Appeals),
 
                                                            Chennai
 
 Income Tax 
 Act, 1961   Income Tax     1,30,33,140 April 2007 to       Commissioner
                                                            of
 
                                        March 2008          Income Tax 
                                                            (Appeals),
 
                                                            Chennai
 
 10. The Company has no accumulated losses.
 
 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. In our opinion, and according to the information and explanations
 given to us, the term loans have been applied, on an overall basis, for
 the purposes for which they were obtained having regard to the
 explanation that certain loan funds were temporarily placed in short
 term fixed deposits pending utilisation for the stated purpose.
 
 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 during the year; and does
 not have any debentures outstanding as at the year end.
 
 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 any such case by the Management.
 
                                  For Price Waterhouse & Co.
 
                                  Firm Registration Number: 007567S 
 
                                  Chartered Accountants
 
                                  Subramanian Vivek
 
 Place: Chennai                   Partner
 
 Date : May 23, 2012              Membership Number : 100332