1.  We have audited the attached Balance Sheet of SKF India Limied
 (the Company) as a 31 December 2010, the Profit and Loss Account and
 the Cash Row Statement of the Company for the year ended on that date,
 annexed hereto.  These financial statements are the responsibiliy 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 staements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporing the amouns and
 disclosures in the financial saemens.  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 (Audiors Repor) Order 2003 issued by
 the Central Government of India in terms of sub-secion (4A) of section
 227 of the Companies Ac, 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:
 
 (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 the Cash Flow
 Statement deal with by this report are in agreement with the books of
 account;
 
 (d) in our opinion, the Balance Sheet, Profit and Loss Account and the
 Cash Flow Statement deal with by his report comply wih the accounting
 standards referred to in sub-secion (3C) of section 211 of the
 Companies Act, 1956;
 
 (e) on the basis of written representations received from the Directors
 of the Company as a 31 December 2010 and taken on record by the Board
 of Directors, we report that none of the Directors are disqualified as
 at 31 December 2010 from being appointed as a Director under clause (g)
 of sub-section (1) of section 274 of the Companies Act 1956; and
 
 (f) in our opinion, and to the best of our information and according to
 the explanations given to us, the said financial statements, read with
 the notes hereon, give the information required by the Act, in the
 manner so required and give a true and fair view in conformiy wih the
 accounting principles generally acceped in India:
 
 (i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31 December 2010;
 
 (ii) in the case of the Profit and Loss Account, 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.
 
 Annexure to the Auditors Report (Referred to in our report of even date)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The Company has a regular programme of physical verification of its
 fixed assets by which all fixed assets are verified in a phased manner
 over a period of three years. In our opinion, his periodicity of
 physical verification is reasonable having regard to the size of the
 Company and the naure of is assets.  The discrepancies noticed on
 verification between the physical fixed assets and the book records
 were not material and were properly dealt in the books of account.
 
 (c) Fixed assets disposed of during the year were not substantial, and
 herefore, do not affect the going concern assumption.
 
 (ii) (a) The invenory, excep goods-in-ransi, has been physically
 verified by the  managemen during the  year. In our opinion, the  frequency
 of such verification is reasonable.
 
 (b) The procedures for the physical verifictaion of inventories
 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. The
 discrepancies noticed on verification between the physical stocks and
 the book records were no material and were properly dealt with in the
 books of accounts.
 
 (iii) The Company has neiher granted nor taken any loans, secured or
 unsecured, to or from companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956.
 
 (iv) In our opinion and according to the information and explanations
 given to us, and having regard to the explanation that purchases of
 cerain items of inventories and fixed assets are for the Companys
 specialised requirements and similarly certain goods sold and services
 rendered are for the specialised requirements of the buyers and
 suitable alternative sources are no available to obtain comparable
 quotation, here is an adequate internal control system commensurate
 with the size of the Company and the nature of its business with regard
 to purchase of inventories and fixed assets and with regard to the sale
 of goods and services. In our opinion and according to the information
 and explanations given to us, here is no continuing failure to correct
 major weaknesses in 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 secion 301 of the Companies Act, 1956 have been entered
 in the register required to be mainained under that section.
 
 (b) In our opinion, and according to the information and explanations
 given to us, the transactions made in pursuance of contracts and
 arrangements referred to in (a) above and exceeding the value of Rs 5
 lakh with any party during the year have been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time, except for purchases of certain items of inventories,
 fixed assets and services which are for the Companys specialised
 requirements and similarly for sale of certain goods and rendering of
 services which are for the specialised requirements of the buyers and
 for which suitable alernative sources are not available to obtain
 comparable quotations. However on the basis of information and
 explanations provided, the same appear reasonable.
 
 (vi) In our opinion, and according to the information and explanations
 given to us, the Company has complied wih the provisions of Section
 58A, Section 58AA or other
 
 relevant provisions of the Companies Act, 1956 and the rules framed
 here under/the directives issued by the Reserve Bank of India (as
 applicable) with regard to deposits accepted from the public.
 Accordingly, here have been no proceedings before the Company Law Board
 or National Company Law Tribunal (as applicable) or Reserve Bank of
 India or any Court or any other Tribunal in his matter and no order has
 been passed by any of the aforesaid authorities.
 
 (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 prescribed by the Central Government for
 maintenance of cost records under secion 209(1) (d) of the Companies
 Act, 1956 in respect of manufacture of bearings, and are of the opinion
 that prima facie, the prescribed accounts and records have been made
 and mainained. However, we have no made a detailed examination of the
 records.
 
 (ix) (a) According to the information and explanations given to us and
 on the basis of our examinaion of the records of the Company, amounts
 deduced / accrued in the books of account in respect of undisputed
 stautory dues including Provident Fund, Employees State Insurance,
 Income tax, Sales tax, Wealh tax, Service tax, Cusoms duty, Excise
 duty, Cess and other material stautory dues have generally been
 regularly deposited during the year by the Company wih the appropriate
 authorities. As explained to us, the Company did no have any dues on
 account of Investor Education and Protection Fund.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Employees
 State Insurance, Income tax, Sales tax, Wealh tax, Service tax, Customs
 duty, Excise duty, Cess and other material satutory dues were in
 arrears as a 31 December 2010 for a period of more than six months from
 the date they became payable.
 
 There were no dues on account of cess under secion 441A of the
 Companies Act, 1956 since the date from which the aforesaid section
 comes into force has not yet been notified by the Central Government.
 
 (b) According to the information and explanations given to us, the
 following dues of Incometax/Sales tax/ Wealth tax/Service tax/Customs
 duty/Excise duty/ Cess (as appropriate) have no been deposied by the
 Company on account of disputes:
 
 Name of the Statute   Nature of the   Amount   Period to  Forum where 
                       Dues            (Rs. 
                                      Million)  which the  is pending 
                                                amount 
                                                relates 
 
 Income Tax Act,1961  Income Tax         5.1   AY 2006-2007  CIT(A)
 
 Income Tax Act, 1961 Income Tax         9.3   AY 2007-2008  CIT(A)
 
 Tamil Nadu Value 
 Added Tax Act        Value Added Tax    1.2    2005 - 2006  Commercial 
                                                             tax officer
 
 Maharashtra Sales 
 Tax Act, 1958        Sales Tax          1.1    2002 - 2003  Maharashtra
                                                             Sales Tax
                                                             Tribunal
 
 Delhi Sales Tax Act  Sales Tax          1.3      2005-2006  Objection 
                                                             Authority
                                                             Deparment
                                                             of Trade 
                                                             & Taxes,
                                                             New Delhi
 
 West Bengal 
 Sales Tax Act        Sales Tax          2.4     2006-2007   Commissi
                                                             oner
                                                             (Appeals)
 
 Karnataka Sales 
 Tax                  Sales Tax          0.3*    2003-2004   Karnataka 
                                                             Appellate
                                                             Tribunal
 
 Karnataka Value 
 Added Tax           Central Sales Tax   1.2*    2005-2006   Commissi
                                                             oner
                                                             Appeals
 
 Karnataka Sales 
 Tax                 Sales Tax           2.7*    2006-2007   Commissi
                                                             oner 
                                                             Appeals
 
 Karnataka Sales 
 Tax                 Sales Tax           1.3*    2008-2009   Commissi
                                                             oner 
                                                             Appeals
 
 Karnataka Value 
 Added Tax           VAT                 1.4*    2006-2007   Joint 
                                                             Commissi
                                                             oner of
                                                             Commercial 
                                                             Taxes 
                                                             (Appeals)
 
 Central Excise 
 Act, 1944           Excise Duty          2.6   1999-2000    CESTAT
 
 Central Excise 
 Act, 1944           Excise Duty          1.6   1997-1998    CESTAT
 
 Central Excise 
 Act, 1944           Excise Duty         4.9*        1995    CESTAT
 
 Finance Act, 
 1994                Service tax         1.3    1997-2000    CESTAT
 
 Finance Act, 
 1994                Service Tax        14.3    2006-2008    CESTAT
 
 Finance Act, 
 1994                Service Tax         0.1    2008-2009    CESTAT
 
 Finance Act, 
 1994                Service Tax         0.7    2005-2006    Commissi
                                                             oner 
                                                             Appeals
 
 * Amount paid under protest
 
 (x) The Company does nto have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the financial year
 and in the immediately preceding financial year.
 
 (xi) The Company did not have any outstanding dues to any financial
 institution, banks or debenture holders during the year.
 
 (xii) The Company has no granted any loans and advances on the basis of
 security by way of pledge of shares, debenures and other securities.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund or a nidhi/ mutual benefit
 fund/ society.
 
 (xiv) According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 (xv) 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.
 
 (xvi) The Company did not have any term loans outstanding during the
 year.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of
 
 the Company, we are of the opinion that the funds raised on shorterm
 basis have no been used for longterm investment.
 
 (xviii) The Company has no made any preferential allotment of shares to
 companies/firms/parties coverted 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 by public issues.
 
 (xxi) According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
                                                 For B S R & Associates
                                                  Chartered Accountants 
                                                 Firm Regn. No.-116231W
 
                                                       Bhavesh Dhupelia
                                                                 Parner 
                                                 Membership No.: 042070
 
 Pune
 February 23, 201