1.  We have audited the attached Balance Sheet of SKF India Limited
 (''the Company'') as at 31 December 2012, the Statement of Profit and
 Loss and the Cash Flow Statement of the Company for the year ended on
 that date, annexed thereto.  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 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 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:
 
 (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, Statement of Profit and Loss and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (d) in our opinion, the Balance Sheet, Statement of Profit and Loss and
 the 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;
 
 (e) on the basis of written representations received from the directors
 of the Company as at 31 December 2012 and taken on record by the Board
 of Directors, we report that none of the directors is disqualified as
 at 31 December 2012 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 thereon, give the information required by the Act, in the
 manner so required 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 31 December 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.
 
 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, this periodicity of
 physical verification is reasonable having regard to the size of the
 Company and the nature of its 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 off during the year were not substantial, and
 therefore, do not affect the going concern assumption.
 
 (ii) (a) The inventory, except goods-in-transit, has been physically
 verified by the management during the year.  In our opinion, the
 frequency of such verification is reasonable.
 
 (b) The procedures for the physical verification 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 not material and were properly dealt with in the
 books of accounts.
 
 (iii) The Company has neither 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
 certain items of inventories and fixed assets are for the Company''s
 specialised requirements and similarly certain goods sold and services
 rendered are for the specialised requirements of the buyers and
 suitable alternative sources are not available to obtain comparable
 quotations, there 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, there 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 section 301 of the Companies Act, 1956 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 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 and
 fixed assets which are for the Company''s 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
 alternative sources are not available to obtain comparable quotations.
 However, on the basis of information and explanations provided, the
 same appear reasonable.
 
 (vi) The Company has not accepted any deposits from the public.
 
 (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 pursuant to the rules prescribed by the Central Government for
 maintenance of cost records under section 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 maintained. However, we have not made a detailed examination of the
 records.
 
 (ix) (a) According to the information and explanations given to us and
 on the basis of our examination of the records of the Company, amounts
 deducted/accrued in the books of account in respect of undisputed
 statutory dues including Provident Fund, Employees'' State Insurance,
 Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise
 duty, Investor Education and Protection Fund and other material
 statutory dues have generally been regularly deposited during the year
 by the Company with the appropriate authorities.
 
 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, Wealth tax, Service tax,
 Customs duty, Excise duty, Investor Education and Protection Fund and
 other material statutory dues were in arrears as at 31 December 2012
 for a period of more than six months from the date they became payable.
 
 (b) According to the information and explanations given to us, the
 following dues of Income-tax, Sales tax, Wealth tax, Service tax,
 Customs duty and Excise duty (as appropriate) have not been deposited
 by the Company on account of disputes:
 
 Sr. 
 No.  Name of the Statute           Nature of the          Amount
                                    Dues                  (Rs. Million)
 
 1    Income Tax Act, 1961          Income Tax                  13.4
 
 2    Income Tax Act, 1961          Income Tax                  14.8
 
 Name of the Statute      Amount 
                          paid     Period to          Forum where
                          under 
                          protest  which the          dispute is pending
                         (Rs. 
                          Million) amount relates
 
 Income Tax Act,1961       13.4    AY 2005 – 2006, &  ITAT
                                   2007 – 2008
 
 Income Tax Act, 1961       7.6    AY 2002 – 03,      CIT (Appeals)
                                   2004 – 05 & 
                                   2008-2009
 
 Sr. 
 No.  Name of the Statute           Nature of the          Amount
                                    Dues                  (Rs. Million)
 
 3    Karnataka Value               Central                    8.0 
      Added Ta x Act – CST          Sales Tax
     (The Central Sales Tax 
      Act, 1956 – Karnataka)
 
 4    The Central Sales             Central                    0.3 
      Tax Act, 1956 –               Sales Tax
      Karnataka
 
 5    Maharashtra Sales             Sales Tax                  1.7 
      Tax Act, 1958
 
 6    The Central Sales             Central                   14.4
      Tax Act, 1956 –               Sales Tax
      Delhi
 
 7    West Bengal Value             Value Added               95.8 
      Added Tax 2003 &              Tax &
      The Central Sales             Central Sales
      Tax Act, 1956                 Tax Act
 
 8    Central Excise Act,           Excise Duty              147.0 
      1944
 
 9    Central Excise Act,           Excise Duty              155.0
      1944
 
 10   Central Excise Act,           Excise Duty                1.6 
      1944
 
 11   Central Excise Act,           Excise Duty                2.7 
      1944
 
 12   Finance Act, 1994             Excise Duty                1.0
 
 13   Finance Act, 1994             Service Tax                2.6
 
 14   Finance Act, 1994             Service Tax                0.7
 
 15   Finance Act, 1994             Service Tax              107.8
 
 16   Finance Act, 1994             Service Tax                7.1
 
 Name of the Statute      Amount 
                          paid     Period to          Forum where
                          under 
                          protest  which the          dispute is pending
                         (Rs. 
                          Million) amount relates
 
 Karnataka Value Added
 Tax Act                      8.0   F.Y 2005 – 06,    Joint Commissioner
                                    F.Y 2006 – 07 
                                    F.Y 2007 – 08 
                                    F.Y 2008 – 09
                                    F.Y 2009 - 10
 
 The Central Sales Tax
 Act, 1956                    0.3   FY 2003-2004      Assessing Authority
 
 Maharashtra Sales
 Tax Act, 1958                0.6   FY 2002 – 2003    Maharashtra Sales
                                                      Tax Tribunal
 
 The Central Sales
 Ta Act, 1956                   -    FY 2005 - 06     Objection authority
                                     FY 2006 – 07     Department of
                                     FY 2007 - 08     Trade & taxes
 
 West Bengal Value
 Added Tax 2003               2.6    FY 2006 - 07     Senior Joint
                                     FY 2007 – 08     Commissioner,
                                     FY 2008 – 09     Sales Tax
                                     FY 2009 - 10
 
 Central Excise Act, 1944    20.0    FY 1994-95,      CESTAT, Mumbai
                                     FY 2006 -07 to 
                                     January 2011, 
                                     January 2009 to 
                                     December 2009, 
                                     February 2005,
                                     February 2011 to 
                                     March 2011.
 
 Central Excise Act, 1944       -    January 2007-    Appeal to be filed
                                     March 2011       with CESTAT
                                                      Bangalore
 
 Central Excise Act, 1944       -    1997-98 &        Commissioner
                                     1998 - 99        Appeals Bangalore
 
 Central Excise Act, 1944       -    1999-2000        CESTAT, Bangalore
 
 Finance Act, 1994              -    2007 – 2009      Appeal to be filed
                                                      with CESTAT Mumbai
 
 Finance Act, 1994            1.3    1997-2000        CESTAT, Mumbai
 
 Finance Act, 1994            0.3    2002 – 2005      Commissioner
                                                      Appeals, Mumbai
 
 Finance Act, 1994              -    April 2006 to    CESTAT, Mumbai 
                                     May 2008
 
 Finance Act, 1994              -    January 2009 to  Commissioner 
                                     March 2011       Appeals, Pune
 
 (x) The Company does not 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 not granted any loans or advances on the basis of
 security by way of pledge of shares, debentures 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 short-term basis have not been
 used for long-term investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 to companies/firms/other parties 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 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 Registration No.-116231W
 
                                                        Shiraz Vastani 
 
 Pune                                                          Partner
 
 21 February 2013                                Membership No: 103334