We have audited the attached Balance Sheet of SONA KOYO STEERING
 SYSTEMS LIMITED (the Company) as at 31st March 2012, the statement of
 profit and loss and the Cash Flow Statement 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.
 
 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.
 
 1.  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, we
 enclose in the annexure a statement on the matters specified in
 Paragraphs 4 and 5 of the said Order.
 
 2.  Further to our comments in the Annexure referred to in paragraph 1
 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 purpose 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, statement of profit and loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 iv. 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 Companies Act, 1956;
 
 v. Based on confirmations received from other public Companies in which
 directors of the Company are directors and/or written representations
 made by the directors of the Company as on 31st March, 2012 and taken
 on record by the Board of Directors, we report that none of the
 directors of the Company is disqualified as on 31st March, 2012 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 31st March, 2012;
 
 b) in the case of the statement of profit and loss, 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.
 
 
 The Annexure referred to in paragraph 1 of the Auditors'' Report of even
 date to the members of Sona Koyo Steering Systems Limited for the year
 ended 31st March, 2012.
 
 On the basis of such checks as we considered appropriate, we further
 report that :
 
 i. (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All the fixed assets of the Company have not been physically
 verified by the management during the year but there is a regular
 phased programme of physical verification which, in our opinion, is
 reasonable having regard to the size of the Company and nature of its
 fixed assets. No material discrepancies were noticed on such
 verification.
 
 (c) In our opinion, and according to the information and explanations
 given to us, fixed assets disposals during the year were not
 substantial and therefore do not affect the going concern assumption.
 
 ii. (a) Physical verification of inventory, except stocks lying with
 third parties and stock-in-transit has been conducted 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 such verification is reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the management were found reasonable and adequate in
 relation to the size of the Company and the nature of its business.
 
 (c) On the basis of examination of records of the inventory, we are of
 the opinion that the Company is maintaining proper records of
 inventory. The discrepancies noticed on verification between the
 physical stocks and book records, which in our opinion were not
 material, have been properly dealt with in the books of account.
 
 iii. According to the information and explanations given to us and on
 the basis of our examination of the books of account, the Company has
 neither granted or taken any loans, secured or unsecured, to or from
 companies, firms or other parties listed in the register maintained
 under Section 301 of the Companies Act, 1956.  Accordingly, the
 paragraphs 4 iii(b), 4 iii(c), 4 iii(d), 4 iii(e), 4 iii(f) and 4
 iii(g) of the Order are not applicable to the Company.
 
 iv. In our opinion and according to the information and explanations
 given to us, and having regard to the explanation that some of the
 inventory items purchased are for the Company''s specialized
 requirements and similarly goods sold are for the specialized
 requirements of the buyers and suitable alternative sources are not
 available to obtain comparable quotations, there are adequate internal 
 control procedures commensurate with the size of the Company and the 
 nature of its business for the purchase of inventory, fixed assets and 
 for sale of goods and services. During the course of our audit, no major 
 weaknesses have been noticed in the internal controls.
 
 v. Based on the audit procedures applied by us and according to the
 information and explanations given to us, the Company has not entered
 into any transactions during the year that needs to be entered into the
 Register maintained under Section 301 of the Companies Act, 1956.
 
 vi. The Company has not accepted any deposits from the public covered
 under Section 58A, 58AA or any other relevant provisions of the
 Companies Act, 1956.
 
 vii. The Company has an adequate internal audit system, which in our
 opinion, is commensurate with the size of the Company and the nature of
 its business.
 
 viii. We have broadly reviewed the books of account maintained by the
 Company in respect of manufacture of Company''s automotive products
 pursuant to the Companies (Cost Accounting Records) Rules, 2011
 prescribed by the Central Government under Section 209(l)(d) of the
 Companies Act, 1956 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.
 
 ix. (a) According to the information and explanations given to us and
 on the basis of our examination of the books of account, the Company
 has been generally regular in depositing undisputed statutory dues
 including Provident Fund, Investor Education and Protection Fund,
 Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service
 Tax, Custom Duty, Excise Duty, Cess and other material statutory dues
 applicable to it.
 
 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,
 Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess
 were outstanding, as at 31st March, 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, and on
 the basis of our examination of the books of account, there are no dues
 of in Income Tax, Sales Tax, Customs Duty, Wealth Tax and Cess which
 have not been deposited on account of any dispute. According to the
 information and explanations given to us, the following dues of Service
 Tax and Excise Duty have not been deposited by the Company on account
 of disputes:
 
 Name of the           Nature of dues          Amount 
                       Statute                (Rs. / Lacs)* 
 
 Central Excise        Wrong availment               2.85 
 Act, 1944             of cenvat credit &
                       penalty
 
 Central Excise        Wrong availment             572.67 
 Act, 1944             of Cenvat Credit &
                       Penalty
 
 The Finance           Wrong availment               86.1 
 Act, 1994             of Cenvat Credit 
 (Service Tax)         & Penalty
 
 The Finance           Wrong availment               4.08 
 Act, 1994             of Cenvat Credit 
 (Service Tax)         & Penalty
 
 The Finance           Wrong availment              17.71 
 Act, 1994             of Cenvat Credit 
 (Service Tax)         & Penalty
 
 The Finance           Wrong availment              48.73 
 Act, 1994             of Cenvat Credit 
 (Service Tax)         & Penalty
 
 The Finance           Wrong availment               9.87 
 Act, 1994             of Cenvat Credit 
 (Service Tax)         & Penalty
 
 
 
 
 Name of the           Period to              Forum where
                       which amount           dispute is
                       relates                pending
 
 Central Excise        2007-2008 &            Commissioner of 
 Act, 1944             2008-2009              Appeals (Central 
                                              Excise & Service 
                                              Tax)
 
 Central Excise        2006-2007 to           CESTAT 
 Act, 1944             2008-2009 
 
 The Finance           2007-2008              Commissioner of
 Act, 1994             2008-2009              Appeals (Central 
 (Service Tax)                                Excise & Service Tax)
 
 The Finance           2009-2010              Commissioner of 
 Act, 1994                                    Appeals (Central
 (Service Tax)                                Excise & Service Tax)
 
 The Finance           2010-2011              Commissioner of
 Act, 1994                                    Appeals (Central
 (Service Tax)                                Excise & Service Tax)
 
 The Finance           2005-2006 to           Commissioner of
 Act, 1994             2009-2010              Appeals (Central
 (Service Tax)                                Excise & Service Tax)
 
 The Finance           2008-2009 to           Commissioner of
 Act, 1994             2009-2010              Appeals (Central 
 (Service Tax)                                Excise & Service Tax)
 
 * includes penalty wherever indicated in the order
 
 x. The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the current
 financial year and in the immediately preceding financial year.
 
 xi. Based on our audit procedures and on the information and
 explanations given to us, the Company has not defaulted in repayment of
 dues to its bankers or to any financial institutions. The Company did
 not have any outstanding debentures during the year.
 
 xii. According to the information and explanations given 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. The Company is not a chit fund or a nidhi/ mutual benefit
 fund/society. Therefore, the provision of this clause of the Companies
 (Auditor''s Report) Order, 2003 is not applicable to the Company.
 
 xiv. According to 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 any loan taken by others from a
 bank or financial institution.
 
 xvi. Based on our audit procedures and on the information and
 explanations given by the management, the term loans have been applied
 for the purpose for which they were raised.
 
 xvii. Based on the information and explanations given to us and on an
 overall examination of the Balance Sheet of the Company as at 31st
 March, 2012, we are of the opinion that no funds raised on short term
 basis have been used for long term investment by the Company.
 
 xviii. The Company has not made any preferential allotment of shares
 during the year.
 
 xix. The Company has no outstanding debentures during the year.
 
 xx. The Company has not raised any money by public issue during the
 year.
 
 xxi. Based on the audit procedures performed and 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.P. Puri & Co.,
 
                                             Chartered Accountants
 
                                    Firm Registration No. 001152 N
 
 
                                             (Rajiv Puri - Partner) 
 
                                             Membership No. 084318
 
 Place : Gurgaon 
 
 Dated: 1st May, 2012