We have audited the attached balance sheet of Sundaram-Clayton Limited,
 Chennai - 600 006 as at 31st March 2012 and the statement of profit and
 loss for the year ended on that date annexed thereto and the Cash Flow
 Statement for the year ended on that date. 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.
 
 1.  We have conducted our audit in accordance with auditing standards
 generally accepted in India. These standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free from any 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 presentation of the
 financial statements. We believe that our audit provides a reasonable
 basis for our opinion.
 
 2.  As required by the Companies (Auditor''s Report) Order, 2003 and
 amended by the Companies (Auditor''s report) (Amendment) Order, 2004
 issued by the Central Government 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.
 
 3.  Further to our comments in the Annexure referred to above, we state
 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 such
 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 accounts.
 
 (iv) 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.
 
 (v) on the basis of written representations received from 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 is disqualified from
 being appointed as a director in terms of Clause (g) of sub-section (1)
 of Section 274 of the Companies Act, 1956 on the said date.
 
 (vi) in our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with the
 notes thereon 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 so far as it relates to the Balance Sheet, of the state of
 affairs of the Company as at 31st March 2012;
 
 b.  in so far as it relates to the Statement of Profit and Loss of the
 profit of the Company for the year ended on that date; and
 
 c.  in so far as it relates to the Cash Flow Statement, of the cash
 flows for the year ended on that date.
 
 (i) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) Fixed assets are physically verified by the management at
 reasonable intervals as per the Company''s policy. In terms of this
 policy, the Company has carried out the verification last during the
 year 2010-2011. The next verification of assets is planned to be
 undertaken shortly. In our opinion, the interval is reasonable having
 regard to the size of the Company and the nature of its assets.
 
 (c) The assets disposed off during the year are not substantial and
 therefore do not affect the going concern status of the Company.
 Further the investments transferred on demerger also do not affect the
 going concern status of the Company.
 
 (ii) (a) The inventory other than overseas inventory has been
 physically verified at reasonable intervals during the year by the
 management. In our opinion, the frequency of such verification is
 adequate. In respect of inventory with third parties, which have not
 been physically verified, there is a process of obtaining confirmation
 from such parties.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures for physical verification of inventory
 followed by the management were reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 (c) In our opinion, the Company has maintained proper records of
 inventory. The discrepancies between the physical stocks and the books
 were not material and have been properly dealt with in the books of
 account.
 
 (iii) (a) During the year the Company has granted loan of Rs.1485 lakhs
 to one of its subsidiaries covered in the register maintained under
 section 301 of the Companies Act, 1956 (through its erstwhile wholly
 owned subsidiary company viz.  Anusha Investments Limited, Chennai).
 Balance due as at the year end is Rs.1485 lakhs along with interest
 accrued thereon amounting to Rs.1.92 lakhs.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 on which such loans and advances are made are not prima facie
 prejudicial to the interest of the Company.
 
 (c) The loan amount of Rs.1485 lakhs along with the interest thereon
 was recovered by the Company on 3rd April, 2012.
 
 (d) As on the date of Balance Sheet, there was no overdue amount
 recoverable on the said loans and advances.
 
 (e) During the year, the Company has not availed any loan, secured or
 unsecured, 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, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of inventory, fixed assets and for the
 sale of goods and services. During the course of our audit, no minor or
 major continuing failure has been noticed in the internal control
 system.
 
 (v) (a) Based on the audit procedures applied by us and according to
 the information and explanations provided by the management, we are of
 the opinion that the contracts or arrangements that need to be entered
 in the register maintained under Section 301 of the Companies Act, 1956
 have been properly entered in the said register.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions entered in the register maintained under
 Section 301 of the Companies Act, 1956 and exceeding the value by
 rupees five lakhs in respect of each party during the year, have been
 made at prices which are reasonable having regard to the prevailing
 market prices at the relevant time.
 
 (vi) The Company has not accepted any deposit from the public.
 
 (vii) The Company has an Internal Audit System which, in our opinion,
 is 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 under
 Section 209 (1)(d) of the Companies Act, 1956 for maintenance of cost
 records and are of the opinion that, prima facie, the prescribed
 accounts and records have been made and maintained.
 
 (ix) (a) According to the records provided to us, the Company is
 regular in depositing undisputed statutory dues including Provident
 Fund, Employees'' State Insurance, Investors Education and Protection
 Fund, Income tax, Sales tax, Wealth tax, Customs duty, Excise duty,
 Service tax and Cess and other statutory dues with the appropriate
 authorities.  However, delays have been noticed in respect of payments
 of service tax (three instances) and tax deducted at source (one
 instance). The die casting divisions at Belagondapalli near Hosur and
 Mahindra World City, Kancheepuram are not covered under the Employees''
 State Insurance Act, 1948.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales
 Tax, Customs Duty, Excise Duty, Service tax and Cess were in arrears,
 as at 31st March 2012 for a period of more than six months from the
 date they became payable.
 
 (c) According to the information and explanations given to us, the
 following are the details of the disputed dues, that were not deposited
 with the authorities concerned.
 
 Name of the       Nature of           Amount         Forum where
 statute           dues               (Rs. in lakhs)  dispute is pending
 
 Income Tax Act,   Income Tax         (a)   50.30     The Hon''ble High 
 1961                                                 Court of Judicature
                                                      at Madras
 
                                      (b)    7.18     Commissioner of
                                                      Income Tax 
                                                     (Appeals), Chennai
 Total                                      57.48
 
 Wealth Tax Act,   Wealth tax               14.61     Commissioner of
 1957                                                 Income tax 
                                                     (Appeals), Chennai
 
 Central Excise 
 Act,              Interest on
 1944              Excise duty        (a)    5.97     The Hon''ble High
                                                      Court of Judicature
                                                      at Madras
 
                   Excise duty        (b)  831.96     Commissioner of 
                                                      Central Excise,
                                                      Chennai
 
 Total                                     837.93
 
 Finance 
 Act, 1994         Service tax        (a)   52.54     Central Excise and
                                                      Service Tax
                                                      Appellate Tribunal,
                                                      Chennai
 
                                      (b)   45.50     Commissioner
                                                     (Appeals),Chennai
 
                                      (c)  144.20     Commissioner of
                                                      Service tax,
                                                      Chennai
 
                                      (d)   66.57     Additional
                                                      Commissioner of 
                                                      Service tax, 
                                                      Chennai
 
                                      (e)   19.61     Joint Commissioner
                                                      of Service tax, 
                                                      Chennai
 
                                      (f)    3.13     Asst. Commissioner
                                                      of Service tax,
                                                      Chennai
 
                                      (g)  155.83     Commissioner of
                                                      Central Excise,
                                                      Chennai
 
 Total                                     487.38
 
 Tamilnadu Town    Fee payable              69.42     The Hon''ble High
 and Country       to CMDA /                          Court of Judicature
 Planning Act, 
 1971              Municipal                          at Madras
                   Authorities
 
 (x) The Company neither has accumulated losses as at the end of the
 financial year nor has incurred cash losses during the financial year
 and in the immediately preceding year.
 
 (xi) Based on our verification and according to the information and
 explanations given by the management, the Company has not defaulted in
 repayment of dues to its banks.
 
 (xii) Based on our examination and 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 / nidhi / mutual benefit fund /
 society and as such this clause of the Order is not applicable.
 
 (xiv) The Company is not dealing or trading in shares, securities,
 debentures and other investments other than in mutual fund investments.
 Proper records have been maintained in respect of these transactions
 and contracts and timely entries have been made therein. The
 investments are held by the Company in its own name, other than those
 acquired on amalgamation, which are pending transfer in Company''s name.
 
 (xv) In our opinion, the terms and conditions of guarantees granted by
 the Company for loans taken by others are not prejudicial to the
 interests of the Company.
 
 (xvi) The term loans availed by the Company were applied for the
 purpose for which the loans were obtained.
 
 (xvii) On the basis of our examination, the Company has not used funds
 raised on short term basis for long term investments.
 
 (xviii) During the year the Company has not allotted any shares on
 preferential basis to parties and companies covered in the register
 maintained under Section 301 of the Companies Act, 1956.
 
 (xix) During the year, the Company has not issued any secured
 debentures.
 
 (xx) During the year the Company has not raised any money through
 public issue.
 
 (xxi) The Company has received an intimation from a Chennai based Bank
 that a person has drawn fraudulently Rs.190 lakhs from the Bank under
 bill discounting facilities towards forged invoices for canteen
 supplies to the Company. The fact that the Company has no relation with
 the said person and it has no connection with the invoices raised has
 been intimated to the Bank by the Company. Hence the Company is not
 liable to pay the said amount of Rs.190 lakhs. Accordingly, this has
 been included under ''Liabilities contested and not provided for.''
 
                                           For SUNDARAM & SRINIVASAN
 
                                               Chartered Accountants 
 
                                              Firm Regn. No. 004207S
 
                                                 M. BALASUBRAMANIYAM
 
 Chennai                                                     Partner
 
 28th August 2012                               Membership No. F7945