1.  We have audited the attached Balance Sheet of M/s Sundram Fasteners
 Limited, Chennai 600 004 as at 31st March 2012, the Statement of Profit
 & Loss and also 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.
 
 2.  We conducted the 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 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 in terms of sub-section (4A) of Section 227
 of the Companies Act, 1956 (the Act), we enclose in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the said
 order to the extent applicable.
 
 4.  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 purposes 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 Act;
 
 (v) On the basis of written representations received from directors of
 the Company, as on 31st March 2012 and taken on record by the Board of
 Directors, we report that no director is disqualified from being
 appointed as a director in terms of clause (g) of sub-section (1) of
 Section 274 of the Act as 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
 Significant Accounting Policies, and other 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:
 
 (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 & Loss, of the profit for
 the year ended on that date; and
 
 (c) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Annexure referred to in para 3 of 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) All the assets have not been physically verified by the management
 during the year but there is a regular programme of verification at
 reasonable intervals, which, in our opinion, is reasonable having
 regard to the size of the Company and the nature of its assets. No
 material discrepancies were noticed on such verification.
 
 (c) The Company has not disposed off substantial part of its fixed
 assets, which will affect the going concern status of the company.
 
 (ii) (a) The inventory other than in transit have 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 lying 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 are 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 book
 stocks were not material and have been properly dealt with in the books
 of account.
 
 (iii) (a) The Company has granted unsecured loan to wholly-owned
 subsidiary company covered in the Register maintained under Section 301
 of the Act. The maximum amount involved during the year and at the end
 of the year was Rs.2267.30 lakhs. The terms and conditions of such
 loans are, prima facie, not prejudicial to the interests of the
 company.
 
 (b) 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, 1956 and accordingly paragraphs 4 (iii)
 (b), (c), (d), (e), (f) and (g) are not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the company and the nature of its business with regard
 to purchases of inventory, fixed assets and for the sale of goods.
 During the course of our audit, no major continuing failure has been
 noticed in the internal control procedures.
 
 (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 transactions that need to be entered in the
 register maintained in pursuance of Section 301 of the Act 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 Act and exceeding Rupees five lakhs during the year
 in respect of each party have been made at prices which are reasonable
 having regard to prevailing market prices at the relevant time;
 
 (vi) The Company has not accepted any deposits 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 accounts maintained by the
 Company pursuant to the rules made by the Central Government under
 Section 209 (1)(d) of the Act 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, Investor Education and Protection
 Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty,
 Excise Duty, Cess and other material statutory dues with the
 appropriate authorities. However, certain delays were noticed in
 respect of remittance of Employees'' State Insurance and tax deducted at
 source on salary and sub-contract payments into government.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales
 Tax, Service Tax, Customs Duty, Excise Duty 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 Income Tax, Customs Duty,
 Service Tax, Excise Duty and Property Tax that was not paid to the
 concerned authorities.
 
 Nature of 
 demand            Amount (Rs lakhs)    Forum where the dispute 
                                        is pending
 
 Income Tax            19.64            High Court of Judicature
                                        at Madras
 
 Income Tax            20.38            Income Tax Appellate Tribunal
 
 Income Tax             1.38            Commissioner of Income Tax
                                       (Appeals)
 
 Income Tax             0.95            Assessing Officer
 
 Excise Duty          505.11            Central Excise & Service
                                        Tax Appellate Tribunal
 
 Excise Duty           92.16            Commissioner Appeals
 
 Excise Duty            2.23            High Court of Judicature 
                                        at Madras
 
 Property Tax          50.67            Commissioner & Secretary
                                        to Govt of Tamil Nadu
 
 Central Sales Tax      0.03            Commercial Tax Officer
 
 Sales Tax / VAT      657.74            Joint Commissioner -
                                        Commercial Tax
 
 Central Sales Tax     33.30            Sales Tax Appellate Tribunal
 
 Service Tax           40.17            Central Excise & Service Tax
                                        Appellate Tribunal
 
 Service Tax           16.27            Commissioner Appeals
 
 (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) According to the records of the Company examined by us and the
 information and explanations given to us by the management, the Company
 has not defaulted in repayment of dues to any financial institution or
 bank as at the balance sheet date.
 
 (xii) Based on our examination and according to the information and
 explanations given to us, the Company has not granted any 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/nidhi/mutual benefit fund/society
 and clause (xiii) of the Order is not applicable.
 
 (xiv) The Company is not dealing or trading in shares, securities,
 debentures and other investments other than in the units of mutual
 funds in respect of which the Company is maintaining adequate and
 proper records.
 
 (xv) The Company has given guarantee to banks and financial
 institutions for loans taken by Subsidiary Companies and also housing
 loans availed by its employees. The terms and conditions of such
 guarantees are not prejudicial to the interests of the Company.
 
 (xvi) In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purposes for
 which they have been obtained.
 
 (xvii) On the basis of our examination of the Balance sheet of the
 Company and according to the explanations given to us, in our opinion,
 funds raised on short term basis have not been used for long term
 investment.
 
 (xviii) The Company has not allotted any shares on preferential basis
 to parties and companies covered in the Register maintained under
 section 301 of the Act.
 
 (xix) The Company has not issued any secured debentures;
 
 (xx) The Company has not raised any money by issue of shares to the
 public.
 
 (xxi) During the course of 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 not come across any instance of fraud by the
 Company. As regards fraud on the Company reference may be made to Note
 22A to the financial statements.
 
                                          For SUNDARAM & SRINIVASAN 
 
                                          Regn. No. 004207S 
 
                                          Chartered Accountants
 
 Chennai                                  M BALASUBRAMANIYAM
 
 May 28, 2012                             Partner
 
                                          Membership No. F7945