Tata Motors

1.  We have audited the attached Balance Sheet of TATA MOTORS LIMITED
 as at March 31, 2009, and also the Profit and Loss Account and the Cash
 Flow Statement for the year ended on that date both 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 the 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 in paragraph 3
 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 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, Profit and Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (iv) in our opinion, the Balance Sheet, Profit and Loss Account 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) On the basis of written representations received from the
 directors, as on March 31, 2009, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2009 from being appointed as a director in terms of clause
 (g) of sub-section (1) of Section 274 of the Companies Act, 1956; and
 
 (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 March 31, 2009;
 
 (b) in the case of the Profit and Loss Account, 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 TO THE AUDITORS’ REPORT
 
 (Referred to in paragraph 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) As explained to us, the Company has a programme for physical
 verification of fixed assets in accordance with which the fixed assets
 have been physically verified during the year by the Management. In our
 opinion, the frequency of physical verification is reasonable. Having
 regard to the size of the operations of the Company and on the basis of
 explanations received, in our opinion, the net discrepancies found on
 physical verification were not material.
 
 (c) The fixed assets disposed off during the year, in our opinion, do
 not constitute substantial part of the fixed assets of the Company and
 such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 (ii) (a) As explained to us, the stocks of finished goods (other than a
 significant part of the spare parts held for sale) and work in progress
 in the Company’s custody have been physically verified by the
 Management as at the end of the financial year, before the year-end or
 after the year-end, and in respect of stocks of stores and spares, the
 aforesaid spare parts held for sale, and raw materials in the Company’s
 custody, there is a perpetual inventory system and a substantial
 portion of the stocks have been verified during the year. In our
 opinion, the frequency of verification is reasonable. In the case of
 materials and spare parts held for sale lying with third parties,
 certificates confirming stocks have been received in respect of a
 substantial portion of the stocks held during the year or at the
 year-end.
 
 (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 are reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company is maintaining proper records of inventory.
 The discrepancies noticed on verification between the physical stocks
 and the book records were not material having regard to the size of the
 operations of the Company.
 
 (iii) (a) The Company has not granted any loans, secured or unsecured
 to companies, firms or other parties covered in the register maintained
 under Section 301 of the Companies Act, 1956. As the Company has not
 granted any loans, clauses (iii) (b), (iii) (c) and (iii) (d) of
 Paragraph 4 of the Companies (Auditor’s Report) Order, 2003 are not
 applicable to the Company.
 
 (b) The Company has taken loan from two parties covered in the register
 maintained under Section 301 of the Companies Act, 1956. The maximum
 amount involved during the year was Rs.13.6 crores and the year-end
 balance of the loans taken from such parties was Rs.13.6 crores.
 
 (c) In our opinion the rate of interest and other terms and conditions
 on which loans have been taken from the parties listed in the register
 maintained under Section 301 of the Companies Act, 1956 are not, prima
 facie, prejudicial to the interest of the Company.
 
 (d) The principal amount is not due for repayment and the Company has
 been regular in payment of interest.
 
 (iv) In our opinion and according to the information and explanations
 given to us, having regard to the explanations that some of the items
 purchased are of special nature and suitable alternative sources do not
 exist for obtaining comparable quotations, there exists an adequate
 internal control system commensurate with the size of the Company and
 the nature of its business with regard to purchases of inventory and
 fixed assets and with regard to the sale of goods and services. During
 the course of our audit, we have not observed any major weakness in the
 internal control system of the Company.
 
 (v) (a) To the best of our knowledge and belief and according to the
 information and explanations given to us, we are of the opinion that
 the particulars of contracts or arrangements that need to be entered
 into the register maintained under Section 301 of the Companies Act,
 1956 have been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the register maintained under Section 301 of
 the Companies Act, 1956 and exceeding the value of rupees five lakhs in
 respect of any party during the year have been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 58A, 58AA and other relevant provisions of the Companies Act, 1956 and
 the Companies (Acceptance of Deposits) Rules, 1975 with regard to the
 deposits accepted from the public. To the best of our knowledge and
 according to the information and explanations given to us, no order has
 been passed by the Company Law Board or National Company Law Tribunal
 or Reserve Bank of India or any Court or any other Tribunal.
 
 (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 relating to the
 manufacture of motor vehicles pursuant to the Rules made by the Central
 Government for the maintenance of cost records under Section 209 (1)(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
 determining whether they are accurate or complete. To the best of our
 knowledge and according to the information and explanations given to
 us, the Central Government has not prescribed maintenance of cost
 records under Section 209 (1) (d) of the Companies Act, 1956 for any
 other products of the Company.
 
 (ix) (a) According to the information and explanations given to us, the
 Company is generally regular in depositing with appropriate authorities
 undisputed statutory dues including provident fund, investor education
 and protection fund, employees’ state insurance, income tax, sales tax,
 wealth tax, service tax, customs duty, excise duty, cess and other
 material statutory dues applicable to it. We are informed by the
 Company that the Employees’ State Insurance Act, 1948 is applicable
 only to certain locations of the Company. With regard to the
 contribution under the Employees’ Deposit Linked Insurance Scheme, 1976
 (the Scheme), we are informed that the Company has its own Life Cover
 Scheme, and consequently, an application has been made seeking an
 extension of exemption from contribution to the Scheme, which is
 awaited.  Further, since the Central Government has till date not
 prescribed the amount of cess payable under Section 441A of the
 Companies Act, 1956, we are not in a position to comment upon the
 regularity or otherwise of the Company in depositing the same.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of statutory dues including
 provident fund, investor education and protection fund, employees’
 state insurance, income tax, sales tax, wealth tax, service tax,
 customs duty, excise duty, cess and other material statutory dues
 applicable to the Company were in arrears, as at March 31, 2009 for a
 period of more than six months from the date they became payable.
 
 (c) According to the information and explanations given to us, details
 of dues of income tax, sales tax, wealth tax, service tax, custom duty,
 excise duty and cess which have not been deposited on account of any
 dispute are given below:
 
 Particulars        Financial years to which the matter pertains
 
 Income tax          1998-99
                     1998-99, 2003-04, 2004-05 and 2005-06
 
 Sales tax           1984-85, 1985-86, 1986-87, 1987-88, 
                     1988-89,1990-91, 1992 - 93,
                     1994 - 95, 2000 - 01, 2005 - 06
                     1987-88, 1988-89, 1989-90, 1990-91, 
                     1992-93, 1993-94,1994-95,
                     1995-96, 1996-97,1997-98, 1999-00, 2000-01, 2004-05
                     2004-05, 2005-06
                     1989-90, 1990-91, 1991-92, 1992-93, 1993-94, 
                     1996-97, 1997-98,
                     1998-99, 1999-00, 2000-01, 2001-02, 2002-03, 
                     2003-04, 2004-05,
                     2005-06, 2006-07,2007-08, 2008-09
                     1964-65, 1965-66, 1966-67, 1971-72, 1972-73, 
                     1973- 74, 1974-75,
                     1975-76, 1979-80, 1982-83, 1984-85, 1985-86, 
                     1986-87, 1987-88,
                     1988-89, 1991-92, 1992-93, 1993-94, 1994-95, 
                     1995-96, 1996-97,
                     1997-98, 1999-00, 2000-01, 2001-02, 2004-05, 
                     2005-06
                     1988-89, 1989-90, 1991-92, 1992-93, 1995-96, 
                     1996-97, 1997-98,
                     1998-99, 2001-02
                     1986-87, 1988-89, 1990-91, 1992-93, 1995-96, 
                     1997-98, 1999-00
                     1986-87, 1991-92, 1999-00, 2002-03
 
 Excise duty         1993-94, 1999-2000, 2001-02, 2002-03, 2004-05, 
                     2005-06, 2006-07,
                     2007-08, 2008-09
                     1984-85, 1994-95, 1995-96, 2003-04, 2006-07, 
                     2008-09
 
 Forum where dispute                   Amount
 is pending                         (Rs. in crores)
 
 Appellate Tribunal                    0.22
 Commissioner                        165.10
 High Court                          147.59
 Appellate Tribunal                   25.57
 Commissioner (Appeals)                0.18
 Joint Commissioner                  249.50
 Deputy Commissioner                  40.76
 Additional Commissioner              21.80
 Assistant Commissioner                0.09
 Trade Tax Officer                     0.54
 Appellate Tribunal                   90.61
 Commissioner (Appeals)                0.76
 
 (x) The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses during the financial
 year covered by our audit and the immediately preceding financial year.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to a
 financial institution, bank or debenture holder.
 
 (xii) Based on our examination of the records and 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) In our opinion, the Company is not a chit fund or a nidhi/mutual
 benefit fund/society. Therefore, the provisions of clause 
 
 (xiii) of Paragraph 4 of the Companies (Auditor’s Report) Order, 2003
 are not applicable to the Company.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the Company is not dealing in or trading in shares,
 securities, debentures and other investments. Accordingly, the
 provisions of clause
 
 (xiv) of Paragraph 4 of the Companies (Auditor’s Report) Order, 2003
 are not applicable to the Company.
 
 (xv) In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company for loans taken by others from banks or financial institutions
 are not prima facie prejudicial to the interest 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 purpose for which
 they were raised.
 
 (xvii) Based on an overall examination of Balance Sheet of the Company,
 as at March 31, 2009, short term funds of Rs 6129 crores have been
 utilized for long term application. As per the information and
 explanation given to us, the same is attributable to the economic
 scenario affecting the volumes and funding plans. Further the Company
 has explained that steps are being taken to augment long term funds.
 
 (xviii) According to the information and explanations given to us, the
 Company has not made any preferential allotment of shares to parties
 and companies covered in the register maintained under Section 301 of
 the Companies Act, 1956.
 
 (xix) In our opinion and according to the information and explanations
 given to us, during the period covered by our audit report, the Company
 has issued debentures and the security or charge has been created in
 respect of debentures issued.  
 
 (xx) We have verified the end use of money raised by the rights issue
 from the Letter of Offer filed with Securities Exchange Board of India
 and as disclosed in the Directors’ Report.
 
 xxi) To the best of our knowledge and belief and according to the
 information and explanations given to us, no material fraud on or by
 the Company has been noticed or reported during the course of our
 audit.
 
                                       For DELOITTE HASKINS & SELLS
                                              Chartered Accountants
 
                                                  M S Dharmadhikari
                                                            Partner
                                              Membership No.: 30802
 
 Mumbai: May 29, 2009