Tata Tea

1. We have audited the attached Balance Sheet of Tata Tea Limited, as
 at 31st March, 2005 and the related Profit and Loss Account and Cash
 Flow Statement for the year ended on that date annexed thereto, which
 we have signed under reference to this report. These financial
 statements are the responsibility of the management of the Company. Our
 responsibility is to express an opinion on these financial statements
 based on our audit.
 
 2. We conducted our audit in accordance with the 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, as
 amended by the Companies (Auditor's Report) (Amendment) Order, 2004,
 issued by the Central Government of India-in terms of sub-section (4A)
 of Section 227 of `The Companies Act, 1956' of India (the `Act') and on
 the basis of such checks of the books and records of the Company as we
 considered appropriate and according to the information and
 explanations given to us, we give in the attached 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 and Profit and Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 d. In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with the applicable
 accounting standards referred to in Section 211(3C) of `The Act';
 
 e. On the basis of written representations received from the directors
 and taken on record by the Board of Directors of the Company, we report
 that none of the directors is disqualified as on 31st March, 2005 from
 being appointed as a director in terms of clause (g) of sub-section (1)
 of Section 274 of The Act;
 
 f. In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts together with the notes
 thereon and attached thereto give in the prescribed manner the
 information required by The Act 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 31st March, 2005;
 
 ii) in the case of the Profit and Loss Account, 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.
 
 For N. M. Raiji & Co.    For Lovelock & Lewes
 Chartered Accountants    Chartered Accountants
 
 J.M. Gandhi              Prabal Kr Sarkar
 Partner                  Partner
 Membership No. 37924     Membership No. 52340
 
 Mumbai, June 9, 2005
 
 Annexure to the Auditors' Report
 
 (Referred to in paragraph 3 of the Auditors' Report of even date to the
 members of Tata Tea Limited on the financial statements for the year
 ended 31st March, 2005)
 
 1. a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of its fixed
 assets.
 
 b) The fixed assets are physically verified by the management in a
 phased manner, over a period of three years. In respect of assets
 physically verified, the details have been compared with the book
 records and discrepancies noticed thereof were not material and have
 been properly dealt with in the books of account.
 
 c) According to the information and explanations given to us, a
 substantial part of fixed assets has not been disposed of by the
 Company during the year.
 
 2. a) Physical verification of inventory has been conducted by the
 management at reasonable intervals, except in respect of stocks lying
 with third parties for which certificates have been obtained.
 
 b) The procedures of 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) On the basis of our examination of the inventory records, the
 Company is maintaining proper records of inventory. The discrepancies
 noticed on physical verification of inventory as compared to book
 records were not material and have been properly dealt with in the
 books of account.
 
 3. a) The Company has granted unsecured loans, to four companies
 covered in the register maintained under Section 301 of the Act. The
 maximum amount involved during the year and the year-end balance of
 such loans aggregates to Rs.4275 lakhs and Rs.2575 lakhs respectively,
 including Rs.475 lakhs relating to a subsidiary.
 
 b) In our opinion, the rate of interest and other terms and conditions
 of the above mentioned loans are prima facie not prejudicial to the
 interest of the Company.
 
 c) In respect of the aforesaid loans, the parties are repaying the
 principal amounts as stipulated and are also regular in payment of
 interest.
 
 d) In respect of the aforesaid loans, there is no overdue amount as at
 the Balance Sheet date.
 
 e) 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.
 
 4. There is an adequate internal control system commensurate with the
 size of the Company and the nature of its business for the purchase of
 inventory and fixed assets and for the sale of goods and services.
 Further, on the basis of our examination of the books and records of
 the Company and according to the information and explanations given to
 us, we have neither come across nor have been informed of any
 continuing failure to correct major weaknesses in the aforesaid
 internal control system.
 
 5. 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 Act 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 such contracts or
 arrangements 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.
 
 6. The Company has complied with the provisions of Sections 58A and
 58AA or any other relevant provisions of the Act and the Companies
 (Acceptance of Deposits) Rules, 1975 with regard to the deposits
 accepted from the public. 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 on the Company in respect of the aforesaid deposits.
 
 7. The Company has an internal audit system commensurate with its size
 and nature of its business.
 
 8. We have broadly reviewed the books of account maintained by the
 Company in respect of products where, pursuant to the Rules made by the
 Central Government of India, the maintenance of cost records has been
 prescribed under clause (d) of sub-section (1) of Section 209 of the
 Act 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.
 
 9. a) According to the information and explanations given to us and the
 records of the Company examined by us, in our opinion, the Company is
 generally regular in depositing the 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 as
 applicable with the appropriate authorities.There are no outstanding
 dues in respect of the above items, which are more than six months as
 at the Balance Sheet date.
 
 b) According to the information and explanations given to us and the
 records of the Company examined by us, the particulars of dues of
 income tax, sales tax, wealth tax, service tax, customs duty, excise
 duty and cess as at 31st March, 2005 which have not been deposited on
 account of a dispute, are as follows:
 
 Nature of the       Nature of the       Amount      Period to which
 Statute             Dues            (Rs. in Lakhs)  the amount     
                                                     relates        
 
 Income Tax Law      Central Income       353.77     2001-02        
                     Tax (Interest Levy)                            
 
 Assam Agricultural  Interest Levy         17.26     1998-99        
 Income Tax Law                                                     
 
 Sales Tax Law       Sales Tax            113.46     1997-98        
 Sales Tax Law       Sales Tax            118.45     1997-98 &      
                                                                    
 Sales Tax Law       Sales Tax             30.71     1998-99 &      
                                                     1999-00      
 Sales Tax Law       Sales Tax             10.02     1983,1994-95, 
                                                     1997-98, 1998-99,
                                                     2000-01, 2001-02 
 
 Sales Tax Law       Sales Tax              2.76     1994-95, 1995-96,
                                                     & 1996-97 
 Sales Tax Law       Sales Tax             10.50     2001-02   
                                                               
 Sales Tax Law       Sales Tax             38.80     2002-03,2003-04
                                                     & 2004-05     
 Sales Tax Law       Sales Tax            570.56     1994-95, 1995-96
                                                     & 1996-97
 Central Excise Law  Excise Duty           42.28     1998-99         
 Central Excise Law  Excise Duty            4.86     2000-01, 2001-02
                                                     & 2002-03       
 Central Excise Law  Excise Duty           18.74     2000-01         
 Cess Law            Cess on Land           4.98     2000-01,2001-02 
                     Revenue                         & 2002-03       
 
 Total                                   1337.15
 
 Nature of the       Nature of the       Forum where the dispute is
 Statute             Dues                pending
                                                     
 
 Income Tax Law      Central Income      Commissioner of Income Tax
                     Tax (Interest Levy) (Appeals), Kolkata
 
 Assam Agricultural  Interest Levy       Assistant Appellate
 Income Tax Law                          Commissioner, Guwahati
 
 Sales Tax Law       Sales Tax           The High Court, Kerala
 Sales Tax Law       Sales Tax           Sales Tax Tribunal, Kerala
 Sales Tax Law       Sales Tax           Deputy Commissioner
                                         (Appeals), Kerala
 Sales Tax Law       Sales Tax           Sales Tax Tribunal,
                                         West Bengal
 Sales Tax Law       Sales Tax           Assistant Commissioner
                                         Commercial Taxes, Kerala
 Sales Tax Law       Sales Tax           Appellate Assistant
                                         Commissioner, Tamil Nadu
 Sales Tax Law       Sales Tax           Deputy Commercial Tax
                                         Officer, Tamil Nadu
 Sales Tax Law       Sales Tax           Sales Tax Tribunal, Karnataka
 Central Excise Law  Excise Duty         High Court,Tamil Nadu
 Central Excise Law  Excise Duty         CESTAT (Central Excise
                                         Tribunal), Chennai
 Central Excise Law  Excise Duty         High Court, Kerala
 Cess Law            Cess on Land        High Court, Tamil Nadu
                     Revenue                                   
 
 10. The Company has no accumulated losses as at 31st March, 2005 and it
 has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 11. According to the records of the Company examined by us and the
 information and explanations given to us, the Company has not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holders as at the Balance Sheet date.
 
 12. The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13. The provisions of any special statute applicable to chit
 fund/nidhi/mutual benefit fund/societies are not applicable to the
 Company.
 
 14. In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 15. 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 a party from bank, are not prejudicial to
 the interest of the Company.
 
 16. In our opinion and according to the information and explanations
 given to us, on an overall basis, the term loans have been applied for
 the purposes for which they were obtained.
 
 17. On the basis of an overall examination of the balance sheet of the
 Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short-term
 basis, which have been used for long-term investment.
 
 18. The Company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Act during the year and therefore paragraph 4 (xviii) of the
 Order is not applicable.
 
 19. The Company has not issued any debentures during the year and
 therefore paragraph 4 (xix) of the Order is not applicable,
 
 20. The Company has not raised any money by public issues during the
 year and therefore paragraph 4 (xx) of the Order is not applicable.
 
 21. During the course of our 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 neither come across any instance of
 fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by the management.
 
 For N. M. Raiji & Co.     For Lovelock & Lewes
 Chartered Accountants     Chartered Accountants
 
 J.M. Gandhi               Prabal Kr Sarkar
 Partner                   Partner
 Membership No. 37924      Membership No. 52340
 
 Mumbai, June 9, 2005