Titan Industries

1.  We have audited the attached balance sheet of TITAN INDUSTRIES
 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, 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 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, we give 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:
 
 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, 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 accounting
 standards referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956;
 
 e) 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;
 
 f) 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:
 
 (i) in the case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2009;
 
 (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.
 
 Annexure Referred to in Paragraph (3) of the Auditors’ Report to the
 Members of Titan Industries Limited on the Accounts for the Year Ended
 March 31, 2009
 
 i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) Most of the fixed assets have been physically verified by the
 management. As explained to us, no material discrepancies were noticed
 on such verification. In our opinion, the frequency of physical
 verification of assets is reasonable having regard to the size of the
 Company and the nature of its assets.
 
 (c) During the year, in our opinion, the Company has not disposed off a
 substantial part of the fixed assets.
 
 ii) (a) In our opinion, inventories have been physically verified
 during the year by the management at reasonable intervals.  In the case
 of stocks lying with third parties, certificates confirming stocks have
 been received in respect of substantial portion of the stocks held.
 
 (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 on the basis of our examination of the records
 of inventory, the Company has maintained proper records of inventory.
 Discrepencies noticed on physical verification of inventories as
 compared to the book records were not material in relation to the
 operations of the Company and have been properly dealt with in the
 books of account.
 
 iii) According to the information and explanations given to us with
 regard to loans, secured or unsecured, granted or taken by the Company
 to or from companies, firms or other parties covered in the register
 maintained under Section 301 of the Companies Act, 1956, we report as
 follows:
 
 (a) During the year, the Company has not granted loans to any such
 parties. The maximum amount involved at any time during the year and
 the year end balance of the loans granted in earlier years was Rs.
 3,683.41 lakhs and Rs. 3,591.06 lakhs respectively. The balance has
 been fully provided as no recoveries are expected.
 
 (b) The Company has taken intercorporate deposits from two companies.
 The maximum amount involved in such transactions at any time during the
 year and the year end balance of intercorporate deposits taken from
 such parties was Rs. 1,070.00 lakhs and Rs. 865.00 lakhs respectively.
 
 (c) In our opinion, the rate of interest and other terms and conditions
 of such intercorporate deposits are not prima facie prejudicial to the
 interest of the Company.
 
 (d) The Company is regular in repaying the principal amounts as
 stipulated and has been regular in the repayment 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 a special nature for which comparable alternative
 quotations are not available, there is an adequate internal control
 system commensurate with the size of the Company and the nature of its
 business for purchase of inventory, fixed assets and for the sale of
 goods and services. During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses, if any, in
 internal control system.
 
 v) In respect of the contracts or arrangements entered in the register
 maintained in pursuance of Section 301 of the Companies Act, 1956, to
 the best of our knowledge and belief and according to the information
 and explanations given to us:
 
 (a) The particulars of contracts or arrangements referred to in Section
 301 that needed to be entered in the register maintained under the said
 section have been so entered.
 
 (b) Where each of such transactions (excluding loans reported under
 paragraph (iii) above) is in excess of Rs.5 lakhs in respect of any
 party and having regard to our comments in paragraph (iv) above, the
 transactions have been made at prices which are prima facie 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 or any 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. We are informed that 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 which is
 commensurate with the size and nature of its business.
 
 viii) We have broadly reviewed the books of account and records
 maintained by the Company pursuant to the Rules made by the Central
 Government for maintenance of cost records under Section 209(1)(d) of
 the Companies Act, 1956 relating to the manufacture of watches and
 clocks and are of the opinion that prima facie the prescribed accounts
 and records have been made and maintained. We have, however, not made a
 detailed examination of the records with a view to determining whether
 they are accurate or complete. We are informed that maintenance of cost
 records has not been prescribed by the Central Government under Section
 209(1)(d) of the Companies Act, 1956 in respect of the Company’s other
 products.
 
 ix) (a) In our opinion and according to the information and
 explanations given to us, the Company is generally regular in
 depositing undisputed statutory dues including Provident Fund, Investor
 Education and Protection Fund, Employees’
 
 State Insurance, Income tax, Sales tax, Value added tax, Wealth tax,
 Service tax, Customs duty, Excise duty, Cess and other material
 statutory dues, if any, applicable to it with the appropriate
 authorities. As at the last day of the financial year, there are no
 arrears of such undisputed statutory dues outstanding for a period of
 more than six months from the date they became payable except Rs.0.11
 lakh relating to Value Added Tax and the same has been subsequently
 paid.
 
 (b) According to the records of the Company and the information and
 explanations given to us, there are disputed dues of Customs duty,
 Excise duty, Income tax and Sales tax which have not been
 deposited/deposited partially, the details of which are set out below:
 
 Name of the statute      Nature of the                 Amount
                                   dues         (Rs. in lakhs)
 
 The Customs Act, 1962     Customs duty                316.94
                                                       130.96
 The Central Excise Act,    Excise duty              2,272.59
 1944                                                   33.38
                                                       445.64
                                                         9.84
 Sales Tax Laws               Sales tax                  0.24
                                                       250.52
                                                         4.59
                                                         1.88
 Income-tax Act, 1961        Income tax                  2.39
                                                        53.86
                                                       816.38
 
 Period to which the amount relates    Forum where dispute is pending
 
 1989-94                                                Supreme Court
 1998-99 and 2002-03                         Commissioners of Customs 
                                                            (Appeals)
 May 2005 to March 2009                                 Supreme Court
 March 1987-February 1990, 
               April 1995                         Customs, Excise and
                                                          Service Tax
 to October 1998 and 2000-05                       Appellate Tribunal
 1996-99, 2002-04 and 2006-08                  Commissioner (Appeals)
 July 1999 - November 1999, 2004               Assistant Commissioner
 2003-04                                 Commercial Taxes Appellate &
                                                     Revisional Board
 2000-01 and 2003-08                    Deputy Commissioner (Appeals)
 1997-98 and 2004-05                           Assistant Commissioner
 2005-08                                      Commerical Tax Officer.
 1997-98                                    Honble Bombay High Court
 2002-03                                Income Tax Appellate Tribunal
 1999-00, 2001-03 and 2004-05              Commissioner of Income Tax
                                                            (Appeals)
 
 x) The Company has neither accumulated losses at the end of the
 financial year nor it has incurred cash losses during the current
 financial year and in 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
 banks and debenture holders. There are no borrowings from financial
 institutions and therefore, reporting on the same does not arise.
 
 xii) The Company has not granted loans or advances on the basis of
 security by way of pledge of shares, debentures, and other securities.
 
 xiii) The provisions of special statute applicable to chit fund and
 nidhi/mutual benefit fund/society are not applicable to the Company.
 
 xiv) The Company is not dealing in or trading in shares, securities,
 debentures and other investments.
 
 xv) The Company has not given any guarantees during the year for loans
 taken by others from banks or financial institutions.
 
 xvi) In our opinion and according to the information and explanations
 given to us, the term loan is being applied for the purpose for which
 it was obtained.
 
 xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, funds
 raised on short-term basis have prima facie, not been used during the
 year for long term investment.
 
 xviii) The Company has not made any preferential allotment of shares
 during the year.
 
 xix) As per the information and explanations given to us, the Company
 has created security in respect of debentures issued.
 
 xx) The Company has not raised any money by way of public issue during
 the year.
 
 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 was noticed or reported during the year.
 
                                          For Deloitte Haskins & Sells
                                                 Chartered Accountants
                                                         B. Ramaratnam
 Place: Bangalore                                              Partner
 Date : April 29, 2009                          (Membership No. 21209)