Tube Investments of India

1.  We have audited the attached Balance Sheet of Tube Investments of
 India Limited (the Company) as at 31 March 2009, the Profit and Loss
 Account and also the Cash Flow Statement of the Company for the year
 ended on that date, both annexed thereto. These financial statements
 are the responsibility of the Companys Management. 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 (Auditors Report) Order, 2003, issued
 by the Central Government of India in terms of Section 227 (4A) 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, to the extent
 applicable to the Company.
 
 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 it appears from our examination of
 those books;
 
 c.  the Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 d.  in our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report are in compliance
 with the Accounting Standards referred to in Section 211(3C) of the
 Companies Act, 1956;
 
 e.  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 fairview 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 31 March 2009;
 
 (ii) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 (iii) in the case of Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 5. On the basis of the written representations/declarations received
 from the Directors and taken on record by the Board, and according to
 the information and explanations given to us, we report that none of
 the Directors of the Company is disqualified as at 31 March 2009, from
 being appointed as a Director under Section 274(1 )(g) of the Companies
 Act, 1956, on the said date.
 
 Annexure to the Auditors Report
 
 (i) The nature of the Companys business/activities during the year has
 been such that Clauses 4(xii), 4(xiii), 4(xiv), 4(xviii) and 4(xx) of
 the Order are not applicable to the Company.
 
 (ii) In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 (b) Some of the fixed assets were physically verified during the year
 by the Management in accordance with a programme of verification which,
 in our opinion, provides for physical verification of all the fixed
 assets at reasonable intervals having regard to the size of the Company
 and the nature of its assets. According to the information and
 explanations given to us, no material discrepancies were noticed on
 such verification.
 
 (c) The fixed assets disposed off during the year, in our opinion, do
 not constitute a 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.
 
 (iii) In respect of its inventories:
 
 (a) As explained to us, the stocks of raw materials, work in process
 and finished goods in the Companys manufacturing units have been
 physically verified during the year by the Management. Stores and
 spares and stocks at warehouses were physically verified during the
 year by the Management in accordance with a phased programme of
 verification. In our opinion, having regard to the nature and location
 of stocks, the frequency of verification is reasonable. In case of
 stocks lying with third parties, certificates confirming stocks have
 been received in respect of a substantial portion of the stocks held 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 has maintained proper records of its
 inventories and no material discrepancies were noticed on such physical
 verification.
 
 (iv) (A) In respect of loans, secured or unsecured, granted by the
 Company to parties covered in the register maintained under Section 301
 of the Companies Act, 1956, according to the information and
 explanations given to us:
 
 (a) The Company has granted loans to one party during the year. At the
 year end, the outstanding balance of such loans granted aggregated to
 Rs. Nil and the maximum amount involved during the year was Rs. 50
 Crores.
 
 (b) The rate of interest, and other terms and conditions of such loans
 is, in our opinion, prima facie, not prejudicial to the interests of
 the Company.
 
 (c) The receipt of principal amounts and interest during the year have
 been regular / as per stipulations.
 
 (d) There were no overdue amounts at the year end, on this account.
 
 (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 Companies Act, 1956.
 
 (v) In our opinion and according to the information and explanations
 given to us, having regard to the explanation that certain items are of
 a special nature and the prices cannot be compared with readily
 available alternative quotations, if any, there is generally 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 and according to the information and
 explanations given to us, we have neither come across nor have we been
 informed of any instance of continuing failure to correct major
 weaknesses in the aforesaid internal control system.
 
 (vi) In respect of contracts or arrangements entered in the register
 maintained in pursuance of Section 301 of the Companies Act, 1956, on
 the basis of audit procedures applied by us and to the best of our
 knowledge and belief and according to the information and explanations
 given to us on our enquiries on this behalf and the records produced to
 us for our verification:
 
 (a) All the particulars of contracts or arrangements referred to in
 Section 301 have been entered in the register required to be maintained
 under the said Section.
 
 (b) Where the transactions (excluding loans reported under paragraph
 (iv) above) are in excess of Rs. 5 lakhs in respect of any party during
 the year, the transactions have been made at prices which are, prima
 facie, reasonable having regard to the prevailing market prices at the
 relevant time.
 
 (vii) The Company has not accepted any deposits from the public during
 the year.
 
 (viii) In our opinion, the internal audit functions carried out during
 the year by the Internal Audit Department of the Company as well as
 some external agencies appointed by the Management have been
 commensurate with the size of the Company and the nature of its
 business.
 
 (ix) We have broadly reviewed the books of account relating to
 materials, labour and other items of cost maintained by the Company for
 manufacture of bicycle and tubes, 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 we are of the opinion that,
 prima facie, the prescribed accounts and records are being 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
 given to us, the Central Government has not prescribed the maintenance
 of cost records for any other products of the Company.
 
 (x) In respect of Statutory dues:
 
 (a) According to the information and explanations given to us and
 according to the books and records as produced and examined by us, in
 our opinion, the
 
 Company has been generally regular in depositing undisputed statutory
 dues, including Provident Fund, Investor Education and Protection Fund,
 Employees State Insurance, Income Tax, Wealth Tax, Sales Tax, VAT,
 Service Tax, Excise Duty, Customs Duty, Cess and other material
 statutory dues applicable to it with the appropriate authorities.
 
 (b) According to the information and explanations given to us and
 according to the books and records as produced and examined by us, in
 our opinion, no undisputed amounts in respect of Provident Fund,
 Investor Education and Protection Fund, Employees State Insurance,
 Income Tax, Wealth Tax, Sales Tax, VAT, Service Tax, Excise Duty,
 Customs Duty, Cess and other material statutory dues applicable to the
 Company was in arrears as at 31 March 2009 for a period of more than
 six months from the date they became payable.
 
 (c) As at 31 March 2009, according to the records of the Company and
 the information and explanations given to us the details of disputed
 Sales Tax, Service Tax and Excise Duty which have not been deposited
 are aiven below:
 
 Name of Nature of the Dues  Amount Statute (Rs. in Crores)
 
 Sales Tax 0.05 Local Sales Tax -
 
 Laws-Various   Sales Tax                             0.12
 States                
                Sales Tax                             0.02
                Sales Tax                             0.08
 
 Central Sales     
 
 Tax Act, 1956  Sales Tax                               0.43
                Penalty                                 0.29
                Service Tax                             0.05
 Service Tax        
 (Chapter V of  Service Tax                             0.13
 the Finance
 Act, 1994)           
 
                Service Tax                             0.16
 
                Excise Duty                             1.22
 
                Penalty                                 1.22
 
 Central Excise
 Act, 1944          Excise Duty                         0.67
 
                    Interest                            0.01
 
                    Excise Duty                         0.11
 
 Period to which the         Forum where dispute is pending
 
 Amount Relates            
 
 1997-98, 2000-01             Sales Tax Appellate Tribunal
 
 1996-97,2003-04             Sales Tax Appellate Tribunal
 
 1999-00                    High Court of Punjab
 
 1990-91, 91-92, 99-00, 2000-01     Sales Tax Appellate Tribunal
 
 1999-00, 2003-04 to 2005-06    Sales Tax Appellate Tribunal
 
 2001-02                    High Court of Madras
 
 1997-98 to 2003-04           Commissioner of Central Excise
 
 (Appeals)
 
 2000-01 to 2004-05           Customs Excise and Service Tax
 
 Appellate Tribunal
 
 1999-00 to 2004-05           Customs Excise and Service Tax
 
 Appellate Tribunal
 
 2000-01 to 2005-06           Customs Excise and Service Tax
 
 Appellate Tribunal
 
 2000-01 to 2005-06           Customs Excise and Service Tax
 
 Appellate Tribunal
 
 2002 - 03                   Commissioner of Central Excise
 
 (Appeals)
 
 2005-06 to 2006-07           Customs Excise and Service Tax
 
 Appellate Tribunal
 
 2001-02 to 2002-03           Joint Secretary, Government of India
 
 (xi) The Company does not have any accumulated losses as at 31 March
 2009. The Company has not incurred cash losses during the financial
 year covered by our audit and the immediately preceding financial year.
 
 (xii) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in the repayment of dues to
 banks, financial institutions and debenture holders.
 
 (xiii) 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, are not, prima facie,
 prejudicial to the interests of the Company.
 
 (xiv) To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, term loans
 availed by the Company were, prima facie, applied by the Company during
 the year for the purposes for which the loans were obtained, other than
 temporary deployment pending application.
 
 (xv) 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.
 
 (xvi) The Company is in the process of creating a charge in respect of
 Privately Placed Non-Convertible Debentures issued in the month of
 February 2009.
 
 (xvii) 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 to the best of our knowledge and belief
 and according to the information and explanations given to us, we have
 neither come across any instance of material fraud on or by the Company
 nor have we been informed of any such case by the Management.
 
                                         For Deloitte Haskins & Sells
                                         Chartered Accountants
                                         K. Sai Ram
 Place: Chennai                          Partner
 Date: 1 May 2009                        Membership No. 022360