TVS Motor Company

We have audited the attached Balance Sheet of TVS Motor Company
 Limited, Chennai - 600 006 as at 31st March 2009 and the Profit and
 Loss Account for the year ended on that date annexed thereto and the
 Cash Flow Statement for the year ended on that date. 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.
 
 1.  We have conducted our 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 from any 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 presentation of the
 financial statements. We believe that our audit provides a reasonable
 basis for our opinion.
 
 2.  As required by the Companies (Auditors Report) Order, 2003 and
 amended by the Companies (Auditors Report) (Amendment) Order 2004
 issued by the Central Government 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.
 
 3.  Further to our comments in the Annexure referred to above, we state
 that:
 
 (a) We have obtained all the information and explanations, which to the
 best of our knowledge and belief, were necessary for the purpose 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 such
 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
 of the Company as on 31 st March 2009 and taken on record by the Board
 of Directors, we report that none of the directors is disqualified from
 being appointed as a director in terms of clause (g) of sub-section 1
 of Section 274 of the Companies Act, 1956 on the said date;
 
 (f) 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 (including the notes under Accounting Standard 11) 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 so far as it relates to the Balance Sheet, of the state of
 affairs of the Company as at 31st March 2009;
 
 (ii) in so far as it relates to the Profit and Loss Account, of the
 profit of the Company for the year ended on that date; and
 
 (iii) in so far as it relates to the Cash Flow Statement, of the cash
 flows for the year ended on that date.
 
 Annexure referred to in our report of even date on the accounts for the
 year ended 31st March 2009
 
 (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 assets disposed off during the year are not substantial and
 therefore do not affect the going concern status of the Company.
 
 (ii) (a) The inventory other than in-transit has 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 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 were 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 the book
 stocks were not material and have been properly dealt with in the books
 of account.
 
 (iii) (a) During the year the Company has granted loans and advances to
 three companies covered in the register maintained under section 301 of
 the Companies Act, 1956 amounting to Rs.21 crores (Balance due as at
 the year end Rs.87.31 crores from four parties).
 
 (b) In our opinion, the rate of interest and other terms and conditions
 on which such loans and advances are made are not prima facie
 prejudicial to the interest of the Company.
 
 (c) The receipt of principal amount and interest thereon were regular.
 
 (d) As on the date of Balance Sheet, there was no overdue amount
 recoverable on the said loans and advances.
 
 (e) During the year the Company has taken an unsecured loan of Rs. 10
 crores from a company covered in the register maintained under section
 301 of the Companies Act, 1956. (Amount outstanding at the year end Rs.
 Nil)
 
 (f) In our opinion the rate of interest and the terms and other
 conditions of loan taken by the Company were not prima facie
 prejudicial to the interest of the Company.
 
 (g) The repayment of the principal amount and interest thereon were
 regular.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business, with regard to purchase of inventory, fixed assets and for
 the sale of goods and services. During the course of our audit, no
 major weakness has been noticed in the internal control system.
 
 (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 contracts or arrangements that need to be entered
 in the register maintained under Section 301 of the Companies Act,
 1956, have been properly entered in the said register.
 
 (b) In our opinion and according to the information and explanations
 given to us, transactions entered in the register maintained under
 Section 301 and exceeding during the year by Rupees five lakhs in
 respect of each party have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 
 (vi) The Company has not accepted any deposit from the public.
 
 (vii) The Company has an internal audit system, which in our opinion is
 commensurate with its size and nature of its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules made by the Central Government under
 Section 209(1 )(d) of the Companies Act, 1956 for maintenance of cost
 records in respect of automotive two and three wheelers 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, Investors Education and Protection
 Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty,
 Excise Duty and Cess and other statutory dues with the appropriate
 authorities.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth
 Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears as
 at 31 st March 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, the
 following are the details of the disputed dues, that were not deposited
 with the concerned authorities
 
 Name of the                 Nature of
 statute                        dues
 
 Central Excise              Central Excise
 Act, 1944                    dues
 Finance                      Service
 Act, 1994                    Tax
 Customs Act, 1962            Customs Duty
 Kamataka Electricity         Electricity Tax
 (Taxation on
 Consumption)
 Act, 1959
 The Tamil Nadu Tax          Electricity Tax
 on Consumption or
 Sale of Electricity
 Act, 2003 read with
 Amendment Act, 2007
 
 Sales Tax laws of           Sales Tax
 various States
 Income Tax Act, 1961        Income Tax &
 Interest there on
 
 Amount                      Forum where the
 (Rs. in crores)             dispute is pending
 
                              Central Excise and
 (a)  5.16                    Service Tax Appellate
                              Tribunal
 (b)  0.32                    Commissioner of
                              Central Excise (Appeals)
 (c) 19.37                    Asst./Deputy/
                              Commissioner of
                              Central Excise
                              Central Excise and
 (a)  1.66                    Service Tax Appellate
                              Tribunal
 (b)  0.15                    Commissioner of Central
                              Excise (Appeals)
 (c) 12.25                    Asst./Deputy/
                              Commissioner of
                              Central Excise
      1.13                    Commissioner of
                              Customs
      0.33                    High Court of
                              Judicature at
                              Bangalore
      0.30                    High Court of
                              Judicature at Madras,
                              Chennai
 (a)  0.56                    Sales Tax Appellate
                              Tribunals
 (b)  2.60                    Asst./Deputy/Joint/
                              Addl Commissioners
                              of Sales Tax at 
                              variousStates
 (a)  2.32                    Supreme Court of
                              India
 (b) 28.82                    Income Tax
                              Tribunal,
 (c) 10.48                    Commissioner of
                              Income-Tax(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) Based on our verification and according to the information and
 explanations given by the management, the Company has not defaulted in
 repayment of dues to its banks.
 
 (xii) Based on our examination and according to the information and
 explanations given to us, the Company has not granted 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 / nidhi / mutual benefit fund /
 society and as such this clause of the order is not applicable.
 
 (xiv) The Company is not dealing or trading in shares, securities,
 debentures and other investments other than in mutual fund intruments.
 Proper records have been maintained in respect of these transactions
 and contracts and timely entries have been made therein.  The
 investments have been held by the Company in its own name except to the
 extent of exemption granted under section 49 of the Act, in respect of
 shares held in subsidiary companies through the nominees.
 
 (xv) In our opinion the terms and conditions of guarantees given by the
 Company for loans taken by others are not prejudicial to the interests
 of the Company.
 
 (xvi) The term loans availed by the Company were utilised for the
 purpose for which the loans were obtained.
 
 (xvii) On the basis of our examination, the Company has not used funds
 raised on short term basis for long term investments.
 
 (xviii) During the year, the Company has not allotted any shares on
 preferential basis to parties and Companies covered in the register
 maintained under section 301 of the Companies Act, 1956.
 
 (xix) During the year, the Company has not issued any secured
 debentures.
 
 (xx) During the year, the Company has not raised any money by public
 issue.
 
 (xxi) Based on the audit procedures adopted and information and
 explanations given to us by the management, no fraud on or by the
 Company has been noticed or reported during the course of our audit.
 
 
                                     For Sundaram & Srinivasan
                                         Chartered Accountants
 
                                            M. BALASUBRAMANIYAM
                                                  Hosur Partner
 June 26, 2009                              Membership No.F7945