1.  We have audited the attached Balance Sheet of WARTSILA INDIA
 LIMITED (the Company) as at 31st December, 2009 and the Profit and
 Loss Account and the Cash Flow Statement of the Companyfortheyearended
 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 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, (the
 Order) 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 paragraph 4 and 5 of the said
 Order.
 
 4.  Further to our comments in the Annexure referred to in the
 paragraph 3 above, we report that:
 
 (i) we have obtained all information and explanations, which to the
 best of our knowledge and belief were necessary for the purpose 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 the 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 the
 Cash Flow Statement dealt with by this report comply with the
 Accounting Standards referred to in Section 211 (3C) of the Companies
 Act, 1956;
 
 (v) in our opinion and to the best of our information and according to
 the explanations given to us, the said accounts give 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 31st December, 2009;
 
 (b) in the case of the Profit and Loss Account, of the profit of the
 Company 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.
 
 5. On the basis of written representations received from the directors,
 as on 31st December, 2009, and taken on record by the Board of
 Directors, we report that none of the directors are disqualified as on
 31st December, 2009 from being appointed as Director of the Company
 under clause (g) of sub-section (1) of Section 274 of the Companies
 Act, 1956.
 
 (Referred to in paragraph 3 of our report of even date)
 
 1.  In respect of the Companys fixed assets:
 
 (a) TheCompanyhas maintained proper records showing full particulars,
 including quantitative details and location of its fixed assets.
 
 (b) The Companys fixed assets were physically verified by the
 management in accordance with a programme of verification, which
 provides physical verification of all fixed assets at intervals which
 in our opinion are reasonable. According to the information and
 explanation given to us no material discrepancies were noticed on such
 verification.
 
 (c) The fixed assets disposed off during the year, 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.
 
 2.  In respect of its inventories:
 
 (a) As explained to us, inventories, excluding materials in transit
 have been physically verified during the year by the management, in our
 opinion, the frequency of verification is reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, 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) In our opinion and according to the information and explanation
 given to us, the Company has maintained proper records of its
 inventories.  The discrepancies noticed between the physical stocks and
 the book records were not material in relation to the operation of the
 Company and the same have been properly dealt with in books of account.
 
 3.  According to the information and explanation given to us, the
 Company has not granted any loans, secured or unsecured, to companies,
 firms or other
 
 parties listed in the register maintained under Section 301 of the
 Companies Act, 1956. Therefore, the provisions of paragraph 4 (iii) (a)
 to (d) of the Order are not applicable to the Company.
 
 4.  According to the information and explanation given to us, the
 Company has not taken any loans, secured or unsecured, from companies,
 firms or other parties listed in the register maintained under Section
 301 of the Companies Act, 1956. Therefore, the provisions of paragraph
 4 (iii) (e) to (g) of the Order are not applicable to the Company.
 
 5.  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 are adequate internal
 control systems commensurate with the size of the Company and the
 nature of its business for the purchase of inventories and fixed assets
 and with regard to the sale of goods and services. During the course of
 our audit, we have not observed any continuing failure to correct major
 weaknesses in the internal control systems.
 
 6.  To the best of our knowledge and belief and according to the
 explanations given to us, we are of the opinion that there are no
 contracts or arrangements, the particulars of which need to be entered
 in the register maintained in pursuance of Section 301 of the Companies
 Act, 1956.
 
 7.  According to the information and explanations given to us, the
 Company has not accepted any deposits from the public within the
 purview of Section 58A and 58AA of the Companies Act, 1956 read with
 the Companies (Acceptance of Deposits) Rules, 1975. Therefore, the
 provisions of paragraph 4 (vi) of the Order are not applicable to the
 Company.
 
 8.  In our opinion, the Company has an adequate internal audit system
 commensurate with the size and nature of its business.
 
 9. According to the information and explanations given to us, during
 the year, the Company has not manufactured any product covered by the
 rules made by the Central Government for maintenance of cost records
 under Section 209 (1) (d) of the Companies Act, 1956 and therefore, no
 such records have been made and maintained during the year by the
 Company.
 
 10.  In respect of statutory and other dues:
 
 (a) In our opinion and according to the information and explanation
 given to us the Company has been regular in depositing undisputed
 statutory dues relating to provident fund, employees state insurance,
 income tax, sales tax, state value added tax and investor education and
 protection fund. The Company has been generally regular in depositing
 undisputed statutory dues relating to service tax. Undisputed amount
 payable in arrears, as at 31st December, 2009 for a period of more than
 six months from the date they became payable are as under:
 
 Name           Nature of       Period         Amount      Due
 of the         dues                          (Rs. in      date
 Statute                                     thousands)
 Professional   Profession tax April 2008 to    42         15th of
 Tax Laws                      June 2009                  subsequent
                                                           month
 Sales Tax      Works Contract Details         724        Details
 Laws           tax            unavailable               unavailable
 
 (b) According to the information and explanation given to us,
 
 (i) There were no disputed dues as regards Wealth tax and
 
 (ii) details of dues of income tax, sales tax, service tax, customs
 duty, excise duty and cess which have not been deposited on account of
 dispute are given below:
 
 Name        Nature of     Financial year    Forum where     Amount
 of the      dues          to which the      the dispute is (Rs. in
 Statute                   matter            pending        thousands)
                           pertains
 Income tax Income tax     2005-2006          Commissioner   15,129
 Act, 1961  (including                       of Income Tax
             interest)                        (Appeals)
 Sales Tax   Sales Tax     2001-2002          Deputy         52,245
 Laws       (including     2002-2003          Commissioner
             interest)     2003-2004          (Appeals),
                           2004-2005          Maharashtra
 Sales Tax   Sales Tax     2004-2005          Assistant       9,280
 Laws       (including                        Commissioner,
             interest)                        New Delhi
 Sales Tax   Sales Tax     1992-1993          Orissa High     7,916
 Laws       (including                        Court
             interest)
 Central    Excise duty    1995-1996          Tribunal        1,274
 Excise Act,
 1944                      1994-1995          Commissioner    2,400
                                              of Central 
                                              Excise
 Finance Act,Service Tax   2003-2004          Assistant     324,873
 1994       (Including     2004-2005          Commissioner
             interest)     2005-2006          of Service tax
                           2007-2008
                           2008-2009
 Finance Act,Service Tax   2005-2006          Commissioner   81,332
 1994                                         of Central
                                              Excise
 Customs     Custom duty   1993-1994          Bombay High    27,280
 Act, 1962  (including                        Court
             interest)
 NMMC Cess   Octroi duty   1997-1998          The District    4,499
 
 Court, Thane
 
 11.  The Company does not have accumulated losses as at the year end.
 The Company has not incurred cash losses during the financial year
 covered by our audit and in the immediately preceding financial year.
 
 12.  According to the information and explanations given to us, the
 Company has not defaulted in repayment of dues to banks. There were no
 amounts outstanding on account of debentures during the year.
 
 13.  According to 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 investments.
 Therefore, the provisions of paragraph 4 (xii) of the Order are not
 applicable to the Company.
 
 14.  The Company is not a chit fund or a nidhi/mutual benefit society.
 Therefore, the provisions of paragraph 4 (xiii) of the Order are not
 applicable to the Company.
 
 15.  According to the information and explanations given to us, the
 Company is not dealing in shares, securities, debentures and other
 investments.  Therefore, the provisions of paragraph 4 (xiv) of the
 Order are not applicable to the Company.
 
 16.  According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 17.  The Company has not taken any term loan during the year covered by
 our audit report. Therefore, the provisions of paragraph 4 (xvi) of the
 Order are not applicable to the Company.
 
 18.  In our opinion and according to the information and explanation
 given to us and on an overall examination of the Balance Sheet of the
 Company, we report that, no funds raised on short term basis have been
 used for long term investment.
 
 19.  According to the information and explanations given to us, the
 Company has not made any preferential allotment of shares to parties or
 companies covered in the register maintained under Section 301 of the
 Companies Act, 1956.
 
 20.  According to the information and explanations given to us, the
 Company has not issued any secured debentures
 
 during the period covered by our report.  Accordingly, the provisions
 of paragraph 4 (xix) of the Order are not applicable to the Company.
 
 21.  According to the information and explanations given to us, the
 Company has not raised any money by public issue during the year.
 
 22.  To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the Company
 was noticed or reported during the year.
 
 
 
 
                                               For S. B. BILLIMORIA & CO.
                                                   Chartered Accountants
                                               (Registration No. 101496W)
                                                    SANJIV V. PILGAONKAR
                                                                 Partner
                                                   Membership No.: 39826
                                                Mumbai: 22nd March, 2010