Welspun India

1.  We have audited the attached Balance Sheet of Welspun India Limited
 (the Company) as at March 31, 2008 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 (Auditors Report) Order, 2003, as
 amended by the Companies (Auditors Report) (Amendment) Order, 2004
 (together the Order) 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 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 Act;
 
 (e) On the basis of written representations received from the
 Directors, as on March 31, 2008, and taken on record by the Board of
 Directors, none of the Directors is disqualified as on March 31, 2008
 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 financial statements, together
 with the Notes thereon and attached thereto, give in the prescribed
 manner, the information required by the Act, and also 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 31,2008;
 
 (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 to Auditors Report referred to in paragraph 3 of the
 Auditors Report of even date to the members of Welspun India Limited
 on the financial statements for the year ended March 31,2008
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation, of fixed
 assets.
 
 (b) The fixed assets of the Company have been physically verified by
 the Management during the year, except certain fixed assets,
 insignificant in the aggregate, at one of the Companys units which
 were verified subsequent to the year-end. No material discrepancies
 between the book records and the physical inventory have been noticed.
 In our opinion, the frequency of verification is reasonable.
 
 (c) In our opinion, and 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.
 
 (ii) (a) The inventory has been physically verified by the Management
 during the year. In our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion, the procedures for the 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, in our
 opinion, the Company has maintained proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 (iii) (a) The Company has not granted any loans, secured or unsecured,
 to companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.
 
 (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 Act.
 
 (iv) In our opinion, 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, fixed assets and for the sale
 of goods. 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 instances of major weaknesses in the aforesaid internal
 control system.
 
 (v) According to the information and explanations given to us, there
 are no contracts or arrangements referred to in Section 301 of the Act
 during the year to be entered in the register required to be maintained
 under that Section.
 
 (vi) The Company has not accepted any deposits from the public within
 the meaning of Sections 58A and 58AA of the Act and the rules framed
 there under.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with its size and the nature of its business.
 
 (viii) 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 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.
 
 (ix) (a) According to the information and explanations given to us and
 the records of the Company examined by us, in our opinion, the Company
 has been generally regular in depositing the undisputed statutory dues
 in respect of 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.
 
 (b) According to the information and explanations given to us and
 records of the Company examined by us, there are no dues of income tax,
 service tax, customs duty, wealth tax and cess which have not been
 deposited on account of any dispute. The particulars of dues of
 sales-tax and excise duty as at March 31,2008 which have not been
 deposited on account of a dispute, are as follows:
 
 Name of the                                  Amounts
 Statute             Nature of dues          (Rs. in
                                              million)*
 
                     Sales Tax
 Gujarat Sales       including penalty        0.88
 Tax Act, 1969       and interest
                     Excise Duty
 Central Excise      including penalty        1.56
 Act, 1944           and interest
                     Excise Duty
 Central Excise      including penalty       17.80
 Act, 1944           and interest
 
 Period to which         Forum where the dispute is
 the amount                      pending
 relates
 
 2003-04                 Joint Commissioner (Appeals -
                         2), Vadodra
 April 2002 to           Commissioner of Central Excise
 February 2007           and Custom, Daman
 April 1999 to           Custom, Excise and Service Tax
 April 2000              Appellate Tribunal, Ahmedabad
 
 * Net of amounts paid under protest
 
 (x) The Company has no accumulated losses as at March 31,2008 and it
 has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 (xi) 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 during the year.
 
 (xii) The Company has not granted any loans and advances on the basis
 of security by way of pledge of shares, debentures and other
 securities.
 
 (xiii) The provisions of any special statute applicable to chit fund/
 nidhi/ mutual benefit fund/ societies are not applicable to the
 Company.
 
 (xiv) In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 (xv) In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company to banks that have given loans to certain subsidiary companies
 of the Company, are not prejudicial to the interest of the Company.
 
 (xvi) In our opinion, on an overall basis, the term loans have been
 applied for the purpose for which they were obtained.
 
 (xvii) On the basis of an overall examination of the Balance Sheet of
 the Company, in our opinion and accord- ing 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.
 
 (xviii) 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.
 
 (xix) The Company issued and redeemed during the year; short-term
 unsecured debentures aggregating to Rs. 500 million, question of
 creating security or charge in respect of the same does not arise.
 
 (xx) The Company has not raised any money by public issues during the
 year.
 
 (xxi) 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.
 
                                           Neeraj Gupta
                                           Partner
                                           Membership No. F055158
 
                                           For and on behalf of
                                           Price Waterhouse & Co.
                                           Chartered Accountants
 
                                           Mumbai, May 30, 2008