1.  We have audited the attached Balance Sheet of Welspun India Limited
 (the Company) as at March 31, 2011, 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 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 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 signifcant estimates made
 by Management, as well as evaluating the overall financial statement
 presentaton. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003, as
 amended by the Companies (Auditor''s Report) (Amendment) Order, 2004
 (together the Order), issued by the Central Government of India in
 terms of sub-secton (4A) of Secton 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 maters specified in paragraphs 4 and 5 of the Order.
 
 4.  We draw your attention to Note 7(b) to the financial statements,
 regarding the accounts receivables balance of Rs.  696.02 million
 (March 31, 2010: Rs. 475.93 million) that is due from Welspun Retail
 Limited (WRL), a group company, as at March 31, 2011, in relaton to
 which no valuaton allowance has been estimated and adjusted in these
 financial statements which, in our view, does not meet the requirement
 to consider prudence in selecton of accounting policies, as set out in
 Accounting Standard 1 – Disclosure of Accounting Policies, as WRL has
 been incurring significant losses (Rs.199.73 million for the year ended
 March 31, 2011 and Rs. 1,205.96 million as at March 31, 2011 basis its
 audited financial statements as of and for the year ended March 31,
 2011) and has also been unable to achieve its projected financial
 results in the previous and current financial reporting periods.
 
 5.  Without qualifying our opinion, we draw your atention to:
 
 (a) Note 8 on Schedule 19, regarding the Company''s dependence on
 Welspun Global Brands Limited (‘WGBL'') and WRL for selling its products
 consequent to the demerger of the marketing arm of the Company efective
 April 1, 2009. If the arrangement between the Company, WGBL and WRL are
 discontinued, the business of the Company could be adversely impacted.
 
 (b) Note 9 on Schedule 19, regarding corporate guarantees, aggregating
 Rs. 3,593 million at the year end, issued consequent to the demerger of
 the marketing arm of the Company referred to in paragraph 5 (a) above,
 to the bankers of WGBL in relation to the debt facilities provided by
 them to WGBL, and other corporate guarantees disclosed in Note 3 on
 Schedule 19, aggregating Rs. 5,145.52 million at the year end, issued
 on behalf of WGBL, Welspun USA Inc. (‘WUSA''), Welspun Captive Power
 Generaton Limited (WCPGL), Welspun Mexico SA de CV (WELMEX) and Welspun
 Home Textiles UK limited (‘WHTL''). If WGBL, WUSA, WCPGL and WHTL are
 unable to meet their obligation as they fall due, the financial
 conditon and cash flows of the Company could be adversely impacted.
 
 (c) Note 4 on Schedule 19, regarding the recognition of deferred tax
 assets during the year, aggregating Rs. 303.64 million, on the
 incremental unabsorbed Income-tax depreciation arising out of its
 treatment of certain excise and Value Added Tax incentives as ‘capital
 receipts'' for income tax purposes based on the judgement in re
 Commissioner of Income Tax, Mumbai v/s. Reliance Industries Limited of
 the Honourable High Court of Judicature at Bombay.  However, this case
 has not attained finality as the judgement has been challenged by the
 tax authorities in the apex court. If the final decision in the mater
 is eventually decided against the Company, then the carrying value of
 the deferred tax assets at the period end could be significantly
 impacted.
 
 6.  Further to our comments in the Annexure referred to in paragraph 3
 above, we report that:
 
 (a) Except for the indeterminate effects of the mater referred to
 paragraph 4 above, 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, except for the indeterminate effects of the mater
 referred to paragraph 4 above, 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, except for the mater referred to paragraph 4 above,
 the Balance Sheet, Proft 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, 2011 and taken on record by the Board of
 Directors, none of the directors is disqualified as on March 31, 2011
 from being appointed as a director in terms of clause (g) of sub-secton
 (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, except for the indeterminate effects of
 the mater referred to in paragraph 4 above, the said financial
 statements together with the notes thereon and attached thereto give,
 in the prescribed manner, the information required by the Act, 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, 2011;
 
 (ii) in the case of the Profit and Loss Account, of the loss for the
 year ended on that date;
 
 (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, 2011
 
 1.  (a) The Company is maintaining 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 and 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.
 
 2.  (a) The inventory (excluding stocks with third partes) has been
 physically verified by the Management during the year. In respect of
 inventory lying with third partes, these have substantially been
 confirmed by them. In our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion, 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) On the basis of our examination of the inventory records, in our
 opinion, the Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 3.  (a) The Company has not granted any loans, secured or unsecured, to
 companies, firms or other partes 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 partes covered in the register maintained
 under Section 301 of the Act.
 
 4.  In our opinion and according to the information and explanations
 given to us, 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,
 no major weakness have been noticed or reported.
 
 5.  (a) In our opinion and according to the information and
 explanations given to us, the particulars of contracts or arrangements
 referred to in Section 301 of the Act have been entered in the register
 required to be maintained under that Section.
 
 (b) In our opinion and according to the information and explanations
 given to us, there are no transactions made in pursuance of such
 contracts or arrangements and exceeding the value of Rupees Five Lakhs
 in respect of any party during the year, which have been made at prices
 which are not reasonable having regard to the prevailing market prices
 at the relevant time.
 
 6.  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.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 8.  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-secton (1) of Secton 209 of the Act,
 and are of the 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.
 
 9. (a) According to the information and explanations given to us and
 the records of the Company examined by us, in our opinion, the Company
 is regular in depositing the undisputed statutory dues including
 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 the
 records of the Company examined by us, the particulars of dues of
 sales-tax and excise duty as at March 31, 2011 which have not been
 deposited on account of any dispute, are as follows:
 
 Name of the      Nature of dues     Amounts     Period to which
 Statute                            (Rs. in      the amount relates
                                     million)*
 
 Gujarat Sales    Sales Tax          10.52       2000-01,2003-04
 Tax Act, 1969    including penalty              and 2004-05 
                  and interest
 
 
 Central Excise   Excise Duty         1.31       March 2004 to July
 Act, 1944        including penalty              2006 
                  and interest
 
 Central Excise   Excise Duty        69.57       September 2005
 Act, 1944                                       to July 2006
 
 
 
 Name of the       Forum where the   
 Statute           dispute is pending                       
                                     
 
 Gujarat Sales     Joint Commissioner 
 Tax Act, 1969     of Sales Tax
                   (Appeals - 2), 
                   Vadodara
 
 Central Excise    Commissioner of
 Act, 1944         Central Excise and   
                   Custom (Appeals),
                   Daman
 
 Central Excise    Joint Secretary, 
 Act, 1944         Ministry of Finance,
                   Department of Revenue                                    
  
 
 * Net of amounts paid under protest
 
 10.  The Company has no accumulated losses as at March 31, 2011 and it
 has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 11.  According to the records of the Company examined by us and the
 information and explanation given to us, the Company has not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holders as at the Balance Sheet date.
 
 12.  The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  The provisions of any special statute applicable to chit fund /
 nidhi / mutual benefit fund/ societies are not applicable to the
 Company.
 
 14.  In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 15.  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 or financial institutions
 during the year, are not prejudicial to the interest of the Company.
 
 16.  In our opinion, and according to the information and explanations
 given to us, on an overall basis, the term loans have been applied for
 the purposes for which they were obtained.
 
 17.  On the basis of an overall examination of the balance sheet of the
 Company, in our opinion and according 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.
 
 18.  The Company has not made any preferential allotment of shares to
 partes and companies covered in the register maintained under Section
 301 of the Act during the year.
 
 19.  The Company has not issued any debentures during the year.
 
 20.  The Company has not raised any money by public issues during the
 year.
 
 21.  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.
 
                                            For Price Waterhouse & Co.
 
                                      Firm Registraton Number: 007567S 
                                                 Chartered Accountants
 
                                                          Neeraj Gupta
                                                               Partner 
                                             Membership Number F055158
 
 Place: Mumbai 
 Date: May 30, 2011