1.  We have audited the attached Balance Sheet of Zenith Birla (India)
 Limited as at 31st March, 2011, and the Profit and Loss Account and
 Cash Flow Statement for the year ended on that date annexed thereto.
 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 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 (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-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 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 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 31st March, 2011 and taken on record by the Board of
 Directors, none of the directors is disqualified as on 31st March, 2011
 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 accounts 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 the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March 2011;
 
 (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 Zenith Birla (India) Limited on the financial statements for
 the year ended 31st March, 2011.
 
 1.  (a) The Company is maintaining proper records showing particulars
 including quantitative details and situation of fixed
 
 assets. However, in respect of the Company’s Divisions at Tarapur and
 Murbad, the fixed asset records are in the process of being updated.
 
 (b) The fixed assets are physically verified by the management
 according to a phased programme designed to cover all the items over a
 period of three years, which in our opinion, is reasonable having
 regard to the size of the Company and the nature of its assets.
 Pursuant to the programme, a portion of the fixed assets has been
 physically verified by the management during the year and no material
 discrepancies between the book records and the physical inventory has
 been noticed, except in the case of the Company’s Divisions at Tarapur
 and Murbad, where the comparisons will be made once the records are
 completed.
 
 (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 so as affect its going concern.
 
 2.  (a) The inventory has been physically verified by the management
 during the year. In our opinion, the frequency of
 
 verification is reasonable. Inventories lying with outside parties have
 been confirmed by them at the close of the year.
 
 (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 taken any loans, secured or unsecured, from
 companies, firms or other parties covered in the maintained under
 Section 301 of the Act.
 
 (b) 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.
 
 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. There is
 no sale of services during the year. 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 continuing failure to correct
 major weaknesses in the aforesaid internal control system.
 
 5.  According to the information and explanations given to us, there
 have been 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.  Accordingly, the question of commenting
 on transactions made in pursuance of such contracts or arrangements
 does not arise.
 
 6.  In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 58A and 58AA or any other relevant provisions of the Act and the
 Companies (Acceptance of Deposits) Rules, 1975, with regard to the
 deposits accepted from the public. According to the information and
 explanations given to us, no Order has been passed by the Company Law
 Board or National Company Law Tribunal or Reserve Bank of India or any
 Court or any other Tribunal on the Company in respect of the aforesaid
 deposits.
 
 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-section (1) of Section 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 generally regular in depositing the undisputed statutory dues
 including provident fund, investor education and protection fund,
 employees’ state insurance, sales-tax, wealth tax, service tax, customs
 duty, excise duty, cess and other material statutory dues as applicable
 with the appropriate authorities. However, Dividend Distribution Tax
 amounting to Rs 359.08 lacs remained in arrears as at the last day of
 the financial year, for a period exceeding six months from the date it
 became payable.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, there were no disputed dues in
 respect of income tax, wealth tax, service tax and cess. The
 particulars of dues of custom duty, excise duty and sales-tax, as at
 31st March, 2011 which have not been deposited on account of disputes
 are as follows:
 
 Nature of dues      Amount      Period to     Forum Where the    
                                 which the          dispute is
                                    amount             Pending
 
              (Rs. in lacs)        relates             pending
     
 Custom Duty          82.00      1998-1999            Tribunal
   
                       3.45      1985-1986          High Court
 
 Excise Duty         129.78      1995-1996        Commissioner 
                                                       Appeals
 
 Sales Tax            78.88      1995-1996            Tribunal
 
 10.  The Company has no accumulated losses as at 31st March 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 bank. There were no dues to any financial
 institution or debenture holder during the year.
 
 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.  In respect of shares, securities, debentures and other investments
 dealt or traded by the Company, proper records have been maintained in
 respect of the transactions and contracts and timely entries have been
 made therein. All the investments are held by the Company in its own
 name.
 
 14.  In our opinion and according to the information and explanations
 given to us, the Company has not given any guarantee for loans taken by
 others from banks and financial institutions.
 
 15.  The Company has not obtained any term loan during the year.
 
 16.  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.
 
 17.  The Company has made a preferential allotment of shares to parties
 and companies covered in the register maintained under Section 301 of
 the Act during the year and the price at which the shares have been
 issued is not prejudicial to the interest of the Company.
 
 18.  The Company has not issued any debentures during the year.
 
 19.  The management has disclosed the end use of money raised by issue
 of Global Depositary Receipts and we have verified the same.
 
 20.  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.
 
 21.  The other clauses, (iii)(b), (iii)(c), (iii)(d), (iii)(f),
 (iii)(g), and (xiii) of paragraph 4 of the Order, are not applicable in
 the case of the Company for the current year, since in our opinion
 there is no matter which arises to be reported in the aforesaid Order.
 
                                   For Thakur, Vaidyanath Aiyar & Co.
                                                Chartered Accountants 
                                    Firm Registration Number: 000038N
 
                                                       C.V.Parameswar
                                                              Partner 
                                                         M.No.: 11541
 Place: Mumbai
 Date : 30-05-2011