We have audited the attached Balance Sheet of FAG Bearings India
Limited (''the Company'') as at December 31,2011 and the related Profit
and Loss Account and the 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.
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
As required by the Companies (Auditors'' Report) Order, 2003 (''the
Order'') issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956 (''the Act''),
we enclose in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure referred to above, we report
-we have obtained all the information and explanations, which to the
best of our knowledge and belief, were necessary for the purposes of
-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
-the Balance Sheet, the Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
-in our opinion, the Balance Sheet, the Profit and Loss Account and the
Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in sub-section (3 C) of Section 211
Of the Act;
- on the basis of written representations received from the directors
of the Company as at December 31, 2011 and taken on record by the Board
of Directors, we report that none of the directors is disqualified as on
December 31, 2011 from being appointed as a director in terms of Clause
(g) of sub-section (1) of Section 274 of the Act; and
- 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 Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
i) in the case of the Balance Sheet, of the state of affairs of the
Company as at December 31,2011;
ii) in the case of the Profit and Loss Account, of the profit of the
Company for the year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
With reference to the Annexure referred to in our report ofthe even
date, we report that: ,
[I] (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
(b) The Company has a programme of physical verification of its fixed
assets by which all fixed assets are verified - once in every two
years. In our opinion, this periodicity of physical verification is
reasonable having regard to the size of the Company and the nature of
its assets. Accordingly, all assets were physically verified by the
management in the previous year and no material discrepancies were
noticed on such verification.
(c) Fixed assets disposed off during the year were not substantial, and
therefore, do not affect the going concern assumption.
[II] (a) The inventory, except goods-in-transit and stocks lying with
third parties, has been physically verified by the management during
the year. In our opinion, the frequency of such verification is
reasonable. For stocks lying with third parties at the year ''end,
written confirmations have been obtained.
(b) The procedures for the physical verification of inventories
followed by the management are reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.
[III] According to the information and explanations given to us, we are
Of the opinion that there are no Companies, firms or other parties
covered in the register required under Section 301 of the Act.
Accordingly, paragraph 4(iii) of the Order is not applicable.
[IV] In our opinion and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories and fixed assets are for the Company''s
specialised requirements and similarly certain goods sold and services
rendered are for the specialised requirements of the buyers and suitable
alternative sources are not available to obtain comparable quotations,
there is an adequate internal control system commensurate with the size
of the Company and the nature of its business with regard to purchase of
inventories and fixed assets and with regard to the sale of goods and
services. We have not observed any major weakness in the internal
control system during the course of the audit.
[V] In our opinion, and according to the information and explanations
given to us, there are no contracts and arrangements the particulars of
which need to be entered into the register maintained under Section 301
of the Companies Act, 1956.
[VI] In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Section
58A, Section 58AA or other relevant provisions of the Act, and the rules
framed there under with regard to deposits accepted from the public.
Accordingly, there have been no proceedings before the Company Law
Board or National Company Law Tribunal (as applicable) or Reserve Bank
of India or any Court or any other Tribunal in this matter and no order
has been passed by any of the aforesaid authorities.
[VII] In our opinion, the Company has an internal audit system
commensurate with the size and the nature of its business.
[VIII] We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government for
maintenance of cost records under Section 209(l)(d) of the Act in
respect of bearings and are of the opinion that prima facie, the
prescribed accounts and records have been made and maintained.
However, we have not made a detailed examination of the records.
[IX](a) According to the information and explanations given to us and
on the basis of our examination of the records of the Company, amounts
deducted/accrued in the books of account in respect of undisputed
statutory dues including Provident Fund, Employees'' State Insurance,
Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise
duty, Value added tax, Investor Education and Protection Fund and other
material statutory dues have been regularly deposited during the year by
the Company with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Employees''
State Insurance, income tax, sales tax, wealth tax, service tax,
customs duty, excise duty, value added tax, investor education and
protection fund and other material statutory dues were in arrears as at
December 31,2011 for a period of more than six months from the date they
b) According to the information and explanations given to us, there are
no dues of income tax, sales tax, service tax, wealth tax, excise duty
and customs duty, which have not been deposited with the appropriate
authorities on account of any dispute other than those mentioned below:
Name of Nature of Amount Period Forum where the dispute
statute the Dues (Rs. in
million) is pending
interest 2.4 2002 Sales tax appellate
penalty 20.3 2004-05 Joint commissioner
0.1 2005-06 Appeals
0.1 2003-04 Dy. Commissioner
interest 0.7 2007-08 Central Excise &
penalty Tax Appellate Tribunal
11.3 2003-04, Commissioner Appeals
1.8 2004-05 Assistant Commissioner
Tax Act, Tax,
interest 27.7 2006-07 Income Tax Appellate
1961 and penalty Tribunal
39.3 2007-08 Commissioner Appeals
[X] The Company does not have any accumulated losses at the end ofthe
financial year and has not incurred cash losses in the financial year
and in the immediately preceding financial year.
[XI] In our opinion and according to the information and explanations
given to us, the Company did not have any outstanding dues to any
financial institution, banks or debenture holders during the year.
[XII] The Company has not granted loans and advances on the basis
Of security by way of pledge of shares, debentures and other securities.
[XIII] In our opinion, and according to the information and
explanations given to us, the Company is not a chit fund ora nidhi /
mutual benefit fund / society.
[XIV] According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities,
debentures and other investments.
[XV] 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.
[XVI] The Company did not have any term loans out standing during the year.
[XVII] According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we are of the
opinion that the funds raised on short-term basis have not been used
for long-term investment.
[XVIII] As stated in paragraph (iii) above, there are no companies /
firms / parties covered in the register required to be maintained
under Section 301 of the Act.
[XIX] The Company did not have any outstanding debentures during the
[XX] The Company has not raised any money by public issues during the
[XXI] According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
For B S R & Co.
Firm''s Reg. No. 101248W
Mumbai: February 9, 2012
Membership No. 046476