1. We have audited the attached Balance Sheet of Timken India Limited
(the Company) as at December 31, 2010 and also the 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 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 the 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) issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose
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 above, we
i. We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
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
iii. The balance sheet, profit and loss account and cash flow
statement dealt with by this report are in agreement with the books of
iv. 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 Companies Act, 1956;
v. On the basis of the written representations received from the
directors, as on December 31, 2010, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
December 31, 2010 from being appointed as a director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956;
vi. 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 :
a) in the case of the balance sheet, of the state of affairs of the
Company as at December 31, 2010;
b) in the case of the profit and loss account, of the profit for the
year ended on that date; and
c) in the case of cash flow statement, of the cash flows for the year
ended on that date.
ANNEXURE TO THE AUDITORS REPORT TO THE MEMBERS OF TIMKEN INDIA LIMITED
REFERRED TO IN OUR REPORT OF EVEN DATE
(i) The Company maintains proper records showing full particulars,
including quantitative details and situation of fixed assets.
Fixed assets have been physically verified by the management during the
year based on a phased programme of verifying all the assets 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 fixed assets. No
material discrepancies were noticed on such verification of fixed
assets. There was no substantial disposal of fixed assets during the
(ii) The management has conducted physical verification of inventory at
reasonable intervals during the year. 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. The Company maintains proper records of inventory and no
material discrepancies were noticed on physical verification.
(iii) (a) As informed to us, 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 Companies Act, 1956.
Accordingly, the provisions of clause 4(iii) (b), (c) and (d) of the
Order are not applicable to the Company.
(b) As informed to us, 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 Companies Act, 1956.
Accordingly, the provisions of clause 4(iii) (f) and (g) of the Order
are not applicable to the Company.
(iv) 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 and fixed assets and for the sale of goods and
services. During the course of our audit, no major weakness has been
noticed in the internal control system in respect of these areas.
During the course of our audit, we have not observed any continuing
failure to correct major weakness in internal control system of the
(v) According to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in section 301 of the Companies Act, 1956 that
need to be entered into the register maintained under section 301 have
been so entered. The company interalia, undertakes transactions of
purchase and sale of goods, materials and components, and services with
associate and group companies, in pursuance of contracts or
arrangements entered in the register maintained under section 301 of
the Companies Act, 1956. As these transactions, exceeding value of
Rupees five lakhs entered into during the financial year, relate to
proprietary items manufactured by the Timken Group and raw materials
and components in connection thereto, and / or specialized services
rendered, comparative rates thereof are not always available; however
as informed, considering the selling prices of such goods, in the
market, and relevant transfer pricing guidelines, prima facie these
transactions have been done at reasonable prices. For services
received, there are no comparatives since as per the managements
explanation such services are highly specialized in nature.
(vi) The Company has not accepted any deposits from the public.
(vii) The Company has an internal audit system, which in our opinion,
is commensurate with the size and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central government for the
maintenance of cost records under section 209 (1) (d) of the Companies
Act, 1956 and are of the opinion that prima facie the prescribed
accounts and records have been made and maintained.
(ix) a) The Company is regular in depositing undisputed statutory dues
including Provident Fund, Investor Education and Protection Fund,
Income tax, Sales tax, Wealth Tax, Service Tax, Custom Duty, Excise
Duty, Cess and other material statutory dues with the appropriate
authorities. The provisions of Employees State Insurance Act are not
applicable to the Company.
Further, since the Central Government has till date not prescribed the
amount of cess payable under section 441 A of the Companies Act, 1956,
we are not in a position to comment upon the regularity or otherwise of
the company in depositing the same.
b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employees state insurance, income-tax,
wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and
other material undisputed statutory dues were outstanding, at the year
end, for a period of more than six months from the date they became
c) According to the records of the Company, the dues outstanding of
income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
duty and cess on account of any dispute, are as follows :
Name of Statute Nature of Dues Amount (Rs.)
Income Tax Act, 1961 Income Tax 36,549,881
Income Tax Act, 1961 Income Tax 47,316,424
Jharkhand Finance Local & Central Sales 218,975,760
(Amendment) Act, Tax Demands
UP Trade Tax Act, Local & Central Sales
1948 Tax Demands
Haryana VAT Sales Tax 208,016
Act, 2003 Demands
Rajasthan Sales Tax Sales Tax 193,374
Delhi Sales Tax Sales Tax 2,425,800
Madhya Pradesh Sales Tax 304,368
Commercial Tax Demands
West Bengal Sales Sales Tax 1,126,623
Tax Act Demands
Orissa Sales Tax Sales Tax 171,563
Central Excise Act, Excise Duty 5,245,045
Name of Statue Period to which Forum
the amount relates
Income Tax Act, 1961 1998-99, 2002-03, Income Tax Appellate Tribunal
Income Tax Act, 1961 2005-06, 2006-07, Commissioner of Income Tax
2007-2008 (Appeals), Jamshedpur
2001 1995-96 to 1996-97, Jt. Commissioner (Appeals),
2004-05 to 2007-08 Jamshedpur
UP Trade Tax Act,
1948 1994-1995 to Appeal filed in Allahabad
2004-05, 2006-07 & Pending with Dy.
Act, 2003 2003-04 & 2006-07 Pending with Dy.
Rajasthan Sales Tax
Act 2007-08 Pending with Assessing
Delhi Sales Tax
Act 2007-08 Pending with Dy.
Act, 1994 1995-1996 Commissioner of Sales Tax,
West Bengal Sales
Tax Act 2006-07 Jt. Commissioner (Tribunal)
2007-08 Jt. Commissioner (Appeal)
Orissa Sales Tax
Act 2003-04 & 2004-05 Jt. Commissioner (Appeal)
Central Excise Act,
1944 1998-99 to 2001-02 Deputy Commissioner of
Central Excise, Jamshedpur
(x) The Company has no accumulated losses at the end of the financial
year and it has not incurred any cash losses in the current and
immediately preceding financial year.
(xi) Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to a financial
institution, bank or debenture holders.
(xii) According to the information and explanations given to us and
based on the documents and records produced to us, 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, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of clause
4(xiii) of the Order are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the
(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 outstanding during the
(xvii) According to the information and explanations 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
(xviii) The Company has not made any preferential allotment of shares
during the year to parties or companies covered in the register
maintained under section 301 of the Companies Act, 1956.
(xix) The Company did not have any outstanding debentures during the
(xx) The Company has not raised any money through a public issue during
(xxi) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the course of our audit.
For S.R. BATLIBOI & CO.
FIRM REGISTRATION NO. 301003E
SANJOY K. GUPTA
Place: Kolkata Partner
Date: 10th February, 2011 Membership No. 54968