Atreya Petrochem Ltd

The Members of Atreya Petrochem Ltd.

1. We have audited the attached Balance Sheet of Atreya Petrochem Ltd. as at 30^thJune, 2011, the Profit and Loss Account and also the Cash Flow Statement of the Companyfor the year ended on that date (i.e. 01.04.2010 to 30.06.2011) annexed thereto. Thesefinancial statements are the responsibility of the Company's management. Ourresponsibility 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 inIndia. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 and the Companies(Auditor's Report) (Amendment) Order, 2004 issued by the Central Government of India interms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in theAnnexure, a statement on matters specified in paragraphs 4 and 5 of the said Order,subject to notes on accounts.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we reportthat -

(a) We have obtained all the information and explanations, which to the best of ourknowledge 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 theCompany so far as appears from our examination of the books;

(c) The Balance Sheet, the Profit and Loss Account and Cash Flow Statement dealt withby this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, the Profit and Loss and Cash Flow StatementAccount dealt with by this report comply with the accounting standards referred to insub-section (3C) of Section 211 of the Companies Act, 1956, subject to notes on accounts.

(e) On the basis of written representations received from the directors as on June 30,2011 and taken on record by the Board of Directors, we report that none of the directorsis disqualified as on 30^th June 2011 from being appointed as a director interms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read with the notes thereon, give the information requiredby the companies Act, 1956, in the manner so required and give a true and fair view inconformity 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 on 30^thJune, 2011;

(ii) in the case of the Profit and Loss Account, of the profit of the company for theyear ended on that date(i.e. 01.04.2010 to 30.06.2011); and

(iii) in the case of the Cash Flow Statement, of the Cash Flow of the company for theyear ended on that date (i.e. 01.04.2010 to 30.06.2011).

Referred to in paragraph 3 of our report of even date on the accounts for the yearended 30^th June 2011 of Atreya Petrochem Ltd.

(i) (a) As informed to us, The Company is in the process of compiling records toshowing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, fixed assets, according to the practice of the Company arephysically verified by the management at reasonable intervals, in a phasedverification-programme, which, in our opinion, is reasonable, looking to the size of theCompany and the nature of its business. As informed to us, no material discrepancies havebeen noticed on verification;

(c) No disposal of a substantial part of fixed assets of the company has taken placeduring the year.

(ii) (a) As informed to us, The Inventory were physical verified by the management atreasonable intervals during the year.

(b) In our opinion and according to the information and explanations given to us,company has reasonable and adequate procedure for physical verification of inventories inrelation to the size of the company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, theCompany has maintained proper records of inventory, and no major discrepancy reported bythe management.

(iii) The Company has granted unsecured loans to 4 companies, and 1 Interested Partylisted in the register maintained under Section 301 of the Companies Act, 1956. The yearbalance of loans granted to these was Rs. 172.63 Lacs.

In our opinion and according to the information and explanations given to us, the termsand condition of interest free loan given to the parties covered under in the registermaintained under section 301of the Companies Act, 1956 are not prima facie prejudicial tothe interest of the company.

According to the information and explanations given to us, no repayment schedule hasbeen specified and accordingly the question of regularity in payment of principal amountand interest wherever applicable does not arise.

The Company has taken unsecured loans from 5 companies and 1 Directors listed in theregister maintained under Section 301 of the Companies Act, 1956. The year balance ofloans taken from these was Rs. 148.15 Lacs.

In respect of above Loans taken, no repayment schedule has been specified with regardto the Interest / Repayment or any other terms and conditions.

(iv) In our opinion and according to the information and explanations given to us,there are adequate internal control procedures commensurate with the size of the Companyand the nature of its business.

(v) According to the information and explanations given to us, the details oftransaction that needed to be entered in the register in pursuance of section 301 of theCompany Act. 1956, have been so entered.

According to information and explanations given to us, the transactions of purchase andsale of goods/services made in pursuance of such contracts or arrangements have been madeat prices which are reasonable having regard to prevailing market prices at the relevanttime.

(vi) The company has not accepted deposits from other corporate which attracting theprovisions of section 58A and 58AA of the Companies Act, 1956, and the rules framed thereunder.

(vii) The system of internal audit of the company needs to be strengthened andcommensurate with the size and nature of its business.

(viii) According to the information and explanations given to us, the CentralGovernment has not prescribed maintenance of cost records under Section 209(1)(d) of theCompanies Act, 1956.

(ix) In respect of statutory dues:

(a) Account to the records of the Company examined by us, Company is not liable to PayProvident Fund, Investor Education and Protection fund, Employees State Insurance, SalesTax, Wealth Tax, Service Tax, Custom duty, Excise Duty, Cess no undisputed amounts payablein respect of such statutory dues which have remained outstanding as on 30^thJune 2011 for a period of more than Six Month from the day they become payable except thefollowing

(b) According to the Information and explanation given to us there are no dues of SalesTax, Custom Duty, Wealth Tax, Services Tax, Custom Duty, Excise Duty and Cess Which havenot been deposited on account of any dispute except the Following -

(x) Accumulated losses at the end of financial year ended on 30^th June ,2011is Rs. 1,40,26,181/- which does not exceed 50% of its net worth and it has not incurredcash losses in the financial year ended on the date and in the immediately precedingfinancial Year.

(xi) According to the information and explanations given to us and records of thecompany examined by us, the Company has not obtained any loan from financial institutionsor banks and has not issued any debentures. Therefore reporting on whether company hasdefaulted in repayment of dues is not applicable.

(xii) According to the information and explanations given to us, the Company has notgranted any loans or advances on the basis of security by way of pledge of shares,debentures and other securities.

(xiii) As the Company is not a chit fund or a nidhi / mutual benefit fund / society towhich the provisions of special statute relating to chit fund are applicable, theprovisions of clause 4(xiii) of the Order are not applicable.

(xiv) The company is dealing in or trading in share, securities, Debenture or otherinvestment. The Company has maintained proper records of the transactions and contracts inrespect of dealing or trading in shares, securities, debentures and other investments andtimely entries have been made therein. Further such securities have been held by thecompany in its own name or are in the process of transfer in its on company name.

(xv) According to the information and explanations given to us, the Company has notgiven any guarantee for loans taken by others from banks or financial institutions.

(xvi) According to the information and explanations given to us and as per records madeavailable for our verification, the Company has not taken any term loan during the year

(xvii) According to the information and explanations given to us and on an overallexamination of the balance sheet of the Company, we report that no funds raised onshort-term basis have been used for long-term investment, this clause is not applicable.

(xviii) As the Company has not made any preferential allotment of shares during theyear to parties and companies covered in the Register maintained under Section 301 of theAct, the provisions of clause 4(xviii) of the Order are not applicable to the Company.

(xix) As the Company has not issued any debentures, the provisions of clause 4(xix) ofthe Order are not applicable to the Company.

(xx) The Company has not raised any money by public issue during the year.

(xxi) According to the information and explanations given to us, no fraud on or by theCompany was noticed or reported during year.