Dhunseri Petrochem & Tea Ltd

To

The Members of

Dhunseri Petrochem & Tea Limited

1. We have audited the attached Balance Sheet of Dhunseri Petrochem & TeaLimited (the "Company") as at 31st March 2012, and the related Statement ofProfit and Loss 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 theresponsibility of the Company’s Management. Our responsibility is to express anopinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally acceptedin India. 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, as amended by theCompanies (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’) andon the basis of such checks of the books and records of the Company as we consideredappropriate and according to the information and explanations given to us, we give in theAnnexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

4. We draw your attention to Note 35 to the financial statements, in relation torecognition of Rs. 6462.93 lacs towards compensation receivable from the insurance companytoward loss of certain items of fixed assets, spares, raw materials and packing materialsdue to fire during the year ended 31st March 2011, of which Rs. 982.08 lacs is outstandingas at 31st March 2012 in spite of the awaited approval of the insurance claim anduncertainties as to the amount that may be approved by the insurance company which doesnot meet the requirement to consider prudence in the selection of accounting policies, asset out in Accounting Standard 1 – "Disclosure of Accounting Policies". Hadthe aforesaid Insurance Claim not been recognised in keeping with the consideration ofprudence the profit before tax for the year would have been Rs. 4921.28 lacs instead ofthe reported amount of Rs. 5903.36 lacs, current tax for the year would have been Rs.522.50 lacs instead of the reported amount of Rs. 718.99 lacs, Profit after tax for theyear would have been Rs. 4163 lacs instead of the reported amount of Rs. 4948.59 lacs,earnings per share (basic) would have been Rs.11.89 instead of the reported amount ofRs.14.13, earnings per share (diluted) would have been Rs.11.33 instead of the reportedamount of Rs.13.46 and Other current assets would have been Rs. 3393.05 lacs instead ofthe reported amount of Rs. 4375.13 lacs and Reserves and Surplus would have been Rs.70372.90 lacs instead of the reported amount of Rs. 71158.49 lacs.

5. 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) Except for the effects of the matter referred to in paragraph 4 above, inour opinion, proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books;

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

(d) Except for the matter referred to in paragraph 4 above, in our opinion, theBalance Sheet, the Statement of Profit and Loss and Cash Flow Statement dealt with by thisreport comply with the accounting standards referred to in sub-section (3C) of Section 211of the Act;

(e) On the basis of written representations received from the directors and taken onrecord by the Board of Directors, none of the directors is disqualified as on 31st March2012 from being appointed as a director in terms of clause (g) of sub-section (1) ofSection 274 of the Act;

(f) In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter 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 fairview 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 31stMarch 2012;

(ii) in the case of the Statement of the Profit and Loss, of the profit for the yearended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended onthat date.

Referred to in paragraph [3] of the Auditors’ Report of even date to the membersof Dhunseri Petrochem & Tea Limited on the financial statements as of and for the yearended 31st March 2012.

1. (a) The Company has maintained proper records showing full particulars, includingquantitative details and situation, of fixed assets.

(b) The fixed assets are physically verified by the management according to a phasedprogramme designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets.

Pursuant to the programme, a portion of the fixed assets has been physically verifiedby the Management during the year and no material discrepancies between the book recordsand the physical inventory have been noticed.

(c) In our opinion, and according to the information and explanations given to us, asubstantial part of fixed assets has not been disposed of by the Company during the year.

2. (a) The inventory (excluding stocks with third parties) has been physically verifiedby the Management during the year. In respect of inventory lying with third parties, thesehave substantially been confirmed by them. In our opinion, the frequency of verificationis reasonable.

(b) In our opinion, the procedures of physical verification of inventory followed bythe Management are reasonable and adequate in relation to the size of the Company and thenature of its business.

(c) On the basis of our examination of the inventory records, in our opinion, theCompany has maintained proper records of inventory. The discrepancies noticed on physicalverification of inventory as compared to book records were not material.

3. The Company has neither granted nor taken any loans, secured or unsecured, to / fromcompanies, firms or other parties covered in the register maintained under Section 301 ofthe Act.

4. In our opinion, and according to the information and explanations given to us, thereis an adequate internal control system commensurate with the size of the Company and thenature of its business for the purchase of inventory and fixed assets and for the sale ofgoods and services. Further, on the basis of our examination of the books and records ofthe Company, and according to the information and explanations given to us, no majorweaknesses 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 havebeen 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, thetransactions made in pursuance of such contracts or arrangements and exceeding the valueof Rupees Five lacs in respect of any party during the year have been made at prices whichare reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion, and according to the information and explanations given to us, theCompany has complied with the provisions of Sections 58A and 58AA or any other relevantprovisions of the Act and the ‘Companies (Acceptance of Deposits) Rules, 1975’with regard to the deposits accepted from the public. According to the information andexplanations given to us, no order has been passed by the Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on theCompany in respect of the aforesaid deposits.

7. In our opinion, the Company has an internal audit system commensurate with its sizeand the nature of its business.

8. We have broadly reviewed the books of account maintained by the Company in respectof products where, pursuant to the rules made by the Central Government of India, themaintenance of cost records has been prescribed under clause (d) of sub-section (1) ofSection 209 of the Act, and are of the opinion that, prima facie, the prescribed accountsand records have been made and maintained. We have not, however, made a detailedexamination 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 theCompany examined by us, in our opinion, except for dues in respect of income tax, theCompany has generally been regular in depositing during the year undisputed statutory duesincluding provident fund, investor education and protection fund, employees’ stateinsurance, income tax, wealth tax, service tax, customs duty, excise duty and othermaterial statutory dues, as applicable, with the appropriate authorities other than duesin respect of income tax. The extent of arrears of statutory dues outstanding as at 31stMarch 2012 for a period of more than six months is in respect of income tax of Rs 1.54lacs for the assessment year 2008-09.

(b) According to the information and explanations given to us and the records of theCompany examined by us, the particulars of dues of income tax, sales tax, wealth tax,service tax, customs duty and excise duty as applicable as at 31st March 2012 which havenot been deposited on account of a dispute are as follows:

10. The Company has no accumulated losses as at 31st March 2012 and it has not incurredany cash losses in the financial year ended on that date or in the immediately preceedingfinancial year.

11. According to the records of the Company examined by us and the information andexplanation given to us, the Company has not defaulted in repayment of dues to anyfinancial 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 wayof pledge of shares, debentures and other securities.

13. The provisions of any special statute applicable to chit fund/ nidhi/ mutualbenefit 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, theterms and conditions of the guarantees given by the Company for loans taken by others frombanks or financial institutions during the year, are not prejudicial to the interest ofthe Company.

16. In our opinion, and according to the information and explanations given to us, theterm loans have been applied, on an overall basis, for the purposes for which they wereobtained.

17. On the basis of an overall examination of the balance sheet of the Company, in ouropinion, and according to the information and explanations given to us, there are no fundsraised 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 parties andcompanies 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; and does not have anydebentures outstanding as at the year end.

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, andaccording to the information and explanations given to us, we have neither come across anyinstance of fraud on or by the Company, noticed or reported during the year, nor have webeen informed of any such case by the Management.