Eastern Gases Ltd

TO THE MEMBERS OF EASTERN GASES LIMITED,

We have audited the attached Balance Sheet of EASTERN GASES LIMITED as at 31stMarch, 2010, and also the Profit and Loss Account and the Cash Flow Statement for the yearended on that date annexed thereto. These financial statements are the responsibility ofthe Company s management. Our responsibility is to express an opinion on these financialstatements based on our audit.

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 a significant estimate made by our audit provides a reasonable basis for ouropinion.

We report as follows:

1. As required by the Companies (Auditor s report) Order, 2003, issued by the CentralGovernment of India, in terms of Section 227(4A) of the Companies Act, 1956, we enclose inthe Annexure a statement on the matters specified in the paragraphs 4 and 5 of the saidOrder.

2. Further to our comments in the Annexure referred to in paragraph 1 above:

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, Profit and Loss account and Cash Flow Statement dealt with bythis report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report comply with the Accounting Standards referred to in sub-section(3C) of Section 211 of the Companies Act, 1956;

e) On the basis of the written representations received from the Directors as on 31^stMarch, 2010 and taken on record by the Board of Directors none of the Directors of theCompany is disqualified as on 31^st March, 2010 from being appointed as Directorin terms 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 together with the Company s Accounting Policies andthe Notes thereto, (specifically note no. 4 of the Notes on account attached herewith)give the information required by the Companies Act, 1956 in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India:

i) In the case of the Balance Sheet, of the state of affairs of the Company as on 31^stMarch, 2010;

ii) In the case of the Profit and Loss Account of the PROFIT of the Company for theyear ended on that date; and

iii) In the case of Cash Flow Statement, of the cash flows for the year ended on thatdate.

Annexure to the Auditors Report

Referred to in paragraph 1 of our report of even date:

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

2. As explained to us the fixed assets have been physically verified by the managementduring the year in a phased / Periodical manner which in our opinion is reasonable havingregard to the size of the Company and nature of its assets. No material discrepancies werenoticed on such verification.

3. During the year, Company has not disposed of any substantial/major part of fixedassets.

4. As explained to us, the inventory has been physically verified during the year bythe management. In our Opinion, the frequency of verification is reasonable.

5. In our opinion and according to the information and explanations given to us, theprocedures of physical verification of inventory followed by the management are reasonableand adequate in relation to the size of the Company and the nature of its business.

6. In our opinion and according to the information and explanations given to us and onthe basis of our examination of the records of inventory; the Company is maintainingproper records of inventory. As explained to us there were no material discrepanciesnoticed on physical verification of inventory as compared to the book records.

7. According to the information and explanations given to us, the Company has not takenany loan from or granted any loan to the Parties listed in the Register maintained undersection 301 of the Companies Act, 1956

8. According to the information and explanations given to us; parties to whom loans andadvances in the nature of loans have been given, where stipulations are made, are repayingthe principal amount as stipulated.

9. According to the information and explanations given to us; there is no overdueamount of loans granted to the parties listed in the Register maintained under Section 301of the Companies Act, 1956.

10. In our opinion and according to the information and explanations given to us, thereare adequate internal control procedures commensurate with the size of the Company andnature of its business with regard to the purchase of inventory and fixed assets, and withregard to the sale of goods. During the course of our audit, no major weakness has beennoticed in the internal controls.

11. In respect of transactions entered in the register maintained in pursuance ofsection 301 of the Companies Act, 1956,

12. Based on audit procedures applied by us, to the best of our knowledge and beliefand according to the information and explanations given to us, we are of the opinion thatthe transactions that needed to be entered into the register maintained under Section 301have been so entered.

13. According to the information and explanations given to us there are no transactionsof purchase of goods and material in excess of Rs. 5 lakhs in respect of any party.

14. In our opinion and according to the information and explanations given to us, theCompany has not accepted any deposits from the public within the Provisions of Section 58Aof the Companies Act, 1956 and rules there under.

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

16. We have broadly reviewed the books of account maintained by the Company. Asexplained to us the maintenance of cost records under Section 209(1)(d) of the CompaniesAct, 1956 are not prescribed by the Central Government.

17. According to the records of the Company and explanations given to us, the Companyhas been regular in depositing undisputed statutory dues including Provident Fund,Investor Education and Protection Fund, Employees State Insurance, Income -Tax, Sales Tax,Wealth-Tax, Customs Duty, Excise Duty, Cess and other Statutory dues with the appropriateauthorities during the year.

18. The Company has not incurred cash losses during current and the immediatelypreceding financial year.

19. Based on our audit procedures and on the basis of information and explanationsgiven by the management, we are of the opinion that the Company has not defaulted in therepayment of dues to banks.

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

21. The provisions of any Special Statute applicable to Chit Fund, Nidhi or MutualBenefit fund/Societies are not applicable to the Company.

22. Based on our audit procedures and to the best of our knowledge and according to theinformation and explanations given to us, we are of the opinion that the company ismaintaining proper record of the transactions and contracts of dealing in shares andsecurities and that timely entries have been made in these records.

23. Based on our audit procedures and to the best of our knowledge and belief andaccording to the information and explanations given to us, the shares and securities havebeen held by the Company in its own name.

24. To the best of our knowledge and belief and according to the information andexplanations given to us the company in its own name has held the shares and securities.

25. 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 by the Company and vice versa.

26. The Company has not made any preferential allotment to parties and companiescovered under register maintained Under Section 301 of the Companies Act, 1956, during theyear and question of whether the price at which the shares have been issued is prejudicialto the interest of the Company does not arise.

27. According to the information and explanations given to us, and the records examinedby us, the Company has not issued any debentures hence no question of creation ofsecurities.

28. The Company has not raised money by any public issues during the year and hence thequestion of disclosure and verification of end use of such money does not arise.

29. To the best of our knowledge and belief and according to the information andexplanations given to us, no fraud on or by the Company was noticed or reported during theyear.