GSL Nova Petrochemicals Ltd

To,

The Members of

GSL-NOVA PETROCHEMICALS LIMITED

(Formerly Known as Nova Petrochemicals Limited)

Ahmedabad

1. We have audited the attached Balance Sheet of GSL-NOVA PETROCHEMICALS LIMITEDas at 31st March 2010, the Profit and Loss Account and also Cash Flow Statement for theyear ended on that date annexed thereto (together read as financial statements). 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. These Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit also includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Company LawBoard in terms of section 227 (4 A) of the Companies Act, 1956, we enclose in the Annexurea statement on the matters specified in paragraphs 4 & 5 of the said Order.

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

(i) We have obtained all the information and explanations, which are to the best of ourknowledge and belief, were necessary for the purpose of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;

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

(iv) 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;

(v) On the basis of written representation received from the directors, as on 31stMarch, 2010 and taken on record by the Board of Directors, none of the directors isdisqualified as on 31st March 2010, from being appointed as director of the company interms of clause (g) of subsection (1) of section 274 of the Companies Act, 1956.

(vi) In our opinion and to the best of our information and according to theexplanations given to us, the said accounts, read together with the notes thereon, givethe information required by the Companies Act, 1956 in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia:

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

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

(iii) In the case of the Cash Flow Statement, of the Cash Flow of the Company for theyear ended on that date.

ANNEXURE TO THE AUDITORS REPORT

Referred to in paragraph 3 of our Report of even date to the Members of

GSL-NOVA PETROCHEMICALS LIMITED for the year ended 31st March, 2010.

1. In respect of Fixed Assets:

a. The Company has maintained proper records showing full particulars includingquantitative details and situation of Fixed Assets on the basis of available information.

b. As per the information and explanations given to us, the management at reasonableintervals during the year in accordance with a programme of physical verificationphysically verified the fixed assets and no material discrepancies were noticed on suchverification as compared to the available records.

c. In our opinion, the Company has not disposed off any major / substantial part of thefixed assets during the year and the going concern status of the company is not affected.

2. In respect of its Inventories:

a. The inventory other than the inventory of work in process has been physicallyverified during the year by the management. We have been informed that looking at themanufacturing process, it is not possible to physically verify the inventory of work inprocess. In our opinion, the frequency of verification is reasonable.

b. The procedures of physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the Company and the nature of itsbusiness.

c. On the basis of our examination of the records of inventory, we are of opinion thatthe Company is maintaining proper records of inventory. The discrepancies noticed onverification between the physical stocks and books records were not material.

3. In respect of loans, secured or unsecured, granted or taken by the company to/fromcompanies, firms or other parties covered in the register maintained under section 301 ofthe Companies Act, 1956.

a. There is 1 party covered in the register maintained under section 301 of theCompanies Act, 1956 to whom the company has granted loans/advances. The maximum amountinvolved during the year was Rs. 18.13 Lacs and the year-end balance of loans taken fromsuch parties was Rs. Nil Lacs.

b. In our opinion and according to the information and explanations given to us, incase of loans/advances granted during the year, the rates of interest, wherever applicableand other terms and conditions are not prima facie prejudicial to the interest of thecompany.

c. In respect of loans/advances granted by the company, the company has grantedinterest free loans and in case of principal, the terms of repayment have not beenstipulated hence the question of regularity of payment of interest and principal does notarise.

d. There are 4 parties covered in the register maintained under section 301 of theCompanies Act, 1956 from whom the company has taken loans. The maximum amount involvedduring the year was Rs. 577.98 Lacs and the year-end balance of loans taken from suchparties was Rs. 442.30 Lacs.

e. In our opinion and according to the information and explanations given to us, incase of loans taken during the year, the rates of interest, wherever applicable and otherterms and conditions are not prima facie prejudicial to the interest of the company.

f. In respect of loans taken by the company, the company has taken interest free loansand in case of principal, the terms of repayment have not been stipulated hence thequestion of regularity of payment of interest and principal does not arise.

4. 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 and thenature of its business with regard to purchases of inventory, fixed assets and with regardto the sale of goods and services. During the course of our audit, no major weakness hasbeen noticed in the internal controls.

5. In respect of contracts or arrangements covered under Section 301 of the CompaniesAct, 1956:

a. Based on the audit procedures applied by us and according to the information andexplanations provided by the management, we are of the opinion that the contracts orarrangements that need to be entered into the register maintained under section 301 havebeen so entered.

b. In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of contracts or arrangements entered in the registersmaintained under section 301 in respect of any party during the year have been made atprices which are reasonable having regard to prevailing market prices at the relevanttime.

6. The company has not accepted any deposits from public.

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

8. We have broadly reviewed the books of account maintained by the Company pursuant tothe Rules made by the Central Government for the maintenance of cost records under Section209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima facie, theprescribed accounts and records have been made and maintained. We have not, however, madea detailed examination of the said records with a view to determine whether they areaccurate or complete.

9. In respect of Statutory Dues:

A. According to the records of the Company, the Company is regular in depositing withappropriate authorities undisputed statutory dues including custom duty, excise duty, cessand other statutory dues applicable to it with the appropriate authorities all thoughthere has been delay in depositing Service Tax, Gujarat Value Added Tax, Central SalesTax, Provident fund, Professional Tax, Income tax deducted at source and Tax Collected atSource. According to the information and explanations given to us, Wealth Tax of Rs. 5Lacs, Investor Education & Protection Fund of Rs.2.85 Lacs and Tax deducted at Sourceof Rs.0.14 Lacs have not been deposited till balance sheet date except that no undisputedamounts payable in respect of Income Tax, Service Tax, Customs Duty, Value Added Tax, andExcise Duty were outstanding as at 31st March, 2010 for a period of more than six monthsfrom the date they became payable.

b. On the basis of our examination of the records, following disputed statutory dueshave not been deposited with the appropriate authorities;

10. The accumulated losses of the company at the end of the financial year are not morethan fifty percent of its net worth. The Company has not incurred cash loss during theyear under audit and in the immediately preceding financial year.

11. In our Opinion and according to the information and explanations given to us, therewas a delay ranging upto 15 days in repayment of principal of Rs.59.36 Lacs and a delayranging up to 67 days in repayment of interest of Rs.280.82 Lacs.

12. Based on our examination of documents and records and information and explanationsgiven to us, the Company has not granted any loans and advances on the basis of securityby way of pledge of shares, debentures and other securities.

13. The provisions of any special statute applicable to Chit Fund, Nidhi or Mutualbenefit Fund/Societies are not applicable to the Company. Therefore, clause 4 (xiii) ofthe Companies (Auditor s Report) Order, 2003 is not applicable to the company.

14. The Company is not dealing or trading in shares, securities, debentures or otherinvestments and hence, the requirements of Para 4 (xiv) are not applicable to the Company.

15. As per the information provided to us, the Company has not given any guarantee forloans taken by others from bank or financial institutions.

16. The company has not obtained any term loans from banks or financial institutionsduring the year under audit.

17. According to the information and explanations given to us and on the basis of anoverall examination of the balance sheet of the company, we report that no funds raised onshort-term basis have been used for long term purpose.

18. During the year, the Company has not made any preferential allotment of shares toparties and companies covered in the register maintained under Section 301 of theCompanies Act, 1956.

19. During the year, the company has not issued any debentures.

20. During the year, the Company has not raised any money by way of Public issues.

21. Based upon the audit procedures performed and information and explanations given bythe management, we report that no fraud on or by the Company has been noticed or reportedduring the year.