Lawreshwar Polymers Ltd

To.

The Members,

Lawreshwar Polymers Limited.

We have audited the attached Balance Sheet of M/s Lawreshwar Polymers Limitedas at 31st March, 2010 together with the Profit & Loss A/c and cash flow statement ofthe Company for the year ending on that date annexed thereto. These financial statementsare the responsibility of the Company's Management. Our responsibility is to express anopinion on these financial statements based on our Audit.

1. We conducted our audit in accordance with Auditing Standards generally accepted inIndia. Those standards require that we plan & 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 disclosurein 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.

2. As required by the Companies (Auditor's Report) order, 2003(as amended), issued bythe Central Government of India in terms of sub section (4A) of section 227 of theCompanies Act. 1956 and on the basis of such checks of the books and records of thecompany as we considered appropriate and according to the explanation given to us, weannex hereto a statement on the matters specified in paragraph 4 & 5 of the saidorder.

3. Further to our comments referred to in paragraph 1&2 above we report that:

(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, subject to Note No.16of Notes On Accounts regarding loss by fire.

(b) In our opinion, proper books of accounts as required by the law have been kept bythe company so far as appears from our examination of those books

(c) The balance sheet, profit & loss account and cash flow statement dealt with bythis report are in agreement with the books of accounts.

(d) In our opinion, the balance sheet, profit & loss account and cash flowstatement dealt with by this report compliance with the Mandatory accounting standardsreferred to in sub section (3C) of section 211 of the Companies Act 1956.

(e) On the basis of Written representation received from all the Director on March31,2010 and taken on records by the board of Directors, we report that none of theDirectors of the company is disqualified as on march 31, 2010 from being appointed as adirector under 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 significant Accounting Policies& Notes on Accounts, subject to Note No. 16(a) regarding non provision against thebalance amount of Rs. 186.74 Lacs against shortfall in insurance claim passed by theinsurance company on the plea that the company is contemplating further action in thismatter, hence we are unable to express our opinion on the recoverability of this matterand refer Note No 15(c) regarding loss by fire in the leased unit of the company, give theinformation required by the Companies Act 1956 in the manner so required and give a trueand fair view in conformity with the accounting principles generally in India subject toNote No. 14 regarding Loss by Fire:

a) In the case of Balance Sheet, of the State of affairs of the Company as at March31,2010.

b) In case of Profit & Loss Accounts of the profit for the year ended on that date.

c) In case of Cash Flow statement, of the cash flows of the company for the year endedon that date.

Re: M/s Lawreshwar Polymers Limited

(i) In Respect of Its Fixed Assets:

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

(b) As explained to us. all the assets have been physically verified by the managementin a phased periodical manner during the year and there is a regular programme ofverification which, in our opinion is reasonable having regard to the size of the companyand the nature of its assets. No material discrepancies were noticed on such physicalverification.

(c) In our opinion, the company has not disposed off a substantial part of it's thefixed assets during the year and the going concern status of the company not affected.

(ii) In respect of its inventories:

(a) As explained to us, the inventory has been physically verified during the year bythe management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanation 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 nature of its business.

(c) In our opinion and according to the information and explanation given to us and onthe basis of our examination of the records of inventory, the company has maintainedproper records of inventory. The discrepancies noticed on physical verification ofinventory as compared to book records were not material and have been properly dealt within the books of accounts.

iii) (a) According to the Information & Explanation given to us, the company hasgranted loans to one parties listed in the register maintained under Section 301 of theCompanies Act, 1956. The year end balance of such deposits as on 31.03.2010 is Rs.2,02,42,395/-. The maximum balance outstanding at a point of time during the year was Rs.2,11,59,395/-.

(b) In our opinion, the rate of interest and other terms & conditions on whichloans & deposits have been granted to the companies, firms or other parties listed inthe register maintained under Section 301 of the Companies Act, 1956 are not prima facieprejudicial to the interest of the company.

(c) According to information & explanations given to us, the receipt of principalamount & interest thereon are regular..

(d) According to informations explanations given to us there is no overdue amount inrespect of such loans.

(e) The Company has taken loans from one party covered in the register maintained UnderSection 301 of The Companies Act, 1956. The Maximum balance outstanding at a point of timeduring the year was Rs. Nil & the year end balance of loans taken from such party wasNIL.

(f) In our opinion, the rate of interest & other terms & conditions on whichloans have been taken from companies, firms or other parties listed in the registermaintained under Section 301 of The Companies Act,1956 are not prima facie prejudicial tothe interest of the company

(g) According to the information & explanation given to us the company is regularin payment of principal amount & interest due o loans taken by it.

(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 andthe nature of its business with regard to purchases of inventory and fixed assets and withregard to the sale of goods and services. During the course of our audit, we have notobserved any continuing failure to correct major weaknesses in internal control system.

(v) In respect of the contracts or arrangements referred to in Section 301 of TheCompanies Act,1956:

(a) According to the information and explanation given to us, we are of the opinionthat the particulars of contracts or arrangements that need to be entered in the registermaintained u/s 301 of the companies act, 1956 have been so entered.

(b) In our opinion and according to the information and explanation given to us, eachof such transaction in respect of any party, listed in the register maintained u/s 301 ofThe Companies Act, 1956 have been made at prices which are prima facie reasonable havingregard to the prevailing market price at the relevant time.

(vi) The Company has not accepted any deposits from the public during the year andaccordingly the provisions of Section 58A & Section 58AA of the Companies (Acceptanceof Deposit) rules, 1975 are not applicable.

(vii) In our opinion, the company has an internal audit system commensurate with thesize and nature of its business.

(viii) The Central Government has prescribed maintenance of cost records u/s 209(1) (d)of The Companies Act, 1956 in respect of certain manufacturing activities of the company.We have broadly reviewed the accounts and records of the company in this connection andare of the opinion that prima facie, The prescribed accounts and records have been madeand maintained. We have, however not carried out a detailed examination of such recordswith a view to determine whether they are accurate or complete.

(ix) In respect of statutory dues:

(a) To the best of our knowledge and information obtained and verifications made, wereport that the company is regular in depositing with appropriate authorities undisputedstatutory dues including provident fund, investor education protection fund, employees'state insurance, income tax, sales tax, Wealth tax, service tax, custom duty, excise duty,cess and other material statutory dues to the extent applicable to it except for few delayin deposition of TDS, Service Tax and there are no undisputed amounts payable in respectof such dues which have remained outstanding as at 31st March2010 for a period exceedingsix months from the date of becoming payable.

(b) According to the information and explanation given to us, there are no pending duesof Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty and cess,which are not deposited on account of any dispute except following:

(x) The company does not have accumulated losses at the end of the financial year. TheCompany has not incurred cash losses during the financial year covered by our audit and inthe immediately preceding financial year.

(xi) Based on our audit procedures and according to the information & explanationsgiven to us, we are of the opinion that the company has not defaulted in repayment of duesto financial institutions, banks or debenture holders.

(xii) In our opinion and according to the information and explanation given to us &based on the information available, the company has not granted loans and advances on thebasis of security by way of pledge of shares, debentures and other securities. Hence, thequestion of maintenance of records or reporting on deficiencies does not arise.

(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 Companies (Auditor's Report)Order, 2003 are not applicable to the company.

(xiv) In our opinion, during the year under audit, the company did not engage indealing or trading in shares, securities, debentures and other investments other thandisposal of some of its investments. Accordingly, the provisions of clause 4(xiv) of theCompanies (Auditor's Report) Order, 2003 are not applicable to the company.

(xv) According to the information and explanation given to us, the company has notgiven any guarantee for loans taken by others from bank or financial institution. Hencethis clause of Companies (Auditor's Report) Order, 2003 is not applicable.

(xvi) In our opinion and according to the information and explanations given to us andbased on the information available, the term loan availed by the company were, primafacie, applied by the company during the year for the purpose for which the loans wereobtained.

(xvii) According to the information and explanations given to us and on an overallexamination of the Balance Sheet of the company, we are of the opinion that there are nofunds raised on short term basis that have been used for long-term investments.

(xviii) According to the information and explanations given to us, the company has notmade preferential allotment of shares to parties and companies covered in the registermaintained under section 301 of the Companies Act, 1956, during the year and hence thequestion of whether the price at which Shares have been issued is prejudicial to theinterest of the company does not arise.

xix) According to the information and explanations given to us, the company has notissued any debentures during the year; hence the question of creating security does notarise.

(xx) According to the information and explanation given to us the company has allotted82,50,705 equity shares of Rs. 10 each at a premium of Rs. 6 on March 8, 2007 as Net Offerto the public during the Financial Year 2006-2007. Management has disclosed the end use ofmoney raised by public issue in Notes of Accounts. However according to information &explanation given to us the same is not yet fully utilized.

(xxi) During the course of examination of the books and records of the company, carriedout in accordance with the generally accepted accounting Practices in India and accordingto the information and explanations given to us, we have neither come across any instanceof fraud on or by the company, nor we have been informed of such cases by the managementthat causes the financial statements to be materially misstated.