1.  We have audited the attached Balance Sheet of AARTI INDUSTRIES
 LIMITED, as at 31st March, 2011 and also the Profit and Loss Account
 for the year ended on that date annexed thereto. These financial
 statements are the responsibility of the Company''s Management. Our
 responsibility 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 in India. Those standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining on a test basis, evidence supporting the amounts and
 disclosures in the financial statement. An audit also includes,
 assessing the accounting principles used and significant estimates made
 by Management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003, issued
 by the Central Government of India in terms of sub- section (4A) of
 section 227 of the Companies Act, 1956, we enclose in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the said
 Order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that:
 
 (i) We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 (ii) In our opinion, the Company has kept proper books of account as
 required by law so far as appears from our examination of those books;
 
 (iii) The Balance Sheet and Profit and Loss Account dealt with by this
 report are in agreement with the books of account;
 
 (iv) In our opinion, the Balance Sheet and Profit and Loss Account and
 Cash Flow Statement dealt 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 representations received from the
 Directors, as on 31st March 2011, and taken on record by the Board of
 Directors, we report that none of the Directors is prima facie
 disqualified as on 31st March, 2011 from being appointed as a Director
 in terms of clause (g) of sub-section (1) of section 274 of the
 Companies Act, 1956;
 
 (vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts give the information
 required by the Companies Act, 1956, in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India;
 
 (a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011;
 
 (b) in the case of the Profit and Loss Account, of the Profit for the
 year ended on that date; and
 
 (c) in the case of the Cash Flow Statement, of the Cash Flows for the
 year ended on that date;
 
 Annexure to The Auditors'' Report
 
 (This is the Annexure referred to in our Report to the Members of AARTI
 INDUSTRIES LTD. of even date)
 
 In terms of the information and explanations given to us and the books
 and records examined by us in the normal course of audit and to the
 best of our knowledge and belief, we state as under:
 
 (i) The Company has maintained proper records showing full particulars
 including quantitative details and situation of its fixed assets. These
 fixed assets were physically verified by the Management during the
 year. We have been informed that no material discrepancies were noticed
 on such physical verification. Substantial part of fixed assets has not
 been disposed of during the year, which will affect its status as a
 going concern.
 
 (ii) The stock of inventory has been physically verified during the
 year by the Management at reasonable intervals, except stock lying with
 third parties, confirmation of such stocks with third parties has been
 obtained by the Company. In our opinion, the procedures of physical
 verification of inventory followed by the Management are reasonable and
 adequate in relation to the size of the Company and the nature of its
 business. The Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of stocks as compared to
 book records were not material, however, the same have been properly
 dealt with the books of account.
 
 (iii) (a) The Company has not granted loans, secured or unsecured to
 Companies, covered in the register maintained under section 301 of the
 Companies Act, 1956.
 
 (b) The Company has taken loans from three Companies covered in the
 register maintained under section 301 of the Companies Act, 1956. The
 maximum amount involved during the year was Rs. 783.05 Lakhs and the
 year-end balance of the loans taken was Rs. 0.03 Lakhs.
 
 (c) In our opinion, the rate of interest and other terms and conditions
 on which the loans have been given by or taken from the Companies
 listed in the register maintained under section 301 of the Companies
 Act, 1956 are not, prima facie, prejudicial to the interest of the
 Company.
 
 (d) The Company is regular in repaying the principal amount as
 stipulated and has been regular in the payment of the interest.
 
 (iv) In our opinion, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business, for the purchase of inventory and fixed assets and for the
 sale of goods. In our opinion, there is no continuing failure to
 correct major weaknesses in internal control.
 
 (v) In case of transactions exceeding the value of the five lakhs
 rupees in the financial year in respect of any party – (a) The
 transactions that need to be entered into a register in pursuance of
 section 301 of the Companies Act, 1956 have been so entered. (b) In our
 opinion, each of these transactions have been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 (vi) The Company has accepted deposits from the public. In our opinion,
 the directives issued by the Reserve Bank of India and the provisions
 of sections 58A and 58AA of the Companies Act, 1956 and the rules
 framed there under, where applicable, have been complied with. National
 Company Law Tribunal has not passed any order in respect of public
 deposits accepted by the Company.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 (viii) The Company has maintained cost records as required under
 Section 209(1)(d) of the Companies Act, 1956. We have not, however,
 carried out a detailed examination of such records.
 
 (ix) (a) The Company is regular in depositing undisputed statutory dues
 including Provident Fund, Investor Education and Protection Fund,
 Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Custom
 Duty, Excise Duty, Cess and any other statutory dues with the
 appropriate authorities.
 
 (b) The following statutory dues have not been deposited on account of
 dispute:
 
                                                       (Rs. in Lakhs)
 
 Name of the Statute/
 Nature of dues            Period to which  Forum where disputes 
                                             is pending            Total
                           the amounts
                           relates
 
                                            Commission
                                               -erate   Appellate
                                                      Authorities 
                                                                &
                                                        Tribunals
 
 Service Tax Act/ Tax 
 & Cess                     2006-07            30.91           -    30.91
 
 The Central Excise 
 Act,1944/                  2001-02 to        253.06      147.48   400.53
 Tax Interest & Penalty     2010-11
 
 Various State Sales Tax 
 Act and Central Sales 
 Tax Act, 1956/ Tax 
 Interest & Penalty         2002-03            14.36           -    14.36
 
                            2004-05                -      259.20   259.20
 
 Total                                        298.33      406.68   705.00
 
 (x) The Company has no accumulated losses. The Company has not incurred
 cash losses in the financial year under report and in the financial
 year immediately preceding such financial year.
 
 (xi) The Company has not defaulted in repayment of dues to financial
 institutions or banks.
 
 (xii) The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures or other securities.
 
 (xiii) The Company has not given guarantee for loans taken by others
 from banks or financial institutions and in our opinion, the terms and
 conditions of such guarantee are not, prima facie, prejudicial to the
 interests of the Company.
 
 (xiv) The Company is not a chit fund or a nidhi/mutual benefit
 fund/society. Therefore, the provisions of clause 4(xiv) are not
 applicable to the Company.
 
 (xv) The Company is not dealing in or trading in shares, securities,
 debentures and other investments. Accordingly the provisions of clause
 4(xv) of the Order are not applicable to the Company.
 
 (xvi) Term loans availed by the Company were, prima facie, applied for
 the purposes for which the loans were obtained.
 
 (xvii) On an overall basis, the funds raised on short-term basis have,
 prima facie, not been used for long term investment.
 
 (xviii) The Company has issued preferential equity share warrants to
 parties and Companies covered in the Register, maintained under section
 301 of the Companies Act, 1956, during the year. In our opinion, the
 price at which preferential share warrants have been issued is not
 prejudicial to the interests of the Company.
 
 (xix) The Company has not issued debentures during the year, hence
 requirement of reporting regarding creation of security in respect of
 debentures does not arise.
 
 (xx) The Company has raised money by preferential issue of partly paid
 convertible equity share warrants during the year and we have verified
 the end use of the funds raised with the necessary documents.
 
 (xxi) During the audit carried out by us, any fraud on or by the
 Company has not been noticed or reported during the year.
 
 
                                         For PARIKH JOSHI & KOTHARE
 
                                            CHARTERED ACCOUNTANTS
 
                                    Firm Registration Number: - 107547W
 
                                                      Sd/-
 
                                           (YATIN R. VYAVAHARKAR)
 
                                                   PARTNER
 
 Place: Mumbai                                  M. No. 33915
 
 Date: 30th May, 2011