We have audited the attached Balance Sheet of Andrew Yule & Company
 Limited as at 31st March, 2011 and also the Profit and Loss Account and
 the Cash Flow Statement for the year ended on that date, both annexed
 thereto, which we have signed this day under reference to this report.
 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.
 
 We have conducted our audit in accordance with auditing standards
 generally accepted in India. Those standards require that we plan and
 perform our audit to obtain reasonable assurance as to whether the
 aforesaid financial statements are free from material misstatements. An
 audit includes examining, on a test basis, evidences supporting the
 amounts and disclosures in the financial statements. 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 expressing our opinion on the aforesaid financial
 statements of the Company.
 
 As required by the Companies (Auditors'' Report) Order, 2003, as amended
 by the Companies (Auditors'' Report)(Amendment) Order, 2004, the Order
 issued by the Central Government of India in terms of sub-section (4A)
 of section 227 of the Companies Act, 1956, and on the basis of such
 checks as we considered appropriate and according to the information
 and explanations given to us, we enclose in the Annexure a statement on
 the matters specified in paragraphs 4 and 5 of the said Order.
 
 Further to our comments in the Annexure referred to above, we report
 the following :-
 
 1. In the proceedings of hearing held on 30th October, 2007 before the
 Board for Industrial and Financial Reconstruction (BIFR).
 Rehabilitation Scheme of the Company with cut- off date as at 31st
 March, 2006 has been sanctioned which is in the process of
 
 implementation. The accounts for the year have been prepared on the
 principle applicable to a going concern after giving due consideration
 to the rehabilitation package. Net worth of the Company has become
 positive at the year end.
 
 2.  Non-provision against diminition in value of investments in Yule
 Financing & Leasing Co.  Ltd. amounting to Rs. 27.88 lakhs. [Refer Note
 No. 13 in Schedule 20].
 
 3.  Read with our above comments :-
 
 (a) 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.
 
 (b) In our opinion, proper books of account as required by law have
 been kept by the Company so far as appears from our examination of
 those books;
 
 (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 (d) In our opinion, the Balance Sheet, Profit and Loss Account and the
 Cash Flow Statement dealt with by this report have been prepared in
 compliance with the applicable accounting standards (AS) referred to in
 Section 211(3C) of the Act.
 
 4.  In terms of Notification No.G.S.R.829(E) dated 21st October, 2003,
 issued by the Central Government, the requirement of Clause (g) of
 Sub-section (1) of Section 274 of the Act is not applicable to a
 Government Company.
 
 5.  Without considering Item No.l above, had the observation under Item
 No. 2 been considered, the profit for the year after extra-ordinary
 income and provision for taxation would have been Rs. 4104.43 lakhs as
 against the reported profit of Rs. 4132.31 lakhs, accumulated loss would
 have been Rs. 5215.07 lakhs as against
 
 the reported accumulated loss of Rs.5187.19 lakhs, value of investments
 would have been Rs.835.43 lakhs as against the reported value of Rs.863.31
 lakhs.
 
 6. In our opinion and to the best of our information and according to
 the explanations given to us the said accounts read with the accounting
 policies and notes on accounts as given in Schedule 20 together with
 the observations in Item Nos.2 and 5 and Note No. 16 in Schedule-20 and
 our comments in paragraph 4 and 7 in the annexure to this report, give
 the information required by the Act 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 31 st March, 2011;
 
 (b) in the case of the Profit and Loss Account of the profit of the
 Company 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 AUDITORS'' REPORT REFERRED TO IN PARAGRAPH 3 OF OUR REPORT
 OF EVEN DATE
 
 1.(a) The Company has maintained proper records showing full 
 particulars including quantitative details and situation of its 
 fixed assets.
 
 (b) The fixed assets of the Company are physically verified by the
 management according to a phased programme designed to cover all the
 items over a period of three years, which is considered to be
 reasonable having regard to the size of the Company and the nature of
 its assets. Pursuant to the programme, a physical verification of fixed
 assets was carried out by the Company during the year.  Reconciliation
 in respect of Tea and General Divisions has been done during the year
 and the discrepancies noticed on such verification valuing Rs.19.48
 lakhs have been written off during the year in the books. (Refer Note
 No.24 of Schedule 20).
 
 (c) During the year, in our opinion, any substantial part of fixed
 assets has not been disposed off by the Company.
 
 2.  (a) The inventory of the Company has been verified by
 
 the management during the year. In our opinion, the frequency of such
 verification is reasonable.
 
 (b) In our opinion, the procedures of physical verification of
 inventory followed by the management were found reasonable and adequate
 in relation to the size of the Company and the nature of its business.
 
 (c) On the basis of our examination of records of inventory, in our
 opinion, the Company has maintained proper records of inventory and the
 discrepancies noticed on physical verification between the physical
 stocks and book records have been properly dealt with in the books of
 account.
 
 3.  (a) According to the information and explanations
 given to us, the Company has not granted any unsecured loan to any
 Company, Firm or other party listed in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 (b) Clause (iii)(b) to (d) of the Annexure are not applicable to the
 Company.
 
 (c) The Company has not taken any unsecured loan from any company
 covered in the register maintained under section 301 of the Companies
 Act, 1956. The outstanding balance of such loan taken including
 interest as at the year end is Rs.Nil.
 
 (d) In our opinion, the rate of interest and other terms and conditions
 on which loan have been taken from a Company listed in the register
 maintained under section 301 of the Companies Act, 1956, are not prima
 facie prejudicial to the interest of the Company.
 
 (e) Paragraph 4(iii)(g) of the Order is not applicable in respect of
 loan taken.
 
 4.  In our opinion, there is an adequate internal control procedure
 commensurate with the size of the Company and the nature of its
 business with regard to purchase of inventory and fixed assets, for
 sale of goods and for services. However, holding of disproportionate
 stocks of stores at Tea Estates were noticed on many occasions.
 Internal Control needs to be strengthened in these areas.  Subject to
 above on the basis of our examination of the books and records, we have
 neither come across nor have we been informed of any continuing failure
 to correct major weakness in Internal Control procedures.
 
 5.  (a) In our opinion and according to the information
 and explanations given to us, there are no transactions that need to be
 entered into the register maintained under section 301 of the Companies
 Act, 1956.
 
 (b) In view of above para 4(v)(b) of the Annexure is not applicable to
 the Company.
 
 6.  In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Section
 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance
 of Deposits) Rules, 1975, as applicable, with regard to the deposits
 accepted from the public. According to the information and explanations
 given to us, no order under the aforesaid sections has been passed by
 the Company Law Board or National Company Law Tribunal or Reserve Bank
 of India or any Court or any other Tribunal.
 
 7.  The Company has its own Internal Audit Department.  The Company has
 also appointed outside agencies in respect of Internal Audit of
 operating Divisions. In our opinion, the present internal audit system
 is generally commensurate with the size of the Company and nature of
 its business. However, it is felt that such audit should be more
 indepth.
 
 8.  We have broadly reviewed the books of account maintained by the
 Company relating to the manufacture of industrial fans, tea and power
 transformers pursuant to the rules made by the Central Government for
 maintenance of cost records under section 209(l)(d) of the Companies
 Act, 1956 and we are of the opinion that prima facie the prescribed
 accounts and records have been maintained. We have not, however, made a
 detailed examination of the records with a view to determine whether
 they are accurate or complete. To the best of our knowledge and
 according to the information given to us Central Government has not
 issued any order u/s.233B of the Companies Act, 1956 for any of the
 products of the Company.
 
 9.  (i) According to the latest information given and
 explanations offered and according to the books and records of the
 Company as produced, there is no undisputed statutory dues and the
 Company is generally regular in depositing undisputed dues including
 Provident Funds, Investors Education Fund, Employees State Insurance
 Premium, TDS, Custom Duty, Excise Duty, Cess etc. and there is no
 undisputed statutory dues as at 31st March, 2011 for a period of more
 than six months from the date they became payable.
 
 (ii) As at 31 st March, 2011 according to the records of the Company
 and the information and explanations given to us, the particulars of
 dues on account of sales tax, entry tax, agricultural income tax,
 professional tax and excise duty that have not been deposited on
 account of any dispute are furnished below :-
 
 Name of    Nature of  Amount     Period to       Forum where
 
 Statute   dues        (Rs.lacs)    which the       dispute
 
                                  amount          is pending
                                  relates
 
 Income 
 Tax     Income Tax    50.53      1993-94         C.I.T(Appeal)
 Act.    (Penalty)
 
 W.B.
 Sales   W.B.Sales     27.53      Preamal-        Appellate
 Tax 
 and     Tax & VAT                gamation         Authority
 VAT
 
                      5498.04     1987-88         Moved Revision
 
                                    to            before the            
 
                                  1988-89         Boaid against
 
                                  1999-2000          Appellate
 
                                    to               Order.
                                  2001-02
                                  1996-97
 
                                    to
                                  1997-98
                                  2003-04
 
                                    to
                                  2004-05 &
                                  1998-99 &
                                  2006-07
 
                      401.24      1973-74,        Appellate Auth-
 
                                  1979-80 &       ority Taxation
 
                                  1986-87         Tribunal
 
                      43.72       2005-06         Appellate
 
                                                  Authcrity before
                                                  DCCT.
 
                      306.12      1992-93         Appellate
 
                                    &             Authority before
                                  1985-86         the High Court.
                      55.06       1980-81,        Appellate
                                  1982-83         Authority,
                                    to               SoD
                                  1984-85
 
 Assam   Assam        39.90       2005-06         Appellate Auth-
 
 Sales 
 Tax     Gardens                     to           ority,
 
                                  2006-07         Revision
                                                  Bench.
                      152.93      1996-97         Appellate Auth-
                                     to           ority Revenue
                                  1998-99         board.
 
 Orissa  Orissa
         Sales        161.83      1999-01         Appellate Auth-
 
 Sales
 Tax     Tax                                      ority Tribunal
                                                  at High Court
                                                  cuttack.
 
 Central Central      455.85      1989-90 
                                   to             Appealat
 
 Excise  Excise                   2001-02         CESTAT.
 
                                  2003-04 
                                    to
                                  2006-07
 
                      30.51       1995-96         Appealat
 
                                    to            Commissioner
                                  1998-99
 
                      52.59       1991 to         Appealat
 
                                  1993            High Court.
 
 10.  The not worth of the Company became positive (Rs.11.77 crore)
 without considering Share Pending Allotment of Rs.3.00 crore and
 Revaluation Reserve of Rs.103.34 crore at the end of the financial year.
 However, the accumulated loss of the Company is more than fifty percent
 of its net worth. The Company has not incurred Cash Loss in the
 Financial year and immediately preceding such financial year.
 
 11.  As appearing in the record and according to the information and
 explanations given to us, taking into account the reliefs, concessions
 and restructuring of dues payable to Financial Institutions and Banks
 as per sanctioned scheme as per Order of BIFR dated 30th October, 2007,
 and fresh arrangement with Banks/ financial institutions, the Company
 has not defaulted in repayment of dues to them.
 
 12.  In our opinion and according to the information and explanations
 given to us, the Company has not granted any loans and advances on the
 basis of security by way of pledge of shares, debentures and other
 securities.
 
 13.  The provisions of any special statute as specified under Clause
 4(xiii) of the Order are not applicable to the Company.
 
 14.  In our opinion and according to the information and explanations
 given to us, the Company is not a dealer or trader in securities.
 
 15.  According to the information and explanations given to us, the
 terms and conditions of the guarantee given by the Company amounting to
 Rs.593.00 lakhs and outstanding as at 31st March, 2011, for loans taken
 from bank by the other Companies, in our opinion, are not prima facie
 prejudicial to the interest of the Company.
 
 16.  In our opinion and according to the information and explanations
 given to us, the term loans were applied for the purpose for which the
 loans were obtained.
 
 17.  Based on the information and explanations given to us and on an
 overall examination of the balance sheet of the Company, in our
 opinion, there are no funds raised on a short term basis which have
 been used for long term investment, and vice versa.
 
 18.  It appears from the records that the Company has not made any
 preferential allotment of shares to parties and Companies covered in
 the register maintained under section 301 of the Companies Act, 1956
 during the year.
 
 19.  As explained to us, wherever applicable, securities have been
 created in respect of Bond issued by the Company.
 
 20.  The Company has not raised any money by public issue during the
 year.
 
 21.  According to the information and explanations given to us, during
 the year, no fraud on or by the Company has been noticed or reported.
 
 
                                               For S. GHOSH & CO.,
 
                                               Chartered Accountants,
 
                                               Firm Registration No.304016E
 
                                               (CA S. Ghosh)
 
                                               Partner.
 
 Kolkata-23rd June, 2011.                      Membership No.5268