1.  We have audited the attached Balance Sheet of Atul Ltd as at March
 31, 2011, and the related Profit and Loss Account and the Cash Flow
 Statement for the year ended on that date annexed thereto, which we
 have signed under reference to this report. These financial statements
 are the responsibility of the Companys Management. Our responsibility
 is to express an opinion on these financial statements based on our
 audit.
 
 2.  We conducted our audit in accordance with the 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 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
 our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003, as
 amended by the Companies (Auditors Report) (Amendment) Order, 2004
 (together the Order”), issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 of ‘The Companies Act, 1956
 of India (the ‘Act) and on the basis of such checks of the books and
 records of the Company as we considered appropriate and according to
 the information and explanations given to us, we give in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 above, we report that:
 
 (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 Cash
 Flow Statement dealt with by this report comply with the accounting
 standards referred to in sub-section (3C) of Section 211 of the Act;
 
 (e) On the basis of written representations received from the
 directors, as on March 31, 2011 and taken on record by the Board of
 Directors, none of the directors is disqualified as on March 31, 2011
 from being appointed as a director in terms of clause (g) of
 sub-section (1) of Section 274 of the Act;
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto give, in the prescribed
 manner, the information required by the Act, and give a true and fair
 view in conformity with the accounting principles generally accepted in
 India:
 
 (i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 (ii) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Annexure to the Report of the Auditors
 Referred to in paragraph 3 of the Auditors Report of even date to the
 members of Atul Ltd on the financial statements for the year ended
 March 31, 2011
 
 i. (a) The Company is generally maintaining proper records showing full
 particulars, including quantitative details and situation, of fixed
 assets.
 
 (b) The fixed assets are physically verified by the Management
 according to a phased programme designed to cover all the items over a
 period of 3 years which, in our opinion, is reasonable having regard to
 the size of the Company and the nature of its assets.  Pursuant to the
 programme, a portion of the fixed assets has been physically verified
 by the Management during the year and no material discrepancies between
 the book records and the physical inventory have been noticed.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 of by the Company during the year.
 
 ii. (a) The inventory (excluding stocks with third parties) has been
 physically verified by the Management during the year. In respect of
 inventory lying with third parties, these have substantially been
 confirmed by them. In our opinion, the frequency of verification is
 reasonable.
 
 (b) 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.
 
 (c) On the basis of our examination of the inventory records, in our
 opinion, the Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 iii. (a) The Company has not granted any loans, secured or unsecured,
 to companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.
 
 (b) The Company has taken unsecured loans (in nature of Fixed
 Deposits), from 5 parties covered in the register maintained under
 Section 301 of the Act. The maximum amount involved during the year and
 the year-end balance of such loans amounts to Rs. 0.90 crore and Rs. 0.90
 crore respectively. The Company has not taken any loans, secured or
 unsecured, from companies and firms covered in the register maintained
 under Section 301 of the Act.
 
 (c) In our opinion, the rate of interest and other terms and conditions
 of such loans are not prima facie prejudicial to the interest of the
 Company.
 
 (d) In respect of the aforesaid loans, the Company is regular in
 repaying the principal amounts as stipulated and is also regular in
 payment of interest, where applicable.
 
 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 and the nature of its business for the
 purchase of inventory, fixed assets and for the sale of goods and
 services. Further, on the basis of our examination of the books and
 records of the Company, and according to the information and
 explanations given to us, no major weaknesses have been noticed or
 reported.
 
 v. (a) In our opinion and according to the information and explanations
 given to us, the particulars of contracts or arrangements referred to
 in Section 301 of the Act have been entered in the register required to
 be maintained under that section.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements and exceeding the value of Rs. 5 lacs in respect of any
 party during the year have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 
 vi. In our opinion and according to the information and explanations
 given to us, the Company has
 
 complied with the provisions of Sections 58A and 58AA or any other
 relevant provisions of the Act and the Companies (Acceptance of
 Deposits) Rules, 1975 with regard to the deposits accepted from the
 public. According to the information and explanations given to us, no
 Order 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 on
 the Company in respect of the aforesaid deposits.
 
 vii. In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 viii. We have broadly reviewed the books of account maintained by the
 Company in respect of products where, pursuant to the Rules made by the
 Central Government of India, the maintenance of cost
 
 Name of the 
 statute     Nature of dues Amount  Period to which the Forum where the
                                                          dispute is
                            (Rs.cror
                             es)(a) amount relates       pending (b)
 The Central 
 Excise Act, Central excise   10.63 From 1992-93 to      [Joint
                                                         Commissioner
 1944                          0.34 2009-10              Commissioner 
                                                         (Appeals)
                               5.81                      Customs, Exci
                                                         se & Service
                               5.11                      Tax Appellate
                                                         Tribunal
                                                         Gujarat High 
                                                         Court Assistant
                                                         Commissioner]
 
 Total :                      21.89
 
 The Customs 
 Act, 1962    Customs duty     1.27  1994 to 1998        [Commissioner
                                                         (Appeals)
                               1.76  1993 to 1998        Customs, Excise
                                                         & Service
                               13.65 1996-97 to 
                                     2007-08             Tax Appellate 
                                                         Tribunal,
                                                         Assistant 
                                                         Commissioner]
 
 Total :                      16.68
 
 The Income 
 Tax Act,     Income tax       4.53  1991-92 to 
                                     2007-08             [Gujarat High 
                                                         Court,
 1961                          0.80                      Income Tax Appe
                                                         llate Tribunal,
                              15.66                      Commissioner of
                                                         Income tax
                                                         (Appeals)]
 
 Total :                      20.99
 
 Gujarat Sales 
 Tax Act,     Sales tax        0.74   2005-06            Joint Commissi
                                                         oner of
 1969                                                    Commercial Tax
                                                         (Appeals)
 Total :                       0.74
 
 (a) Net of amounts deposited
 
 (b) Necessary stay received from respective authority
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, the particulars of dues of
 income-tax, sales-tax, customs duty, excise duty and cess as at March
 31, 2011 which have not been deposited on account of disputes are as
 follows:
 
 records has been prescribed under clause (d) of sub- section (1) of
 Section 209 of the Act, and are of the opinion that prima facie, the
 prescribed accounts and records have been made and maintained. We have
 not, however, made a detailed examination of the records with a view to
 determine whether they are accurate or complete.
 
 ix. (a) According to the information and explanations given to us and
 the records of the Company examined by us, in our opinion, the Company
 is regular in depositing the undisputed statutory dues including
 provident fund, investor education and protection fund, employees
 state insurance, income-tax, sales-tax, wealth tax, service tax,
 customs duty, excise duty, cess and other material statutory dues as
 applicable with the appropriate authorities.
 
 x. The Company has no accumulated losses as at March 31, 2011 and it
 has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 xi. According to the records of the Company examined by us and the
 information and explanation given to
 
 us, the Company has not defaulted in repayment of dues to any financial
 institution or bank or debenture holders as at the balance sheet date.
 
 xii. The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 xiii. The provisions of any special statute applicable to chit fund 
 nidhi  mutual benefit fund  societies are not applicable to the
 Company.
 
 xiv. In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 xv. In our opinion and according to the information and explanations
 given to us, the terms and conditions of the corporate guarantees given
 by the Company, for loans taken by others from banks or financial
 institutions in connection with central ETP project at Ankleshwar
 during the year, are not prejudicial to the interest of the Company.
 
 xvi. In our opinion, and according to the information and explanations
 given to us, on an overall basis, the term loans have been applied for
 the purposes for which they were obtained.
 
 xvii. On the basis of an overall examination of the balance sheet of
 the Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short- term
 basis which have been used for long-term investment.
 
 xviii. The Company has not made any preferential allotment of shares to
 parties and companies
 
 covered in the register maintained under Section 301 of the Act during
 the year.
 
 xix. On the basis of the records and documents examined by us, the
 Company has not issued any secured debentures during the year.
 
 xx. The Company has not raised any money by public issues during the
 year.
 
 xxi. During the course of our examination of the books and records of
 the Company, carried out in accordance with the generally accepted
 auditing practices in India, and according to the information and
 explanations given to us, we have neither come across any instance of
 fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by the Management.
 
 xxii. The other clauses, (iii)(b), (iii)(c), and (iii)(d) of paragraph
 4 of the Companies (Auditors Report) Order, 2003, as amended by the
 Companies (Auditors Report) (Amendment) Order, 2004, are not
 applicable in the case of the Company for the year, since in our
 opinion there is no matter which arises to be reported in the aforesaid
 order.
 
 
                                                  For and on behalf of
                                                       Dalal & Shah
                                         Firm Registration No. 102020W 
                                                 Chartered Accountants
 
                                                         S Venkatesh
 Mumbai                                                      Partner
 May 13, 2011                                Membership No. F-037942