We have audited the attached Balance Sheet of Atul Auto Limited as at
 31st March, 2011, the Profit and Loss Account for the year ended on
 that date annexed thereto and also the Cash Flow statement for the year
 ended on that date. 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.
 
 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 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.
 
 We report as follows:
 
 1.  As required by Companies (Auditors Report) Order, 2003 issued by
 the Central Government in terms of section 227(4A) of the Companies
 Act, 1956, we enclose in the Annexure a statement on the matter
 specified in paragraphs 4 of the said order to the extent applicable to
 the company.
 
 2.  Further to our comments in the Annexure referred to 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 the
 books;
 
 c.  The said 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 said 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 Companies Act, 1956;
 
 e.  On the basis of written representation 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 disqualified as on 31st March,
 2011 from being appointed as director in terms of 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 explanations given to us, the said financial statements read
 together with the companys accounting policies and the notes thereto,
 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:
 
 i.  In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011;
 
 ii.  In the case of Profit and Loss account, of the Profit of the
 Company for the year ended on that date; and
 
 iii.  In the case of Cash flow statement, of the cash flows for the
 year ended on that date.
 
 Annexure to the Auditors Report - 31st March 2011
 (Referred to in Paragraph (1) of our report of even date)
 
 (1) In respect of its fixed assets:
 
 (a) The Company has maintained proper records to show full particulars
 including the quantitative details and situation of its fixed assets on
 the basis of available information.
 
 (b) As explained to us, all the assets have been physically verified by
 the management at phased periodical manner, which in our opinion is
 reasonable, having regard to the size of the Company and nature of its
 business. According to information and explanations given to us, no
 material discrepancies have been noticed on such verification as
 compared to the book records.
 
 (c) In our opinion, the Company has not disposed off any substantial
 part of its fixed assets and going concern status of the Company is not
 affected.
 
 (2) In respect of its inventories:
 
 (a) The inventories have been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion and according to the information and explanation
 given to us, the procedures of physical verification of inventories
 followed by the management are reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 (c) The Company has maintained proper records of its inventories. As
 explained to us, there were no material discrepancies notices on
 physical verification of inventory as compared to book records.
 
 (3) In respect of the loans, secured or unsecured, granted or taken by
 the Company to/from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956:
 
 (a) The Company has granted loan to the Company covered under register
 maintained U/s 301 of the Companies Act, 1956. In respect of said
 loans, the maximum amount outstanding at any time during the year is
 Rs. 10.02 Crores and at the year end the balance is nil.
 
 (b) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions of the
 loan granted are not prima facie prejudicial to the interest of the
 Company.
 
 (c) The principal amounts are repayable on demand and there is no
 repayment schedule.  The associate company to which loan is granted is
 regular in payment of interest.
 
 (d) In respect of the said loans, the same are repayable on demand and
 therefore the question of overdue amount does not arise. In respect of
 interest, there are no overdue amounts.
 
 (e) The Company has not taken any loans Secured or Unsecured, from
 Companies, firms or other parties covered in the register maintained
 under Section 301 of the Companies Act, 1956. Consequently, the
 requirement of Clause (iii)(f) and (iii)(g) of paragraph 4 of the Order
 are not applicable.
 
 (4) In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business with regard to purchases of inventory, fixed assets and also
 for the sale of goods. During the course of our audit, we have not
 observed any major weaknesses in internal controls.
 
 (5) In respect of transactions covered under section 301 of the
 Companies Act, 1956:
 
 (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 contracts or
 arrangements entered in the Register maintained u/s 301 of the
 Companies Act, 1956 and exceeding the value of Rs. 5,00,000/- in
 respect of each party during the year have been made at prices which
 appear reasonable as per information available with the company.
 
 (6) According to the information and explanations given to us, the
 Company has not accepted any deposit within the meaning of Section
 58-A, 58AA or any other relevant provisions of the Companies Act, 1956
 and the Rules framed there under from the public. Therefore Clause (vi)
 of paragraph 4 of the Order are not applicable to the Company.
 
 (7) In our opinion, the Company has an adequate internal audit system
 commensurate with the size and nature of its business.
 
 (8) 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, for maintenance of cost records have been
 prescribed under Section 209(1) (d) of the Companies Act, 1956 and are
 of the opinion that prima facie the prescribed accounts and records
 have been made and maintained. However, we have not made a detailed
 examination of the records with a view to determining whether they are
 accurate or complete.
 
 (9) In respect of statutory dues:
 
 (a) According to the records of the company and according to the
 explanations and information given to us, undisputed statutory dues
 including Provident Fund, Income tax, Sales Tax, Excise duty, Wealth
 Tax, Custom duty, Service Tax, Cess, ESI and other statutory dues
 payable by the company have been generally regularly deposited with
 appropriate authority.  According to the information and explanations
 given to us, no undisputed amounts payable in respect of the aforesaid
 dues were outstanding as at 31st March, 2011 for a period of more than
 six months from the date of becoming payable.
 
 (b) The disputed statutory dues aggregating Rs. 1.06/- crores, that
 have not been deposited on account of disputed matters pending before
 appropriate authorities are as under:
 
 Sr.  Name of the Statute        Nature of         Period to 
 No.                             the Dues          which the amount 
                                                   relates
 
 1   The Gujarat Sales Tax       Sales Tax         2002-03
 
 2   The Central Sales Tax       Central           2002-03
     Act, 1956                   Sales Tax
 
 3   The Finance Act, 1994       Service Tax       2007-08
 
 4                                                 2008-09
 
 5   The Central Excise          Excise Duty       2006-07 &
     Act, 1944                                     2007-08
 
 6                                                 2005-06 & 2006-07
 
 7   The Income Tax              Income Tax        2004-05
     Act, 1961
 
 8                               TDS               2002-03
 
 9                                                 2003-04
 
 10                                                2004-05
 
 
 Sr.    Forum where dispute is          Amount Rs.  
 No.    pending
 
 1      High Court                      2,02,531 
 
 2      High Court                     11,83,791
 
 3      CESTAT                            51,255
 
 4      Commissioner                    4,74,335
        (Appeals)
 
 5      Commissioner                   16,81,586
        (Appeals)
 
 6                                      1,03,025
 
 7      Income Tax                      2,11,660
        Appellate Tribunal
 
 8      Commissioner                   32,59,470
 
 9      (Appeals)                      25,22,288 
 
 10                                     9,52,405
 
 (10) The Company has neither accumulated losses at the end of the
 financial year nor has it incurred cash losses, both, in the financial
 year under report and the immediately preceding financial year.
 
 (11) Based on our audit procedures and according to the information and
 explanations given to us, we are of the opinion that the company has
 not defaulted in repayment of dues to financial institutions and banks.
 The company has not issued any debentures.
 
 (12) In our opinion and according to the explanations given to us and
 based on the information available, no loans and advances have been
 granted by the Company on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 (13) In our opinion, the company is not a chit fund or a
 nidhi/mutual/benefit fund/society. Therefore, clause 4 (xiii) of
 Companies (Auditors Report) Order, 2003 is not applicable to the
 company.
 
 (14) According to information and explanations given to us, the company
 has not dealt or traded in shares or debentures however in respect of
 securities being mutual fund the company has maintained proper records
 of the transactions and contracts in respect of dealing and trading.
 All the mutual fund investments have been held by the company in its
 own name.
 
 (15) The Company has given guarantees for loans taken by the associate
 company from the bank. According to information and explanations given
 to us, we are of the opinion that the terms and conditions thereof are
 not prejudicial to the interest of the company. However during the year
 the guarantees given by the company was satisfied.
 
 (16) In our opinion, the term loans have been applied for the purpose
 for which they were raised.
 
 (17) According to the information and explanations given to us and on
 an overall examination of the Financial Statements of the Company and
 after placing reliance on the reasonable assumptions made by the
 Company for classification of long term and short term usages of funds,
 we are of the opinion that, prima facie, short term funds have not been
 utilized for long term purposes.
 
 (18) 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.
 
 (19) The company has not issued any debentures.
 
 (20) The company has not raised any money by public issue during the
 year.
 
 (21) According to the information and explanations given to us, no
 fraud on or by the company has been noticed or reported during the
 year.
 
 
 
 
 For Maharishi & Co.  
 Chartered Accountants 
 Firm Reg. No. 124872W
 
 Prashant Maharishi
 Partner
 Membership No. 41452
 
 Place: Rajkot 
 Date : 30.05.2011