1.  We have audited the attached Balance Sheet of BALRAMPUR CHINI MILLS
 LIMITED as at 31st March, 2011 and also the Profit & Loss Account and
 the Cash Flow Statement for 18 months period ended on that date annexed
 thereto. 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 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 issued
 by the Central Government of India in terms of Section 227(4A) of the
 Companies Act, 1956 (the Act) and on the basis of such checks 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 said 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 & 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 & Loss Account and Cash
 Flow Statement dealt with by this report are in compliance with the
 applicable Accounting Standards referred to in Section 211 (3C) of the
 Act.
 
 e) On the basis of written representations received from the Directors,
 as on 31st March, 2011 and taken on record by the Board of Directors of
 the Company, we report that none of the Directors is 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 Act.
 
 f) 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 Act, 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 the Profit & Loss Account, of the PROFIT for the 18
 months period ended on that date, and
 
 iii) in the case of the Cash Flow Statement, of the cash flows for the
 18 months period ended on that date.
 
 Annexure to the Auditors Report
 Statement referred to in our report of even date to the members of
 BALRAMPUR CHINI MILLS LIMITED on the accounts for the 18 months period
 ended 31st March, 2011.
 
 i) a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of its fixed
 assets.
 
 b) As explained to us, the Company has a programme of physically
 verifying all its fixed assets once in a period of three years and in
 accordance therewith, major portion of fixed assets were physically
 verified by the management during the period. In our opinion, the
 frequency of verification is reasonable having regard to the size of
 the Company and nature of its business. The discrepancies noticed on
 such verification were not material and have been properly dealt with
 in the books of account.
 
 c) During the period, the Company has not disposed off substantial part
 of its fixed assets.
 
 ii) a) The inventories have been physically verified during the period
 by the management at reasonable intervals.
 
 b) In our opinion and according to the information and explanations
 given to us, the procedure of physical verification of stocks followed
 by the management are reasonable and adequate in relation to the size
 of the Company and nature of its business.
 
 c) On the basis of our examination, we are of the opinion that the
 Company is maintaining proper records of inventory.  No material
 discrepancies were noticed on verification between the physical stocks
 and the book records.
 
 iii) a) The Company has not granted any loan, secured or unsecured, to
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.
 
 b) As the Company has not granted any loan, secured or unsecured, to
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act, clauses (iii) (b) to (iii)(d) of
 paragraph 4 of the said order are not applicable to the Company.
 
 c) The Company has not taken any loan, secured or unsecured, from
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.
 
 d) As the Company has not taken any loan, secured or unsecured, from
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act, clauses (iii) (f) and (iii) (g) of
 paragraph 4 of the said order are not applicable to the Company.
 
 iv) On the basis of the information and explanation given to us, we are
 of the opinion that the Company has an adequate internal control system
 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 and services. Further, on the basis of
 our examination and according to the information and explanations given
 to us, we have neither come across nor have we been informed of any
 instance of major weaknesses in the aforesaid internal control system.
 
 v) a) According to the information and explanations given to us, there
 is no contract or arrangement that needs to be entered in the register
 required to be maintained under section 301 of the Act.
 
 b) As the Company has not entered into any contract or arrangement that
 needs to be entered in the register required to be maintained under
 section 301 of the Act, clause (v)(b) of paragraph 4 of the said order
 are not applicable to the Company.
 
 vi) The Company has not accepted any deposit within the meaning of
 Section 58A, 58AA or any other relevant provisions of the Act and the
 rules framed there under.
 
 vii) In our opinion, the internal audit system of the Company is
 commensurate with the size of the Company and the 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, the maintenance of Cost records has been prescribed
 under Section 209(1)(d) of the Act and are of the opinion that, prima
 facie, the prescribed accounts and records have been made and
 maintained. We, however, as not required, have not made a detailed
 examination of such records.
 
 (ix) a) On the basis of our examination, the Company is regular in
 depositing undisputed statutory dues including Provident Fund, Income
 Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty, Cess, Investor
 Education and Protection Fund, Wealth Tax and other statutory dues with
 appropriate authorities and 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. On the basis
 of our information, the provisions of Employees State Insurance Act
 are not applicable to the Company.
 
 b) The disputed statutory dues aggregating to Rs.1088.01 lacs that have
 not been deposited on account of matters pending before appropriate
 authorities are as under:
 
 Sl.  Name of the               Nature of dues  Period to which  Amount
 No.  statute                                       pertain      (Rs.in 
                                                                  Lacs)
 
 1    Central Excise Act, 1944  Cenvat Credit        2007-08       2.06
 
 2    Central Excise Act, 1944  Cenvat Credit        2008-10       2.40
 
 3    Central Excise Act, 1944  Cenvat Credit        2010-11       1.20
 
 4    Central Excise Act, 1944  Cenvat Credit        2005-07      15.69
 
 5    Central Excise Act, 1944  Cenvat Credit 2005-06 to 2009-10  99.94
 
 6    Central Excise Act, 1944  Cenvat Credit        2006-10       4.23
 
 7    Central Excise Act, 1944  Excise Duty          1995-96       0.58
 
 8    Central Excise Act, 1944  Excise Duty          2003-04       1.03
 
 9    Central Excise Act, 1944  Excise Duty          2009-10      11.00
 
 10   Central Excise Act, 1944  Excise Duty   2003-04 to 2008-09 146.66
 
 11   Central Excise Act, 1944  Excise Duty          2008-10       4.08
 
 12   Central Excise Act, 1944  Excise Duty         1998-2000      1.02
 
 13   Central Excise Act, 1944  Excise Duty          2005-06       4.80
 
 14   Central Excise Act, 1944  Excise Duty          2003-04       6.57
 
 15   Central Excise Act, 1944  Excise Duty          2003-04       3.08
  
 16   Central Excise Act, 1944  Excise Duty          2007-08       2.88
 
 17   Central Excise Act, 1944  Excise Duty          2006-07       5.75
 
 18   Central Excise Act, 1944  Excise Duty          2006-07       1.25
 
 19   Central Excise Act, 1944  Excise Duty          2007-08       4.82
 
 20   Central Excise Act, 1944  Excise Duty          2008-10       1.47
 
 21   Central Excise Act, 1944  Excise Duty          2008-09       0.77
  
 22   Central Excise Act, 1944  Excise Duty          2009-10       4.91
 
 23   Central Excise Act, 1944  Excise Duty          2009-10       4.61
 
 24   Central Excise Act, 1944  Excise Duty          2009-10      34.72
     
 25   Central Excise Act, 1944  Excise Duty          2003-05      82.16
 
 26   Central Excise Act, 1944  Service Tax          2006-08       2.13
 
 27   U.P.Trade Tax Act, 1948   Sales Tax            1990-91       0.22
   
 28   U.P.Trade Tax Act, 1948   Sales Tax            2002-03       0.65
 
 29   U.P.Trade Tax Act, 1948   Sales Tax            2007-08       0.89
 
 30   U.P.Trade Tax Act, 1948   Entry Tax            2007-08       0.27
 
 31   Entry Tax Act, 2008       Entry Tax            2010-11       8.00
 
 32   The Indian Stamp Act, 
      1899                      Stamp Duty            2002         5.29
 
 33   The Indian Stamp Act, 
      1899                      Stamp Duty           2006-07      11.04
 
 34   The Indian Stamp Act, 
      1899                      Stamp Duty           2009         78.19
 
 35   The Indian Stamp Act, 
      1899                      Stamp Duty           1992          5.09
 
 36   The Indian Stamp Act, 
      1899                      Stamp Duty      1997, 1999 & 2008 44.50
 
 37   The Indian Stamp Act, 
      1899                      Stamp Duty             2010      370.20
 
 38   The Indian Stamp Act, 
      1899                      Stamp Duty            1995-96     12.60
 
 39   The Indian Stamp Act, 
      1899                      Stamp Duty              1994      19.32
 
 40   Sugar Incentive Scheme, 
      2004 of U.P. Govt.        Entry Tax              2007-08    64.54
 
 41   U.P. Zamindari Abolition 
      and Land Reforms 
      Act, 1950                 Land Rent               2003      17.40 
 
 Total                                                          1088.01
 
 
 
 Sl.  Appellate Tribunal - New Delhi
 No.
 
 1    Asst. Commissioner of Central Excise - Lucknow        
 
 2    Commissioner of Central Excise - Lucknow
 
 3    Asst. Commissioner of Central Excise - Lucknow
 
 4    Addl. Commissioner - Allahabad
 
 5    CESTAT- New Delhi
  
 6    Commissioner (Appeals) Central Excise - Allahabad
 
 7    Commissioner of Central Excise - Faizabad
 
 8    Commissioner of Central Excise (Appeals) - Allahabad
 
 9    High Court Allahabad - Lucknow Bench
 
 10   Appellate Tribunal - New Delhi 
 
 11   High Court Allahabad - Lucknow Bench
 
 12   Jt./Dy. Commissioner of Central Excise - Allahabad
 
 13   Asst.Commissioner of Central Excise - Lucknow
 
 14   Tribunal - New Delhi
 
 15   High Court - Allahabad
 
 16   Jt. Commissioner of Central Excise - Allahabad
 
 17   Jt. Commissioner of Central Excise - Allahabad
 
 18   Commissioner (Appeals) - Allahabad
 
 19   Commissioner (Appeals) - Allahabad
 
 20   Commissioner (Appeals) - Lucknow
 
 21   Asst. Commissioner - Sitapur
 
 22   Asst. Commissioner - Sitapur
 
 23   Asst. Commissioner - Sitapur
 
 24   High Court Allahabad - Lucknow Bench
 
 25   Jt. Commissioner (Adj.) Central Excise - Allahabad
 
 26   Tribunal - New Delhi
 
 27   High Court
 
 28   Jt. Commissioner (Appeal)
 
 29   Asst. Dy. Commissioner
 
 30   Asst. Dy. Commissioner
 
 31   Jt. Commissioner Commercial Taxes
 
 32   High Court - Lucknow
 
 33   ADM Balrampur
 
 34   District Magistrate - Barabanki
 
 35   District Magistrate - Barabanki
 
 36   High Court Allahabad - Lucknow Bench
 
 37   Addl. District Magistrate - Gonda
 
 38   High Court Allahabad - Lucknow Bench
 
 39   High Court Allahabad - Lucknow Bench
 
 40   High Court - Lucknow
 
 41   Tehsildar - Gonda
 
 
 
 x) The Company has no accumulated losses and has not incurred any cash
 loss during the period covered by our audit or in the immediately
 preceding financial year.
 
 xi) The Company has not defaulted in payment of dues to a financial
 institution or bank or debenture- holders.
 
 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 provisions of any special statue applicable to Chit Fund,
 Nidhi or Mutual Benefit Society are not applicable to the Company.
 
 xiv) In our opinion and according to the information and explanations
 given to us, the Company is not dealing or trading in securities. The
 Company has maintained proper records of transactions and contracts in
 respect of shares, securities and other investments and timely entries
 have been made therein.  All shares, securities and other investments
 have been held by the Company in its own name.
 
 xv) On the basis of our examination and according to the information
 and explanations given to us, the Company has not given any guarantee
 for loan taken by others from bank or financial institution.
 
 xvi) On the basis of our examination and according to the information
 and explanations given to us, the term loans have been applied for the
 purpose for which the loans were obtained.
 
 xvii) According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we report
 that no funds raised on short term basis have been used for long term
 purposes.
 
 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.
 
 xix) The Company has not issued any debentures.
 
 xx) The Company has not raised any moneys by public issue during the
 period covered by our audit report.
 
 xxi) In our opinion and according to the information and explanations
 given to us, no fraud on or by the Company has been noticed or reported
 during the period that causes the financial statements materially
 misstated.
 
                                               For G. P. Agrawal & Co.
                                                 Chartered Accountants
                                                      F.R. No. 302082E
 
 
 
 7A, Kiran Shankar Ray Ro ad,                        (CA. Sunita Kedia
 Kolkata - 700 001.                              Membership No. 60162) 
 13th May, 2011.                                               Partner