1.  We have audited the attached Balance Sheet of BHARAT FERTILISER
 INDUSTRIES LIMITED, as at 31st March, 2011, the Profit and Loss Account
 of the Company and the Cash Flow Statement of the Company 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 statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statements
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 (the
 Order) (as amended) issued by the Central Government of India in terms
 of subsection (4A) of section 227 of the Companies Act, 1956, we
 enclose in the Annexure hereto a statement on the matters specified in
 paragraph 4 and 5 of the said Order to the extent applicable.
 
 4.  a) The Balances of sundry debtors, creditors, certain loans &
 advances and deposits are subject to confirmation and reconciliation.
 
 b) The impact of remark of Para 4(a)) on the Profit & Loss Account and
 Balance Sheet cannot be ascertained.
 
 5.  Subject to our comments in paragraph 4(a) & (b) above and our
 comments in the Annexure, referred to in paragraph 3, 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 purpose 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 and 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 and the Profit and Loss Account
 and Cash Flow Statement dealt with by this report comply with
 Accounting Standards referred to in subsection (3C) of section 211 of
 the Companies Act, 1956;
 
 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, 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 Companies Act, 1956.
 
 f) subject to paragraph 4 (a) & (b) above, in our opinion and to the
 best of our information and according to the explanations given to us,
 the said accounts read together with the Significant Accounting
 Policies & Notes to the Accounts thereon 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 the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 iii) in the case of the Cash Flow Statement, of the Cash Flows of the
 Company for the year ended on that date.
 
 Annexure to the Auditors'' Report
 Referred to in paragraph 3 of the Auditors'' Report of even date.  i.
 In respect of its fixed assets:
 
 (a) The Company has generally maintained proper records showing full
 particulars including quantitative details and situation of its fixed
 assets.
 
 (b) As per the explanation given to us, the Company has designed a
 phased programme for the physical verification of its fixed assets and
 accordingly a portion of the fixed assets are verified every year to
 cover all the items in reasonable time frame. Pursuant to the said
 programme, during the year also a portion of fixed assets of the
 Company has been physically verified by the management. As explained to
 us, no material discrepancies were noticed on such verification.  In
 our opinion, the frequency of verification is reasonable having regard
 to the size of the Company and the nature of its assets.
 
 (c) In our opinion, during the year, the Company has not disposed off a
 substantial part of the fixed assets and in our opinion the going
 concern status of the Company is not affected.
 
 ii.  In respect of its inventories:
 
 a) As explained to us, inventories of raw materials, finished goods
 pertaining to manufacturing division and finished apartments,
 pertaining to construction division were physically verified during the
 year by the Management. According to the information and explanation
 given to us, keeping in view the nature of the operations of the
 Company, inventory of work-in-progress cannot be physically verified.
 
 (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 nature of its business.
 
 (c) The Company has maintained proper records of inventories. As
 explained to us there were no material discrepancies noticed on the
 physical verification of inventory as compared to the book records.
 
 iii. In respect of 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) According to the information and explanations given to us, the
 Company has not granted any loans, secured or unsecured, to companies,
 firms or other parties listed in the Register maintained under section
 301 of the Companies Act 1956. As the Company has not granted any
 loans, secured or unsecured to the parties listed in the Register
 maintained under section 301 of the Companies Act 1956, paragraphs
 (iii) (b), (c)and (d) of the Order are not applicable.
 
 (b) According to the information and explanations given to us, the
 Company has taken interest free loan from three parties listed in the
 Register maintained under section 301 of the Companies Act 1956. In
 respect of the said loans, the maximum amount outstanding at anytime
 during the year and the year end balance is Rs.3,76,306/-.
 
 c) The above-mentioned loan in non-interest bearing. In our opinion and
 according to the information and explanations given to us, other terms
 and conditions of such loans given by the Company are prima facie, not
 prejudicial to the interest of the Company.
 
 d) The principal amount is repayable on demand and there is no
 repayment schedule.
 
 iv.  In our opinion, and according to the information and explanation
 given to us, having regard to the  explanation, except that some of
 the items purchased are of a special nature and suitable alternative
 sources do not exist for obtaining comparable quotations, there are
 adequate internal control systems commensurate with the size of the
 Company and the nature of its business for the purchase of inventory,
 fixed assets and sale of goods.  During the course of our audit, we
 have not observed any major weaknesses in such internal control
 systems.
 
 v.  lnrespect of the contracts or arrangements referred to in
 Section 301 of the Companies Act, 1956;
 
 a) In our opinion and according to the information and explanations
 given to us, since, there were no transactions of sale & purchase
 during the year with the parties covered under Register maintained
 under section 301 of the Companies Act, 1956, therefore ,the provisions
 of clause 4(v) (a) of Companies (Auditor''s Report) Order 2003, are not
 applicable to the Company.
 
 b) In our opinion and according to the information and explanations
 given to us, as there are no contracts or agreements that need to be
 entered into register maintained under section 301 Companies Act 1956,
 therefore ,the provisions of clause 4(v) (b) of Companies (Auditor''s
 Report) Order 2003, are not applicable to the Company.
 
 vi. In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposits from the public.
 Therefore, the provisions of clause 4(vi) of Companies (Auditor''s
 Report) Order 2003, are not applicable to the Company.
 
 vii. The Company has an internal audit system commensurate with the
 size of the Company and the nature of its business.
 
 viii. As per the information and explanation given to us, the Central
 Government has prescribed the maintenance of cost records under clause
 (d) of sub section (d) of section 209 of the Companies Act, 1956 for
 the Fertiliser unit of the Company. However the Company has not
 maintained the same.
 
 ix. (a) According to the information, explanations and records of the
 Company, in respect of statutory and other dues, the Company has been
 generally regular in depositing undisputed statutory dues, including
 Provident Fund, Employees'' State Insurance, Income Tax, Sales Tax,
 Custom Duty, Excise Duty, Cess, Service Tax and any other statutory
 dues, applicable to it, with the appropriate authorities during the
 year. The Company has not paid various undisputed statutory liabilities
 viz.  Sales Tax, Central Sales Tax and VAT dues. Details of the same
 are as under.
 
 sr.  Particulars           Nature          Year to which
 No.                        of Dues         Liability 
                                            pertains
   
      Sales Tax (including                  2001-2002
 1    and Surcharge Turn    Sales tax       to 
      Over Tax)             dues            2005
 
 2    Central Sales tax     Central Sales   2001-02
                            Tax dues        to
                                            2003-2004       
 
                            Valua           2005-06
 3    Value Added Tax       Added Tax       to
                                            2007-2008
                                  
                            Wrong           2004-2005
 4    Custom Duty           Classification  to 
                            of material     2005-2006
 
                                            
                                            April 99
 5   Sales Tax              Sales Tax       to 
     Deferral Loan         Loan             ju|y 2001
 
 
 
 
 
                    Amount                  Date of       Net
 Particulars         (Rs.)      Due Dates   Payment       Due
 
 Sales Tax        0,60,143     08/04/2010        -        70,60,143
 (including
 and Surcharge
 Turn Over Tax)
 
 Central Sales   10,63,853     08/04/2010        -         10,63,853
 tax
                               On various 
 Value Added      1,44,794     dates from        -         1,44,794 
 Tax                           to FY2005-
                               06
                               FY2007-08
 
 Custom Duty     3,71,269      27/05/2011        -         3,71,269
                 5,52,281                                  5,52,281
 
 Sales Tax                     31/3/2009 
                               to
                 81,05,000     31/3/2011                   81,05,000
                               Rs. 16,21,000 
                               each year.
 
 
 (b) According to the records of the Company and the information and
 explanations given to us, details of statutory dues, which have not
 been deposited on account of dispute, are given below:
 
               Financial Year to       Forum where
 Particulars   which matter pertains   matter is pending   Amt Rs.
 
 Service Tax   2010 - 2011             Bombay High Court   48.81,467
 
 Value Added   2010-2011               Supreme Court       26,37,457
 
 Tax
 
 x. The Company does not have accumulated losses as at 31st March 2011.
 The Company has not incurred cash losses during the financial year
 covered by the audit. The Company has not incurred cash losses in the
 immediately preceding financial year.
 
 xi. Based on our audit procedure and according to the information and
 explanations given to us, we are of the opinion that the Company has
 not defaulted in the repayment of dues to financial institutions or
 banks.
 
 xii. To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, the Company
 has not granted any loans and advances on the basis security by way of
 pledge of shares, debentures and any other securities.
 
 xiii. In our opinion, the Company is not a chit fund or a nidhi/mutual
 benefit fund/society. Therefore the provisions of clause 4(xiii) of
 Companies (Auditor''s Report) Order 2003, are not applicable to the
 Company.
 
 xiv. According to information and explanations given to us, we are of
 the opinion that the Company is not trading in shares, debentures and
 other investments. Therefore, the provision of clause 4(xiv) of
 Companies (Auditor''s Report) Order 2003, are not applicable to the
 Company.
 
 xv. In our opinion and according to the information and explanations
 given to us, the Company has not given guarantees, for loans taken by
 others from banks or financial institutions.
 
 xvi. The Company has raised new term loans during the year. The term
 loans outstanding at the beginning of the year and those raised during
 the year have been applied for the purposes for which they were raised.
 
 xvii. According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we are of
 the opinion that no funds raised on short-term basis prima facie, have
 been used for long-term investments.
 
 xviii. The Company has not made any allotment of shares during the
 year. Accordingly the question of preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Companies Act, 1956, or otherwise, does notarise.
 
 xix. According to the information and explanations given to us, the
 Company has not issued any debentures; hence the question of creation
 of securities or charge does not arise.
 
 xx.  The Company has not raised any money byway of public issu & during
 the year.
 
 xxi. In our opinion and according to the information and explanations
 given to us, no material fraud on or by the Company has been noticed or
 reported during the year.
 
 
                                       For DESAI SAKSENA & ASSOCIATES
 
                                                Chartered Accountants 
                                                        (FRN102358VW)
 
                                                       Dr. S.N. Desai
                                                              Partner 
                                                           M.No.32546
 Place: Mumbai 
 Date: 12 th August 2011