I have audited the attached Balance Sheet of Caprolactam Chemicals
 Limited as at 31st March, 2011 and also the Profit and Loss Account and
 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. My responsibility is to express an opinion on
 these financial statements based on my audit.
 
 I conducted my audit In accordance with auditing standards generally
 accepted in India. Those standards require that I plan and
 
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 Includes examining on test basis evidence supporting the amounts and
 disclosure 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. I believe that my audit provides reasonable basis for my
 opinion.
 
 1.  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 and on the basis of checks of the books and records
 of the Company as I considered appropriate and according to the
 information & explanation given to me I enclose in the annexure a
 statement on the matters specified In the paragraph .4 and S of the
 said order.
 
 2.  Further to my comments in the Annexure referred to in paragraph 1
 above, report that :
 
 a] I have obtained all the information and explanations which to the
 best of my knowledge and belief were necessary for the purpose of my
 audit;
 
 b] In my opinion, proper books of account as required by the law have
 been kept by the Company, so far as it appears from my examination of
 the books of accounts of the Company;
 
 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 of
 the Company;
 
 d] The Company has not made provision towards retirement benefit due to
 employees as per AS 15 on Employees Benefit.
 
 The impact on profit of the company and on reserve and surplus that may
 arise due to adjustment on account of the above comment is
 un ascertainable.
 
 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, I
 report that none of the directors is disqualified as on 3lst 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] In my opinion and to the best of my information and according to the
 explanation given to me, the account read together with the notes
 thereon ; give the information required by the Companies Act, 1956 in
 the manner so required and subject to the notes thereon give true and
 fair view;
 
 [1] In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011 and
 
 [2] In the case of the Profit and Loss Account, of the profit of the
 company for the year ended on that date; and
 
 [3] In the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 
 Annexure to the Auditor''s Report to the members of Caprolactam
 Chemicals Limited as required by the Companies (Auditor''s Report)
 Order, 2003 (Refer Para 1  of my report)
 
 (i) (a) The Company has maintained proper records showing full
 particulars Including quantitative details and situation of Fixed
 Assets.
 
 (b) As explained to me, these fixed assets have been physically
 verified by the management in a phased periodical manner. In my opinion
 the frequency of verification is reasonable. No material discrepancies
 were noticed on such physical verification.
 
 (c) The Company has not disposed off any substantial part of if s fixed
 assets so as to affect is going concern status.
 
 (ii) (a) As explained to me, inventories have been physically verified
 by management at reasonable intervals during the year. In my opinion,
 the frequency of such verification is reasonable.
 
 (b) In my opinion and according to the information and explanations
 given to me, 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 inventory and
 discrepancies noticed on physical verification as compared to the book
 records have been properly dealt with in the books of accounts.
 
 (iii) (a) According to the Information and explanation given to me, the
 Company has not granted any loans, secured or unsecured to company,
 firms and other parties covered in the register maintained under
 section 301 of the Companies Act, 1956. Accordingly, paragraph 4 (iii)
 (b), (c) and (d) of the order are not applicable.
 
 (b) The Company has taken unsecured loans from two parties whose names
 are to be covered In the register maintained under section 301 of the
 Act. The Maximum amount Involved during the year was Rs.88,82,500/-
 and the balance outstanding as on 31st March, 2011 was Rs.88,82,500/-.
 
 (c) The rate of interest and other terms and conditions of the loan are
 not prima fade prejudicial to the interest of the Company.
 
 (d) The Company has been regular in repaying principal amount wherever
 stipulated and the Company is also regular in payment of interest
 wherever applicable.
 
 (iv)ln my opinion and according to the information and explanation
 provided to me. There is an adequate internal control procedure
 commensurate with the size of the Company and the nature of its
 business, for the purchase of the Inventory and fixed assets and for
 the sale of goods & services.
 
 (v)(a) According to the Information and explanation provided by the
 management, I am of the opinion that all the particulars of contracts
 or arrangements that need to be entered Into a register In pursuance of
 section 301 of the Act have been so entered.
 
 (b) According to the information and explanation provided by the
 management, the transactions made in pursuance of such contracts or
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956. and exceeding the value of Rs. Five Lacs in
 respect of each 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 my opinion and according to the information and explanations
 given to me, the Company has not accepted any deposits from the public.
 
 (vii) The Company has an adequate internal audit system, which in my
 opinion is commensurate with the size of the Company and the nature of
 Its business.
 
 (viii) According to information/explanation given to me, the rules made
 by Central Government under clause (c) of Sub-section (1) of section
 209 of the Companies Act 1956, are not applicable to the company.
 
 (Ix)(a) According to the information & explanation given to me and the
 records of the company examined by me, In my opinion, the company is
 generally regular in depositing undisputed statutory dues including
 Provident fund, Employee State Insurance, Income Tax, Sales Tax, Wealth
 Tax, Service Tax, Custom Duty Excise Duty, Cess & other statutory dues
 as applicable with appropriate authorities.
 
 According to the information & explanation given to me, 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 they
 becoming payable.
 
 (b) According to the information & explanation given to me there are no
 disputed amount of statutory dues towards Income Tax, Sales Tax, Wealth
 Tax, Service Tax, Custom Duty Excise Duty, Cess that have not been paid
 to concerned authorities.
 
 (x) The company has accumulated losses as at 31st March 2011 and has
 neither incurred cash losses during the financial year ended on that
 date nor in the immediately preceding financial year.
 
 (xi) According to the information & explanation given to me and based
 on the audit procedures applied by me, the company has not defaulted in
 repayment of its dues to any financial institution or bank as at the
 Balance sheet date.
 
 (xii) The Company has not granted 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 find/
 nidhi/ mutual benefit/ societies are not applicable to the company.
 
 (xiv) In my opinion and according to the information and explanations
 given to me, the Company is not dealing in or trading in shares,
 securities, debentures and other investments. Accordingly, the
 provisions of clause (xiv) of Paragraph 4 of the Companies ( Auditor''s
 Report) Order, 2003 are not applicable to the Company.
 
 (xv) According to information & explanation given to me, the Company
 has not given any guarantee for loans taken by others from banks or
 financial institutions.
 
 (xvi) According to information & explanation given to me, the Company
 has not taken any Term Loan from banks or Financial Institutions.
 
 (xvii) According to the information & explanation given to me, and
 based on the examination of Balance Sheet of the Company, prima facie,
 the funds raised on short term basis have not been used for long term
 Investment.
 
 (xviii) According to the information and explanations given to me, the
 Company has not made preferential allotment of shares to parties and
 companies covered in the register maintained under Section 301 of the
 Companies Art, 1956 during the year.  
 
 (xix) The company has not issued any secured debentures during the
 year, and accordingly, no securities were required to be created.
 
 (xx) The company has not raised any funds by way of a public issue
 during the year.
 
 (xxi) During the course of my examination of the books of the accounts
 and records of the company and according to the information
 &explanation given to me, I have neither come across any instances of
 material fraud on or by the Company, noticed or reported during the
 year.
 
 
 Place: Mahad                                             JATIN V. SHAH
 
 Date: 19th August, 2011                            CHARTERED ACCOUNTANT