We have audited the attached Balance Sheet of CLARISIS ORGANICS
 LIMITED,as at 31st March, 2003 and also Profit and Loss Account of the
 Company for the year 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 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 the management, well as
 evaluating the overall financial statement presentation. We believe
 that our audit provides a reasonable basis for our opinion.
 
 As required by the Manufacturing and Other Companies (Auditors Report)
 Order, 1988 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 a statement on the matters specified in paragraphs 4
 and 5 of the said order. Further to our comments in the Annexure
 referred to above, we report that:
 
 1. 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.
 
 2. 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.
 
 3. The Balance Sheet and Profit and Loss Account dealt with by this
 report are in agreement with the books of account.
 
 4. In our opinion, the Balance Sheet and Profit and Loss Account dealt
 with by this report, except as narrated in clause(vi) below, comply
 with the accounting standards referred to in sub-section (3C) of
 section 211 of the Companies Act, 1956, to the extent applicable;
 
 5. On the basis of written representations received from the
 directors, as on 31st March, 2003 and taken on record by the Board of
 Directors, we report that none of the Directors is disqualified as on
 31st March, 2003 from being appointed as a director terms of clause (g)
 of sub-section (1) of section 274 of the Companies Act, 1956;
 
 6. In our opinion and to the best of our information and according to
 the explanations given to us, Subject to note no: 9 regarding non
 provision of interest of Rs. 104.80 lacs on Cash Credit Account for
 part of the year (47,41 Lacs) and Note no :8 regarding leave encashment
 of Rs. 1.39 lacs (3.85 Lacs) as a result of which the loss for the year
 by Rs. 106.19 (51.26 Icas) and liability by way of secured loans and
 Current Liabilities are lower by Rs. 152.21 Lacs and Rs. 5.25 Lacs
 respectively, read together with the notes thereon and the Statement of
 Significant Accounting Policies 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;
 
 (a) In the case of Balance Sheet of the state of affairs of the Company
 as at 31st March, 2003. AND
 
 (b) In the case of Profit and Loss account of the loss for the year
 ended on that date.
 
                                                 For C.R. SHAH & COMPANY
                                                   CHARTERED ACCOUNTANTS
 Date: 18th June, 2003                                        [C R SHAH]
 Place: Vadodara                                                 Partner
 
 ANNEXURE TO THE AUDITORS REPORT
 
 (Referred to in our report o even date)
 
 01. The proper records showing full particulars including quantitative
 details and situation of fixed assets are in the process of being
 updated. We have been informed by the company that the fixed assets of
 the company have been physically verified by the Management at the end
 of the year.
 
 02. The Company has not revalued any of the fixed assets during the
 year.
 
 03. The stock of finished goods, raw Materials, consumable stores &
 Work in process other than the stock laying with third party have been
 physically verified by the Management at the end of the year.
 
 04. As explained to us the procedure for physical verification of
 stocks followed by the Management are, in our opinion are reasonable &
 adequate in relation to the size of the company and nature of its
 business.
 
 05. According to the records produced to us for verification no
 material discrepancies have been noticed on physical verification of
 stocks, as compared to book records and the same have been properly
 dealt with in the books of accounts.
 
 06. On the basis of our examination of stock records, the valuation of
 stocks is fair & proper in accordance with the normally accepted
 accounting principles and is on the same basis as in the earlier year.
 
 07. The Company has current accounts with companies under the same
 management, the rate of interest and other terms and conditions of the
 current accounts are not prima facie prejudicial to the interest of the
 company The company has taken loans, secured or unsecured from
 companies, firms or other parties listed in the register maintained U/S
 301 of the Companies Act 1956.The rate of interest and other terms and
 conditions are not prima facie prejudicial to the interest of the
 company
 
 08. The company has not granted loans to companies, firms or other
 parties listed in the register maintained under section 301 or to the
 companies under the same management as defined u/s (1B) of section 370
 of the companies Act, 1956.
 
 09. The company has given interest free loans to the employees & such
 employees are repaying the principal amounts as stipulated.
 
 10. In our opinion and according to the information and explanation
 given to us, there are adequate internal control procedures
 commensurate with the size of the company and the nature of its
 business for the purchase of stores, raw materials, plant & machinery,
 equipments & other assets and for sale of goods.
 
 11. The company has made purchase of goods & materials aggregating to
 Rs. 50,000 or more in respect of each party listed in register
 maintained u/s 301 of the Companies Act, 1956. The company has made
 sale of goods, material and services aggregating to Rs. 50,000/- or
 more in respect of each party listed in the register maintained under
 section 301 of the Companies Act, 1956. The prices paid/charged are
 reasonable considering the prices at which purchases/sales of similar
 goods have been made to other parties.
 
 12. According to the information and explanations given to us, the
 company has a procedure for determination of unserviceable or damaged
 stores and raw materials during the year under review.
 
 13. The company has not accepted any deposits from public and
 accordingly the question of compliance of section 58A of the Companies
 Act, 1956 does not arise.
 
 14. The company has maintained reasonable records for the sale &
 disposal of realisable by-products and scrap (if any), wherever
 applicable.
 
 15. The company does not a have an internal audit system during the
 year under review.
 
 16. We have been informed by the company that the maintenance of cost
 records has not been prescribed by the Central government under section
 209(1)(d) of the Companies Act, 1956 for one of the products of the
 company. However the company has not maintained such records.
 
 17. According to the records of the Company, Provident Fund dues have
 generally been regularly deposited with the appropriate authorities. We
 have been informed by the Company the E.S.I. Act does not apply to the
 Company for the year under review.
 
 18. No undisputed amounts payable in respect of income-tax,
 wealth-tax, sales-tax, customs-duty and excise-duty were outstanding
 for more than 6 months from the date they became payable.
 
 19. On the basis of (i) the examination of books of accounts, (ii)the
 explanations given and representations made to us on our inquiries and
 (iii) the checks and control relating to authorizing the expenditure on
 the basis of contractual obligations to the employees accepted business
 practices having regard to the compnanys needs and exigencies, we have
 not come across any expenses charged to revenue, which in our opinion
 and judgement and to the best of our knowledge and belief should be
 regarded as personal expenses;
 
 20. The Company is not a Sick Industrial Company within the meaning of
 section 3(1)(0) of the Sick Industrial Companies (Special Provisions)
 Act, 1985.
 
                                                 For C.R. SHAH & COMPANY
                                                   CHARTERED ACCOUNTANTS
 Date: 18th June, 2003                                        [C R SHAH]
 Place: Vadodara                                                 Partner