Deepak Fertilizers and Petrochemicals Coprn

We have audited the attached Balance Sheet of DEEPAK FERTILISERS AND
 PETROCHEMICALS CORPORATION LIMITED as at 31st
 
 March, 2009 and also the Profit and Loss Account and the Cash Flow
 Statement 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 on our audit.
 
 We conducted our audit in accordance with the generally accepted
 auditing standards 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, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 As required by the Companies (Auditors Report) Order, 2003 issued by
 the Central Government of India in terms of sub-section (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 purposes 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 and proper returns adequate for the purposes of our audit have
 been received from the branches not visited by us.
 
 3) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account.
 
 4) In our opinion, the 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.
 
 5) On the basis of written representations received from the directors,
 as on 31st March, 2009 and taken on record by the Board of Directors,
 we report that none of the directors is disqualified as on 31st March,
 2009 from being appointed as a director in 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, the said accounts 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 the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2009;
 
 b) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 c) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Annexure to the Auditors Report
 
 Referred to in paragraph 3 of our report of even date,
 
 1) FIXED ASSETS
 
 (a) The Company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 (b) All the assets have not been physically verified by the management
 during the year but there is a regular programme of verification which,
 in our opinion, is reasonable having regard to the size of the Company
 and the nature of its assets. No material discrepancies were noticed on
 such verification.
 
 (c) In our opinion and according to the information and explanations
 given to us, no substantial part of fixed assets has been disposed off
 by the Company during the year.
 
 2) INVENTORIES
 
 (a) The inventories at the factory have been physically verified during
 the year by the management. In our opinion, the frequency of
 verification is reasonable. The Company has received confirmations in
 respect of stocks lying with third parties.
 
 (b) 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) On the basis of our examination of the records of inventory, in our
 opinion, the Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of stocks as compared to
 the book records were not material.
 
 3) LOANS
 
 (a) The Company has not granted unsecured loans, to any company listed
 in the register maintained under Section 301 of the Companies Act,
 1956.
 
 (b) Accordingly, our comments in respect of sub clauses (b), (c) and
 (d) are not called for and offered.
 
 (c) The Company has not taken any loans, secured or unsecured from
 companies, firms and other parties covered in the register maintained
 under Section 301 of the Companies Act, 1956 and hence on facts our
 comments in respect of clauses (f) and (g) are not called for and
 offered.
 
 4) In our opinion and according to the information and explanations
 given to us, there is adequate internal control system commensurate
 with the size of the Company and the nature of its business for the
 purchase of inventory, fixed assets and for sale of goods and services.
 Further, on the basis of our examination of the books and records of
 the Company and according to the information and explanations given to
 us, we have neither come across nor have been informed of any
 continuing failure to correct major weakness in the aforesaid internal
 control procedures.
 
 5) RELATED PARTIES TRANSACTIONS
 
 (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 Companies Act, 1956, 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 such contracts or
 arrangements have been made at prices which are reasonable having
 regard to prevailing market prices at the relevant time.
 
 6) In our opinion and according to the information and explanations
 given to us, the Company has not accepted deposits within the meaning
 of the provisions of Sections 58A and 58AA of the Companies Act, 1956
 and the Rules made thereunder.
 
 7) In our opinion, the Company has an 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 pursuant to the Rules made by the Central Government for the
 maintenance of cost records under Section 209 (1) (d) of the Companies
 Act, 1956 in respect of its products specified under the said Order 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.
 
 9) STATUTORY DUES
 
 (a) According to the records of the Company, the Company is regular in
 depositing with appropriate authorities undisputed statutory dues
 including Provident Fund, Investor Education And Protection Fund,
 Employees State Insurance, Income Tax, Sales Tax, Value Added Tax,
 Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other
 statutory dues applicable to it with the appropriate authorities.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, the particulars of dues of
 Income Tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax,
 Customs Duty, Excise Duty and Cess as at 31st March, 2009, which have
 not been deposited on account of a dispute, are included in Annexure C
 of Notes forming part of the Accounts.
 
 10) The Company has no accumulated losses as at 31st March, 2009 and
 has not incurred any cash losses during the financial year ended on
 that date or in the immediately preceding financial year.
 
 11) According to the records of the Company examined by us and the
 information and explanations given by the management, the Company has
 not defaulted in repayment of dues to financial institutions, banks or
 debenture holders as at the Balance Sheet date.
 
 12) LOANS AND ADVANCES
 
 (a) Based on our examination of documents and records, we are of the
 opinion that the Company has maintained adequate records, where the
 Company has granted loans and advances on the basis of security by way
 of pledge of shares and other securities.
 
 (b) Based on our examination of the records and evaluation of the
 related internal controls, we are of the opinion that proper records
 have been maintained of the transactions and contracts and timely
 entries have been made in those records. We also report that the
 Company has held the shares, securities in its own name.
 
 13) The provisions of any special statute applicable to chit fund /
 nidhi / mutual benefit fund / societies are not applicable to the
 Company.
 
 14) In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 15) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 16) In our opinion, and according to the information and explanations
 given to us, on an overall basis, the funds raised have been applied
 for the purposes for which they were obtained or pending the actual
 application, have been deployed for working capital purposes
 transitorily.
 
 17) Based on the information and explanations given to us and on an
 overall examination of Balance Sheet of the Company, in our opinion,
 funds raised on a long-term basis have not been used for short-term
 investment.
 
 18) The Company has not made 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 created securities in respect of debentures issued
 and outstanding at the year end.
 
 20) The Company has not raised any money by public issues during the
 year.
 
 21) During the course of our examination of the books and records of
 the Company, carried out in accordance with the generally accepted
 auditing practices in India and according to the information and
 explanations given to us, we have neither come across any instance of
 fraud on or by the Company noticed or reported during the year, nor
 have we been informed of such case by the management.
 
                                            For B. K. KHARE & CO.
 
                                           Chartered Accountants
                                                     R. D. Onkar
 
 Mumbai                                                  Partner
 Dated 20th May, 2009                      Membership No.: 45716