We have audited the attached Balance Sheet of DHARANI SUGARS AND
 CHEMICALS LIMITED, as at 31st March 2011, the Profit and Loss account
 and Cash Flow Statement for the year ended on that date annexed the
 responsibility of the Company''s management. Our responsibility is to
 express an opinion on these financial statements based on our audit.
 
 We conducted our audit in accordance with the auditing standards
 require that we plan and perform the audit to obtain reasonable
 assurance about whether the financial statements. An audit also
 includes assessing the accounting principles used and significand
 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.
 
 As required by the Companies (Auditor''s Report) Order, 2003 issued by
 the Central Governmentt of India in terms of Section 227(4A) of the
 Companies Act, 1956, we have annexed hereto a statement on the matters
 specifies in paragraphs 4 and 5 of the said Order.
 
 In terms of an further to our comments in the Annexure referred to
 above, we report that:
 
 (a) we have obtained all the information and explanations which, to the
 best of our knowledge and belief, were neccessary 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 it appears from our examination of
 the said books and records;
 
 (c) The Balance Sheet, Profit & Loss account and Cash flow statement
 referred to in this report are in agreement with the said books of
 account;
 
 (d) In our opinion, the Balance Sheet, Profit & 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;
 
 (e) On the basis of the written representations received from the
 Directors as on 31st March 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 sub
 section 1(g) of Section 274 of the Companies Act, 1956 
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the said financial statements, read in
 conjunction with Notes and Schedules attached thereto, 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 2011;
 
 (b) in the case of the Profit & Loss Account, of the Profit of the
 Company for of 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 
 
 With reference to our Auditor''s Report to the Shareholders of Dharani
 Sugars and Chemicals Limited, we report that, in our opinion and to the
 best of our knowledge and belief and as per the information and
 explanations furnished to us and the books and records examined by us
 in the normal course of audit;
 
 1. In terms of its fixed assets 
 
 a) The Company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.  
 
 b) The fixed assets of the Company have been physically verified during
 the period by the management in accordance with a programme of
 verification, the frequency whereof is reasonable.  According to the
 information and explanations given to us, no material discrepancies
 were noticed on such verification.
 
 c) During the year, the Company has not disposed off any substantial
 part of the fixed assets.  
 
 2. In respect of its inventories 
 
 a) The inventory has been physically verified during the year by the
 management. In our opinion, the frequency of verification is
 reasonable.
 
 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, we are
 of the opinion that the Company is maintaining proper records of
 inventory. The discrepancies noticed on verification between the
 physical stocks and the book records were not material.  
 
 3. The Company has not granted any loans, secured or unsecured during
 the year to companies, firms or parties covered in the Register
 maintained under Section 301. In respect of loans, secured or unsecured
 taken by the Company from companies, firms, or other parties covered in
 the Register maintained under Section 301 of the Companies Act, 1956,
 we state the following:
 
 a) During the period, the Company has taken loans from a party covered
 in the register maintained under Section 301 of the Companies Act,
 1956. The outstanding amount in respect of the loans taken during the
 year is Rs. 350 lakhs as at the 0end of the year.  
 
 b) ln our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions on
 which the loans has been taken from the Company, are not prima facie
 prejudicial to the interest of the Company The amounts are repayable on
 demand
 
 4. In our opinion and according to the explanations given to us, there
 is an adequate internal control system commensurate with the size of
 the Company and the nature of its business with regard to purchases of
 inventory, fixed assets and for the sale of goods and services. During
 the course of our audit, no major weakness has been noticed in the
 internal system.
 
 5. In respect of transactions entered in the register maintained in
 pursuance of Section 301 of the Companies Act 1956.  
 
 a) To the best of our knowledge and belief and according to the
 information and explanations given to us, transactions that need to be
 entered into the register maintained under Section 301 have been so
 entered.
 
 b) According to the information and explanations given to us, there are
 no transactions of purchase of inventory and fixed assets and sale of
 goods exceeding Rs.5 lakhs in respect of each party. In respect of
 other transactions exceeding Rs. 5 lakhs in respect of each party, the
 transactions have been made at prices, which are prima facie,
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 6.  In our opinion and according to the information and explanations
 given to us, directives issued by the Resen/e Bank of India and the
 provisions of Sections 58A and 58AA or any other relevant provisions of
 the Companies Act, 1956 and the rules framed there under, to the extent
 applicable, have been complied with. We are informed by the management
 that no order has been passed by the Company Law Board, National
 Company Law Tribunal or Reserve Bank of India or any
 CourtoranyotherTribunal.
 
 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 accounts and records 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 and we are of the opinion that prima facie the prescribed
 accounts and records have been made and maintained. We have however,
 not made a detailed examination of the records with a view to
 determining whether they are accurate or complete 
 
 9.  According to the information and explanations given to us, in
 respect of statutory dues and other dues.
 
 a) The Company has been generally regular in depositing undisputed
 statutory dues, including Provident Fund, Employees'' State Insurance,
 Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth
 Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other
 statutory dues with the appropriate authorities during the period.  
 
 b) As confirmed by the Management, there are no dues of Income Tax,
 Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess,
 on account of any dispute other than the following:
 
 Name of the    Nature of dues           Amount   Forum where
 Statute                         (Rs. in lakhs)   Dispute is pending
 
 Finance Act,   Service Tax on           580.01   Central Excise and
 1994           Manpower and                      Service Tax
                Recruipment                       Appellate Tribunal
                Supply Agency 
                Service
 
 Finance Act,   Service Tax on            14.92   Central Excise and
 1994           Goods Transport                   Service Tax
                Agency                            Appellate Tribunal
 
 10.  The Company does not have accumulated losses at the end of the
 financial year. The Company has not incurred cash losses during the
 financial year covered by the audit and in the immediately preceding
 financial year.
 
 11.  According to information and explanation given to us and as per
 the books and records examined by us, the Company has not defaulted in
 repayment of dues to financial institution or bank. The Company has not
 issued any debentures.
 
 12. Based on our examination of documents and records, we are of the
 opinion that the Company has not granted loans and advances on the
 basis of security by way of pledge of shares, debentures and other
 securities.
 
 13. In our opinion, the Company is not a chit fund or nidhi / mutual
 benefit fund / society. Therefore, the provisions of clause 4(xiii) of
 the Companies (Auditor''s Report) Order, 2003 (as amended) are not
 applicable to the Company.
 
 14.ln our opinion, the Company is not dealing in or trading in shares,
 securities, debentures and other investments. Accordingly, the
 provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order,
 2003 (as amended) are not applicable to the Company.  
 
 15. The Company has not given any guarantee for loans taken by others
 from bank or financial institutions.
 
 16. To the best of our knowledge and belief and according to the
 information and explanations given to us, term loans availed by the
 Company were, prima facie applied by the Company during the period for
 the purposes for which the loans were obtained.
 
 17.TO the best of our knowledge and according to the information given
 to us, funds raised on short-term basis have, prima facie not been used
 for long-term investment.
 
 18.  The Company has made preferential allotment of shares to parties
 and to a company covered in the register maintained under Section 301
 of the Act.  
 
 19. According to the information and explanations given to us, the
 Company has not issued any debentures.
 
 20. The Company has not raised any monies by way of public issues
 during the year.
 
 21. Based upon the audit procedures performed and information and
 explanations given by the management, we report that no fraud on or by
 the Company has been noticed or reported during the course of our
 audit.
 
                                                   SRINIVASAN&SHANKAR 
                                                Chartered Accountants 
                                    (Firm Registration No. : 005093S) 
 
 
                                                     per P SRINIVASAN 
                                                              Partner 
                                                 Membership No.025416 
 Place : Chennai 
 Dated :24th May 2011