1. We have audited the attached Balance Sheet of Dhunseri Petrochem &
 Tea Limited (the Company) as at 31 March, 2011, and the related
 Profit and Loss Account and Cash Flow Statement for the year ended on
 that date annexed thereto, which we have signed under reference to this
 report. 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 the 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 statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3. As required by the Companies (Auditor''s Report) Order, 2003, as
 amended by the Companies (Auditor''s Report) (Amendment) Order, 2004
 (together the Order), issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 of `The Companies Act, 1956''
 of India (the `Act'') and on the basis of such checks of the books and
 records of the Company as we considered appropriate and according to
 the information and explanations given to us, we give in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the Order.
 
 4. We draw your attention to Note 8 on Notes to Accounts, in relation
 to the recognition of Rs 6462.93 lacs towards compensation from
 insurance company towards loss of certain items of inventory and fixed
 assets due to fire during the year, in spite of the awaited approval of
 the insurance claim and uncertainties as to the amount that may be
 approved by the insurance company; which does not meet the requirement
 to consider prudence in selection of accounting policies, as set out in
 Accounting Standard 1 - Disclosure of Accounting Policies. Had the
 aforesaid insurance claim not been recognised in keeping with the
 consideration of prudence, Other Income would have been Rs 8183.60 lacs
 instead of the reported amount of Rs14646.53 lacs, profit before tax
 for the year would have been Rs 12948.70 lacs instead of the reported
 amount of Rs19411.63 lacs, current tax for the year would have been Rs
 2499.45 lacs instead of the reported amount of Rs 3788.87 lacs, profit
 after tax for the year would have been Rs.  7557.42 lacs instead of the
 reported amount of Rs 12730.93 lacs, Earnings per share (basic) would
 have been Rs. 21.58 instead of the reported amount of Rs. 36.35 per
 share, Earnings per share (diluted) would have
 
 been Rs. 20.56 instead of the reported amount of Rs. 34.63 per share
 and Net Current Assets would have been Rs. 37859.44 lacs instead of the
 reported amount of Rs.43032.95 lacs.
 
 5. Further to our comments in the Annexure referred to in paragraph 3
 above, 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 purposes of
 our audit;
 
 (b) Except for the effects of the matter referred to in paragraph 4
 above, 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, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 (d) Except for the matter referred to in paragraph 4 above, 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 Act;
 
 (e) On the basis of written representations received from the
 directors, as on 31 March, 2011 and taken on record by the Board of
 Directors, none of the directors is disqualified as on 31 March, 2011
 from being appointed as a director in terms of clause (g) of
 sub-section (1) of Section 274 of the Act;
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto give, in the prescribed
 manner, the information required by the Act, and except for the effects
 of the matter referred to in paragraph 4 above, 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 31 March, 2011;
 
 (ii) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Annexure to Auditors'' Report
 Referred to in paragraph 3 of the Auditors’ Report of even date to the
 members of Dhunseri Petrochem & Tea Limited on the financial statements
 for the year ended March 31, 2011.
 
 1. (a) The Company is maintaining proper records showing full
 particulars, including quantitative details and situation, of fixed
 assets.
 
 (b) The fixed assets of the tea division are physically verified by the
 management according to a phased programme designed to cover all the
 items over a period of three years. Fixed assets of the PET division
 are physically verified by the management every three years. In our
 opinion, this is reasonable having regard to the size of the Company
 and the nature of its assets. Pursuant to the programme, a portion of
 the fixed assets has been physically verified by the Management during
 the year and no material discrepancies between the book records and the
 physical inventory have been noticed.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 off by the Company during the year.
 
 2. (a) The inventory (excluding stocks with third parties) has been
 physically verified by the management during the year. In respect of
 inventory lying with third parties, these have substantially been
 confirmed by them. In our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion, the procedures of physical verification of
 inventory 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 inventory records, in our
 opinion, the Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 3. The Company has neither granted nor taken any loans, secured or
 unsecured, to companies, firms or other parties covered in the register
 maintained under Section 301 of the Act. Consequently, clause (iii)(b),
 (iii)(c), (iii)(d), (iii)(f) and (iii)(g) of paragraph 4 of the
 Companies (Auditor’s Report) Order, 2003 as amended by the Companies
 (Auditors’ Report) (Amendment Order), 2004 are not applicable.
 
 4. In our opinion and according to the information and explanations
 given to us, there is an 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 the 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 weaknesses in the
 aforesaid internal control system.
 
 5. (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 Act 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 and exceeding the value of Rupees Five Lakhs in respect of
 any party during the year have been made at prices which are 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, the Company has complied with the provisions of Sections
 58A and 58AA or any other relevant provisions of the Act and the
 Companies (Acceptance of Deposits) Rules, 1975 with regard to the
 deposits accepted from the public. According to the information and
 explanations given to us, no Order has been passed by the Company Law
 Board or National Company Law Tribunal or Reserve Bank of India or any
 Court or any other Tribunal on the Company in respect of the aforesaid
 deposits.
 
 7. In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 8. We have broadly reviewed the books of account maintained by the
 Company in respect of products where, pursuant to the Rules made by the
 Central Government of India, the maintenance of cost records has been
 prescribed under clause (d) of sub-section (1) of Section 209 of the
 Act, and are of the opinion that prima facie, the prescribed accounts
 and records have been made and maintained. We have not, however, made a
 detailed examination of the records with a view to determine whether
 they are accurate or complete.
 
 9. (a) According to the information and explanations given to us and 
 the records of the Company examined by us, in our opinion, except dues 
 in respect of income tax, the Company is generally regular in
 depositing the undisputed statutory dues including provident fund,
 investor education and protection fund, employees’ state insurance,
 sales-tax, wealth tax, service tax, customs duty, excise duty, cess and
 other material statutory dues, as applicable, with the appropriate
 authorities. Further, since the Central Government has till date not
 prescribed the amount of cess payable under section 441A of the
 Companies Act, 1956, we are not in a position to comment upon the
 regularity or otherwise of the company in depositing the same. The
 extent of the arrears of statutory dues outstanding as at March 31,
 2011, for a period of more than six months is in respect of
 Agricultural Income Tax of Rs. 2.44 lacs for the A.Y.  2003-2004.
 
 (b) According to the information and explanations given to us and the
 records of the company examined by us, there are no dues of income-tax,
 wealth tax, service tax, customs duty, excise duty and cess which have
 not been deposited on account of any dispute except an amount of Rs.
 148.61 lacs, under the Central Excise Act, 1944 and an amount of
 Rs.18.13 lacs under the Service Tax, 1961, in respect of which
 demand/showcause notices have been received by the company.
 
 10. The Company has no accumulated losses as at March 31, 2011 and it
 has not incurred any cash losses in 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 explanation given to us, the Company has not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holders as at the balance sheet date.
 
 12. The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 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. In our opinion and 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 during the year.
 
 16. In our opinion, and according to the information and explanations
 given to us, on an overall basis, the term loans have been applied for
 the purposes for which they were obtained.
 
 17. On the basis of an overall examination of the balance sheet of the
 Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short-term
 basis which have been used for long-term investment.
 
 18. The Company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under Section
 301 of the Act during the year.
 
 19. The Company has not issued any debentures during the year and no
 debentures are outstanding at the end of the year.
 
 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 Lovelock & Lewes
                                   Firm Registration Number: 301056E
                                               Chartered Accountants
 
                                                   Prabal Kr. Sarkar
                                                             Partner
                                           Memebership Number: 52340
 
 Kolkata
 24 May, 2011