1.  We have audited the attached Balance Sheet of Diana Tea Company
 Limited as at 31st December, 2010 and the Profit and Loss Account and
 Cash Flow Statement for the year ended on that date both annexed
 thereto, which we have signed under reference to this report. 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.
 
 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 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. We believe that our audit provides a reasonable basis cf
 our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003, as
 amended by the companies (Auditors Report) Amendment Order, 2004
 (CARO) 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 on the basis of
 information and explanations given to us during the course of audit we
 state that: i) 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 at all its locations were physically
 verified by the Management at reasonable intervals during the year. As
 informed, no material discrepancies were noticed on such verification.
 
 c) In our opinion and according to the information and explanations
 given to us, the Company has not disposed off any substantial part of
 fixed assets during the year.
 
 ii) a) As explained to us, the Management has conducted physical
 verification of inventory at reasonable intervals during the year
 except stock of tea lying with third party .
 
 b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of Inventory
 followed by the Management are reasonable and adequate in relation to
 the size of the Company and nature of its business.
 
 c) In our opinion and according to the information and explanations
 given to us, the Company is maintaining proper records of inventory and
 no material discrepancies were noticed on physical verification.
 
 iii) In respect of loans granted/obtained by the company to companies,
 firms or other parties covered in the register maintained under section
 301 of the Companies Act, 1956, according to the information and
 explanations given to us:-
 
 (a) The Company has granted inter-corporate loans to one company. At
 the year end the outstanding balance of such loan granted was
 Rs800,000/- and maximum amount involved during the year was ^800,000/-.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 of such loans are prima facie not prejudicial to the interest of the
 company.
 
 (c) The receipt of principal amounts and interest has been regular
 during the year.
 
 (d) There was no overdue amount in respect of above inter-corporate
 loans.
 
 (e) The Company has taken interest free unsecured loan from holding
 company. The amount of loan taken by the company during the year was Rs
 3,710,000/- at the year end the outstanding balance of such loan taken
 was RS 1,485,000/- and maximum amount involved during the year was Rs
 1,485,000/-
 
 (f) In our opinion, terms and conditions of such loans are prima facie
 not prejudicial to the interest of the Company.
 
 (g) In respect of aforesaid loan the company is regular in repayment of
 the principal amount as stipulated and is also regular in payment of
 interest where applicable.
 
 iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business, for purchase of inventory, fixed assets and for the sale of
 goods & services. During the course of audit, no major weakness has
 been noticed in the internal control in respect of these areas.
 
 v) a) To the best of our knowledge and belief and according to the
 information and explanations given to us, we are of the opinion that
 the particulars of the transactions that need to be entered into the
 register maintained under Section 301 of the Companies Act, 1956 have
 been so entered.  b) In our opinion and according to the information
 and explanations given to us, the transactions made in pursuance of
 such contracts or arrangements 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 where such market prices
 are available.
 
 vi) The Company has not accepted any deposits from the public under
 Sections 58A and 58AA of the Act and the rules framed thereunder.
 
 vii) According to the information and explanations given to us, Company
 has an internal audit system commensurate with the size and nature of
 its business.
 
 viii) 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 (i) of Section 209 of the
 Act and are of 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.
 
 ix) According to the information and explanations given to us and the
 records of the company examined by us in respect of Statutory and other
 dues:-
 
 (a) In our opinion, Undisputed Statutory dues including Provident Fund,
 Investor Education & Protection Fund, Employees State Insurance,
 Sales Tax, Wealth Tax and any other statutory dues has been regularly
 deposited with the appropriate authorities during the year except:-
 
 West Bengal Professional Tax Liability of Rs 327,41 I- in respect of
 interest for which the Company had applied for waiver.
 
 (b) According to the records of the Company, the disputed statutory
 dues on account of sales tax, income tax, wealth tax, service tax,
 excise duty and cess that have not been deposited on account of matters
 pending before appropriate authorities are as follows:
 
 Name of the Statute    Nature of Dues                  Amount
 
                                                       (in Rs)
 
 West Bengal Sales Tax 
 
 Act, 1994                   Sales Tax                  80,543/-
 
 Central Sales Tax Act, 
 
 1956                            CST                 2,528,836/-
 
 Central Sales Tax Act, 
 
 1956                            CST                     2,718/-
 
 Income Tax Act, 1961        Income Tax                779,200/-*
 
 Income Tax Act, 1961        Income Tax              1,328,258/-
 
 
                             Period to which            Forum where
 Name of the Statute
                             the Amount relates     dispute is pending
 
 
 west Bengal Sales Tax 
 
 Act, 1994                      2000-2001          Commercial Tax Officer
 
 Central Sales Tax Act,
 1956                           2003-2004          Deputy Commissioner
 
 Central Sales Tax Act,1956     2004-2005          Deputy Commissioner
 
 Income Tax Act, 1961           2007-2008          Commissioner of
                                                   Income Tax (Appeal) 
 
 Income Tax Act,1961            2008-2009          Commissioner of
 
                                                   Income Tax (Appeal)
 
 
 *The company has paid Rs 800,000/- against the same on protest.  
 
 x) The Company does not have any accumulated losses at the financial
 year ended 31st December 2010 and it has not incurred cash losses in
 the current and immediate preceding financial year.  xi) According to
 the information and explanations given to us, the Company has not
 defaulted in repayment of dues to the Financial Institutions.  
 
 xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loan or advances on the basis of security by way of pledge of
 shares, debentures and other securities.  
 
 xiii) In our opinion the Company is not a chit fund or nidhi/mutual
 benefit fund / Societies. Therefore, the provisions of claus
 
 4(xiii) of the Companies (Auditors Report) Order, 2003 are not
 applicable to the Company.  xiv) (a) According to the information and
 explanations given to us, Company is not dealing / trading in shares,
 securities or debentures and other investments. Therefore, the
 provisions of clause 4 (xiv) of the Companies (Auditors Report| Order,
 2003 are not applicable to the Company.
 
 (b) According to the information and explanations given to us,
 long-term investments have been held by the Company in its own name.
 
 xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from the
 Bank or Financial Institutions during the year.  xvi) 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.  xvii) According to the information and
 explanations given to us and on an overall examination of the Balance
 Sheet and Cash
 
 Flow Statement of the Company, we report that no fund raised on short
 term basis have been used for long term investment and no long term
 fund have been used to finance the short term assets.  
 
 xviii) The Company has not made any preferential allotment of shares to
 parties or Companies covered in the register maintained under Section
 301 of the Companies Act, 1956 during the year and hence the question
 of the price at which shares have been issued is prejudicial to the
 interest of the Company does not arise.  
 
 xix) The Company has not raised debentures during the year and hence
 question of any security in respect of debentures does not arise.  xx)
 The Company has not raised any money through public issue during the
 year.  
 
 xxi) During the course of our examination of the books and records of
 the company and based upon the audit procedures performed for the
 purpose of reporting the true and fair view of the financial statements
 and as per the information and explanations given to us by the
 management, we have neither come across any instance of fraud on or by
 the Company noticed or reported during the year nor have been informed
 of such case by the management.
 
 4.  Further to our comments 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 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 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 accounts.
 
 d) In our opinion, the Balance Sheet, Profit and Loss Account and the
 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 except for Accounting Standard 15(Revised
 2005), in respect of non-provision of part of gratuity liability
 indicated in Note No.B-8(b) of Schedule 12.
 
 e) On the basis of the written representation received from the
 Directors as on 31st December, 2010 and taken on record by the Board of
 Directors we report that none of the Directors is disqualified as on
 31st December, 2010 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 statement of accounts read
 together with Notes as appearing in schedule 12 to the Accounts
 particularly
 
 (a) Note No.-B-5 for non provision of sundry debtors considered as
 doubtful of recovery,
 
 (b) Note No.B-8 (b) for non provision of gratuitliability,
 
 (c) Note No.B-9 for non-provision of diminution in value of
 investments,
 
 (d) Note No.B-12 for non provision of professional tax liability and
 
 (e) Note No.B-13 for non provision of loan receivable.  Had the effect
 of above Notes Nos.  (a) to (e) been taken in the books the profit as
 well as carried forward profit would have been reduced by the net of
 sum of the amounts referred in above notes; 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.
 
 i) in the case of Balance Sheet, of the state of affairs of the Company
 as at 31st December, 2010; ii) in the case of 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 Flow for the year ended on that
 date.
 
                                                 For Das & Prasad
 
                                            Chartered Accountants
 
                                                Regn. No. 303054E
 
                                                    P. K. Agarwal
 
                                                          Partner
 
                                              Membership No.056921
 
 4, Chowringhee Lane
 
 Kolkata-700 016
 
 Date: May 14, 2011