We have audited the attached Balance Sheet of Duncans Industries
 Limited as at 31st March, 2011 and also the Profit and Loss Account and
 the Cash Flow Statement of the Company for the year ended on that date.
 These financial statements of the company are 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 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 from material misstatements. An audit includes
 examining, on 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.
 
 1. As required by the Companies (Auditor''s Report) Order, 2003 (“the
 order”), as amended by the Companies (Auditor''s Report) (Amendment)
 Order, 2004 issued by the Central Government in exercise of the powers
 conferred by Section 227 (4A) of the Companies Act 1956, (“the Act”)
 and according to the information and explanations given to us and
 subject to non availability of certain details and records as given in
 paragraph 5 below on the basis of such checks as we considered
 appropriate, we state that :
 
 I.  a) The Company has maintained proper records to show full
 particulars including quantitative details and situation of its fixed
 assets except in respect of Fertilizer division where such records are
 not accessible.
 
 b) All the fixed assets have not been verified by the management during
 the year but according to the information and explanations given to us,
 there is a regular programme of verification which, in our opinion, is
 reasonable having regard to the size and the nature of its assets. In
 respect of assets verified during the year, no material discrepancies
 have been noticed.
 
 c) In our opinion, during the year, the company has not disposed off
 substantial part of its fixed assets.
 
 II.  a) The inventory, as explained to us, has been physically verified
 by the management in a phased manner. No confirmations with respect to
 stock lying with third parties were obtained. In respect of certain
 materials stored in heaps such verification has been done on the basis
 of visual estimation/survey and/or volumetric measurement technique.
 
 b) In our opinion, read together with Para (II) (a) above, the
 procedure 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, the company has maintained proper records of its
 inventory and as explained to us, the discrepancies observed on such
 verification between the physical stock and the book records were not
 material and have been properly dealt with in the books of account.
 
 III.  a) During the year, the Company has not granted any loan secured
 or unsecured to any company, firm or other party covered in the
 Register maintained under Section 301 of the Act. In respect of the
 unsecured loan given in earlier years to a company covered in the
 register maintained under said section, the aggregate maximum amount
 involved and the year end balance was Rs.1685 lacs. The said loan
 continues to be interest free and yet to be repaid as indicated in Note
 19(b) of Schedule 12.
 
 b) The amount advanced is strategic in nature and in the absence of any
 specific terms for repayment etc it is not possible to ascertain and
 comment whether the same is prima facie prejudicial to the interest of
 the Company. Given the terms of repayment etc. as given in Note 19(b)
 of Schedule 12, clause III(c) and (d) are not applicable to the
 company.
 
 c) The Company, during the year has not taken any loan secured or
 unsecured from companies, firms or other parties covered in the
 register maintained under section 301 of the Act. Accordingly, clause
 4(III)(e) to (g) of the order are not applicable to the company.
 
 IV.  In our opinion, and having regard to the nature and exigencies of
 business and the practices followed and the explanation that certain
 items purchased are of a special nature and therefore in certain cases
 alternative quotations are not available, there is an adequate internal
 control procedure commensurate with the size of the Company and nature
 of its business with regard to purchase of inventory, fixed assets and
 with regard to sale of goods and services. During the course of our
 audit, we have not observed any continuing failure to correct the major
 weaknesses in internal controls.
 
 V.  According to information and explanation given to us and as per the
 records of the company, there is no transaction that needs to be
 entered, in the Register maintained under Section 301 of the Act.
 Accordingly, the provisions of the clause 4 (v) (b) of the said order
 is not applicable to the Company.
 
 VI.  Deposits accepted by the company in earlier years which were in
 excess of the limits prescribed for the purpose are due for repayment.
 The amount payable as given in Note 10 of Schedule 12 has been settled
 to be repaid on one time basis as per the scheme sanctioned by BIFR and
 as given in Note 7 of Schedule 12 is pending implementation.
 
 VII.  The Company''s internal audit in respect of the tea division has
 been conducted in a phased manner by a firm of Chartered Accountants.
 In the Fertilizer division of the Company, no such audit was carried
 out during the year. Accordingly, internal audit system needs to be
 strengthened further.
 
 VIII.  We have been explained that in the absence of any production of
 Urea during the year no cost records are required to be maintained. In
 respect of Tea division, on the basis of records produced, we are of
 the opinion that prima facie the cost records and accounts prescribed
 by the Central Government under Section 209(1) (d) of the Act have been
 maintained. However, we have not carried out any detailed examination
 of such records with a view to determine whether they are accurate or
 complete.
 
 IX.  a) As stated in Note 11 of Schedule 12 outstanding dues in respect
 of Employees Provident Fund is to be deposited in terms of scheme
 sanctioned by BIFR. Other than this, according to the information and
 explanations given to us the company is generally regular in depositing
 with appropriate authorities undisputed statutory dues in respect of
 Investor Education & Protection Fund, Sales Tax, Cess,
 
 Professional Tax and other material statutory dues applicable to it.
 The details of material statutory dues outstanding for a period
 exceeding six months as provided for in the accounts are given below:
 
 Statute        Nature of         Amount           Period to which the
                  Due            (Rs. in           amount relates to
                                   Lacs)
 
 The Income 
 Tax Act, 1961  Tax Deducted       50.67           2003-04 to 2006-07
                at Source                          and 2010-11
 
 Bihar Sales 
 Tax            Turnover Tax       17.54           2001-2003
 
 The Central 
 Sales          Sales Tax          36.59           2002-03 to 2004-05
 Tax Act, 
 1956
 
 The West 
 Bengal Sales   Purchase Tax        2.93           2004-05 to 2008-09
 Tax Act, 1944                                     and 2010-11
 
 The Employee''s 
 Provident      Contribution to   755.86           2002-03 to 2004-05
 Funds and 
 Miscellaneous  Provident and                      & 2010-11
 Provisions 
 Act, 1952      Pension Fund
 
 b) According to the information and explanations given to us, there are
 no dues of Sales Tax, Income Tax, Custom Duty, Wealth Tax, Excise Duty
 and Cess which have not been deposited on account of any dispute except
 as given below:
 
 Statute         Nature of      Forum where    Amount     Period to which
                 Tax            Dispute is     (Rs. in     amount relates
                                 Pending        Lacs)
 
 The Income      Income Tax     High Court      47.32        1976-77 &
 Tax Act, 1961                  Assessing      597.01        1977-78
                                officer                      2010-11
 
 The Central 
 Sales          Central Sales     ACCT           2.41        2004-05
 Tax Act, 1956       Tax          WBCT           1.72        2007-08
 
 The West 
 Bengal         Interest          ACCT           1.35     1996-97&1997-98
 Sales Tax Act, Sales Tax         ACCT           2.39        2004-05
 1994
 
 The Central    Excise Duty    Commissioner     86.60        March''94
 Excise Act, 
 1944                                                       to June''95
 
 The West 
 Bengal         West              WBCT          16.77        2007-08
 Value Added 
 Tax,           Bengal Vat 
 2003
 
 X. The accumulated losses of the company have exceeded fifty percent of
 its net worth.  The Company has incurred cash losses during the
 financial year covered by our audit but had not incurred cash losses in
 the immediately preceding financial year. The effect of qualifications
 has not been taken into consideration for the purpose of making comment
 in respect of this clause.
 
 XI.  As stated in Note 7 of schedule 12 amounts payable to Banks,
 Financial institutions and debenture holders have been
 restructured/rescheduled and the rehabilitation scheme specifying the
 same has since been sanctioned by BIFR. The amount and terms of the
 repayment in this respect have been stated in notes given in Schedule 3
 and on adherence to these, and implementation of the scheme as given in
 Note 7 of Schedule 12, the amounts payable will no longer be in
 default.
 
 XII.  The Company has not granted any loan and advances on the basis of
 security by way of pledge of shares, debentures and other security.
 
 XIII.  In our opinion, the Company is not a chit fund or nidhi/mutual
 benefit fund/society.  Therefore, the provisions of the clause 4 (XIII)
 of the said order are not applicable to the Company.
 
 XIV.  In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provision of clause 4 (XIV) of the Order is not applicable to the
 Company.
 
 XV.  The Company has not given any guarantee during the year for loan
 taken by others.  Guarantees given in earlier years to group/associate
 companies in respect of loans taken by them from banks and financial
 institutions, considering the long term involvement with those
 companies when issued was not prima facie prejudicial to the interest
 of the Company.
 
 XVI.  As per the information and explanations given to us, no fresh
 term loan has been taken during the year.
 
 XVII.  According to the information and explanation given to us,
 pending implementation of the scheme sanctioned by BIFR as given in
 Note 7 of Schedule 12, on an overall examination of the Balance Sheet
 of the Company, we report that funds amounting to Rs. 78,260 lacs
 raised on short-term basis have been used for long term investment,
 i.e., for funding losses of the Company.
 
 XVIII. The Company has not made any preferential allotment of shares to
 parties and companies required to be covered, in the Register
 maintained under Section 301 of the Act, during the year.
 
 XIX.  The Company has not issued any secured debentures during the
 year. Accordingly, clause 4 (XIX) of the order is not applicable to the
 company.
 
 XX.  The Company has not raised any money through a Public issue during
 the year.
 
 XXI.  During the course of our examination of books and records of the
 Company carried out in accordance with generally accepted auditing
 practices in India, we have neither come across any instances of fraud
 on or by the Company, noticed and/or reported during the year, nor have
 we been informed of any such case by the management.
 
 2.  As indicated in Note 7(a) of schedule 12, the accounts have been
 prepared on a going concern basis. However, it''s ability to continue as
 a going concern is dependent upon the future implementation of the
 scheme sanctioned by BIFR, on which we are unable to express any
 opinion presently.
 
 3.  The impact with respect to various measures required to be
 implemented in terms of the scheme sanctioned by BIFR in the hearing
 held on 29th September, 2011 including the resultants write backs,
 provisions, etc. as given in Note 7(b) to 7(d) and read with notes
 3.2,4,10 and 11 of Schedule 12 will be ascertained and given effect to
 on implementation of the scheme. Pending this, impact with respect to
 various adjustments arising have presently not been ascertained and as
 such cannot be commented upon by us.
 
 4.  As indicated in Note 19 and 20 of Schedule 12, shortfall in value
 of investments and loans and advances given to certain companies and
 resultant impact thereof on the losses if any are presently not
 ascertainable.
 
 5.  As indicated in Note 9 and 22 of Schedule 12, relevant records and
 details in respect of Fertilizer Division and certain records,
 confirmations and reconciliation for the purpose of the audit, were not
 available and thereby year end verification in this respect as such
 could not be carried out. In view of the above and in the absence of
 relevant details/records and/or full
 information/reconciliations/confirmations, we are unable to express any
 opinion on the extent of adjustments arising there from and their
 impact on amounts of various assets and liabilities, expenses and
 income and impact thereof on the profit of the Company.
 
 6.  Attention is invited to the following Notes in Schedule 12:
 
 a) Note 12(b) regarding non provision of various employee related
 expenses amounting to Rs. 179.62 lacs from 1st October, 2010 to 31st
 March, 2011 and thereby loss for the year and accumulated balances is
 lower to the extent of Rs. 179.62 lacs.
 
 b) Note 21(c) regarding non disclosure of liability related to employee
 benefits under defined benefit plans pertaining to Fertilizer division
 and those related to Superannuation Fund as required in terms of AS 15.
 
 7.  Further attention is also invited to the following Notes in
 Schedule 12, impacts whereof are presently not ascertainable:
 
 a) Note 6.2 regarding non availability of details regarding micro,
 small and medium enterprise as defined under Micro, Small and Medium
 Enterprise Development Act, 2006,
 
 b) Note 18.4 regarding non-provision of Rs. 811.67 lacs demanded by the
 appropriate authorities as “Salami” on renewal of lease in certain
 circumstances; and
 
 c) Note 30.2 regarding payment of managerial remuneration amounting to
 Rs. 491.51 lacs (including Rs. 98.70 lacs for the year) which is
 subject to approval of the Central Government.
 
 8.  We further report that, without considering Para 2 to 5,6(b) and 7,
 impacts of which on the company''s loss for the year and the accumulated
 balance thereof have not been ascertained and as such cannot be
 commented upon by us, had the impact of items 6(a) above been
 considered, the loss for the year would have been Rs. 3924.14 lacs as
 against the reported loss of Rs. 3744.52 lacs and accumulated balance
 thereof would have been Rs.147097.41 lacs as against the reported
 figures of Rs. 146917.79 lacs.
 
 9.  Further to above, we report that :
 
 a) Subject to Para 5 and Para 7(a) above, 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) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 referred to in this report are in agreement with the books of account;
 
 c) 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 such
 books;
 
 d) In our opinion, excepting non recognition of foreign exchange
 fluctuation on FCRN in terms of Accounting Standard 11 “the effect of
 changes in foreign exchange rate” as stated in Note 4(b) of Schedule
 12, non provision/ascertainment of certain employee related expenses
 and disclosure in terms of Accounting Standard 15 on “Employee
 Benefits” as stated in Note 21(c) of Schedule 12 and non ascertainment
 of contingent liabilities and disclosures thereof in respect of
 Fertilizer Division as required in terms of Accounting Standard 29 on
 “provisions, contingent liabilities and contingent assets”, the Balance
 Sheet, Profit and Loss Account, and Cash Flow Statement comply with the
 Accounting Standards referred to in sub-section 3(c) of Section 211 of
 the Act;
 
 e) In view of the defaults made in repayment of deposits and interest
 thereon reference is invited to Note 13 of schedule 12 regarding the
 Company''s contention, for applicability of section 274(1)(g) of the
 Act. As per the legal opinion received on which we have placed
 reliance, the directors of the Company are not disqualified from being
 appointed as directors in terms of Section 274(1)(g) of the Act;
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, subject to our remarks as given in Para 2
 to 7 above whereby excepting as given in Para 8 above, we are unable to
 ascertain the impact on these accounts and read together with the other
 Notes thereon, these accounts give the information required by the Act,
 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 the Balance Sheet, of the State of Affairs of the
 Company as at 31st March, 2011;
 
 ii.  in the case of the Profit and Loss Account, of the loss of the
 Company 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.
 
                                                 For LODHA & CO.
 
                                          Chartered Accountants
 
                               Firm ICAI Membership no. 301051E
 
                                                    R. P. Singh
 Place : Kolkata                                        Partner
 
 Dated : 14th November, 2011               Membership No. 52438