We have audited the attached Balance sheet of Dwarikesh sugar
 Industries limited as at 30th September, 2010, the Profit & Loss
 Account and also the Cash Flow Statement of the Company 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 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 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 (Auditors Report) order, 2003 as
 amended by the Companies (Auditors report) (Amendment) order, 2004
 (collectively the order) issued by the Central Government of India in
 terms of section 227 (4A) of the Companies Act, 1956 and on the basis
 of such checks as we considered appropriate and according to the
 information & explanations given to us, we enclose in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the said
 Order.
 
 2.  Further to our comments in the Annexure referred to in paragraph
 (1) 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 & Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 d.  In our opinion, the said Balance Sheet, Profit & Loss Account and
 Cash flow Statement have been prepared in accordance with the
 accounting standards as prescribed under the provisions of section 211
 (3C) of the Companies Act, 1956 to the extent applicable;
 
 e.  On the basis of written representations received from the
 directors, as on 30th september,2010 and taken on record by the Board
 of directors, we report that none of the directors is disqualified as
 on 30th September, 2010 from being appointed as a director of the
 Company in terms of section 274 (1) (g) of the Companies Act, 1956;
 
 f.  Without qualifying our opinion :
 
 i) We draw attention to note 12 of schedule B relating to accounting
 for cane purchase liability for the sugar season 2007-08 at Rs 110 per
 quintal based on earlier interim order of Honble Allahabad High Court
 (subsequently upheld by Honble Supreme Court pending final decision)
 instead of State Advised price of Rs125 per quintal fixed by the Uttar
 Pradesh Government. Pending completion of legal proceedings in the
 matter, the effect thereof on these accounts cannot be determined at
 this stage.
 
 ii) We draw attention to note 13 of schedule B relating to non
 accounting for adjustment on account of conversion of non-levy sugar
 into levy sugar. Based on SLP fled and the stay granted by the Honble
 supreme Court of India and legal opinion taken by the company, against
 the order of Honble Allahabad High Court which had upheld the order of
 Directorate of sugar for converting the unlifted non-levy quantity of
 177,403 qtls. into levy sugar, the matter being subjudice, the
 adjustment in accounts cannot be made at this stage.
 
 g.  In our opinion, and to the best of our information and according to
 the explanations given to us, the said Accounts read together with the
 Signifcant Accounting policies in Schedule A & Notes to Accounts in
 schedule B 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 the Companys affairs as at 30th
 September, 2010; (ii) In the case of Profit & Loss Account, of the loss
 of the Company for the year on that date; and (iii) In the case of Cash
 flow statement, of the cash flows for the year ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT
 Annexure referred to in paragraph 1 of our report to the members of
 Dwarikesh Sugar Industries limited on the accounts for the year ended
 30.09.2010
 
 i (a) The Company is maintaining proper records to show full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) As explained to us, the assets have been physically verified by the
 management in accordance with a phased programme of verification, which
 in our opinion, is reasonable considering the size and nature of its
 business. No material discrepancies have been noticed on such physical
 verification as compared to book records.
 
 (c) During the year, the Company has not disposed off substantial part
 of the fixed assets.
 
 ii. (a) As explained to us, inventory has been physically verified by
 the management at reasonable intervals during the year. In our opinion,
 the frequency of such verification is reasonable.
 
 (b) The procedures of physical verification of inventories followed by
 the management are, in our opinion, reasonable and adequate in relation
 to the size of the company and the nature of its business.
 
 (c) The Company is maintaining proper records of inventory. The
 discrepancies noticed on 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) The Company has taken unsecured loans from four companies and
 Managing Director covered in the register maintained under section 301
 of the Companies Act, 1956, maximum balance outstanding against these
 loans is Rs 3,02,38,948 and year end balance is Rs 1,17,20,805.
 
 (b) In our opinion, the rate of interest and other terms & conditions
 on which these loans have been taken are not, prima facie, prejudicial
 to the interest of the Company.
 
 (c) These loans are repayable on demand; therefore, there are no
 overdue amounts at the year end.
 
 (d) The company has not granted any loan, secured or unsecured, to
 companies, firms and other parties covered in the register maintained
 under section 301 of the Companies Act, 1956.
 
 (e) Since there are no such loans, comments regarding terms &
 conditions, repayment of the principal amount & interest due thereon
 and overdue amounts are not required.
 
 iv. In our opinion, and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and the nature of its business with regard
 to purchase of inventory & fixed assets and with regard to sale of
 goods & services. Further, on the basis of our examination of the books
 & records of the company, carried out in accordance with the generally
 accepted auditing practices in India, we have neither come across nor
 have we been informed of any instances of major weaknesses in the
 aforesaid internal control systems.
 
 v. (a) To the best of our knowledge & belief and according to the
 information and explanations given to us, we are of the opinion that
 the particulars of contracts or arrangements 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 contracts or
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956, and exceeding the value of rupees five lacs in
 respect of each party during the year have been made at prices which
 are reasonable having regard to prevailing market prices at the
 relevant time where such market prices are available.
 
 vi. The company has not accepted any deposits from the public within
 the meaning of provisions of section 58A, 58AA & any other relevant
 provisions of the Companies Act, 1956, including the Companies
 (Acceptance of Deposits) Rules, 1975.
 
 vii.  In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 viii. In our opinion and according to the information and explanations
 given to us, the Company is maintaining accounts and records in
 accordance with the Rules prescribed by the Central Government under
 section 209(1) (d) of the Companies Act, 1956, for maintenance of Cost
 Accounting records. However, we are not required to make a detailed
 examination of such books & records.
 
 ix. (a) The Company is generally regular in depositing with appropriate
 authorities undisputed statutory dues including provident fund,
 Investor education and protection fund, employees state insurance,
 Income tax, sales tax, Wealth tax, service tax, Custom duty, excise
 duty, Cess and any other statutory dues applicable to it. there are no
 arrears of such dues outstanding as at the year end for a period of
 more than six months from the date they became payable.
 
 (b) According to the information and explanations given to us and as
 per the books & records examined by us, there are no dues of Income
 tax, Wealth tax, service tax, Custom duty and Cess which have not been
 deposited on account of any dispute except the following in respect of
 trade tax and excise duty along with the forum where the dispute is
 pending:
 
 Sr.  Name of statue   Nature of       Disputed Amt. 
                                       (net of          Forum where 
                                                        dispute is
 No.                   dues            payments made)   pending
                                       (Rs In lacs)
 
 1    Uttar Pradesh 
      Trade tax        Trade Tax       27.03            Honble Allaha
                                                        bad High Court
      Act              dues                             and other trad
                                                        e tax Authorit
                                                        ies
 
 2    The Central  
      Excise Act,      Excise Duty     320.76           Excise Appellate
                                                        Authorities 
      1944             demands
 
 
 x. The accumulated losses as at the end of the financial year are less
 than 50%of the net worth. Further, the Company has not incurred cash
 losses in the current financial year and in the immediately preceding
 financial year.
 
 xi. In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to any
 financial institution and bank.
 
 xii. According to the information & explanations given to us, the
 Company has not granted loans and 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/ society. Therefore the relevant reporting requirements of
 the order are not applicable.
 
 xiv. According to the information and explanations given by the
 management, the Company is not dealing in or trading in shares,
 securities, debentures and other investments and hence the related
 reporting requirements of the order are not applicable.
 
 xv. The company has not given any guarantees for loans taken by others
 from banks or financial institutions.
 
 xvi. In our opinion and according to the information and explanations
 given to us, the term loans raised during the year have been applied
 for the purpose for which they were raised where such end use has been
 specified by the lender.
 
 xvii. According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, long term
 assets of Rs 5,309.73 lacs have been financed through short term loan
 from a bank.
 
 xviii. During the year, the company has not made any preferential
 allotment of shares to companies and parties covered under section 301
 of the Companies Act,1956.
 
 xix. During the financial year, the Company has not issued any
 debentures nor has any outstanding debentures.
 
 xx. The company has not raised any monies by way of public issues
 during the year.
 
 xxi. During the course of our examination of the books & records of the
 company carried out in accordance with the generally accepted auditing
 practices in India, we have neither come across any instance of fraud
 on or by the company, noticed and reported during the year, nor have we
 been informed of such case by the management.
 
 
                                          For S. S. KOTHARI MEHTA & Co.  
 
                                                  Chartered Accountants
 
                                                 Firm Regn. No. 000756N
 
                                                        ARUN K. TUlSIAN
 
 place: New Delhi                                               Partner
 
 Date: November 29, 2010                            Membership no.89907