1.  We have audited the attached Balance Sheet of Ester Industries
 Limited (''the Company'') as at March 31, 2012 and also the Statement of
 profit and loss and the Cash Flow Statement for the year ended on that
 date annexed thereto. 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 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) issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose
 in the Annexure a statement on the matters specified in paragraphs 4
 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that:
 
 i.  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;
 
 ii.  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;
 
 iii. The balance sheet, statement of profit and loss and cash flow
 statement dealt with by this report are in agreement with the books of
 account;
 
 iv.  In our opinion, the balance sheet, statement of profit and loss
 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.
 
 v.  On the basis of the written representations received from the
 directors, as on March 31, 2012, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2012 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956.
 
 vi.  In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts 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 March 31, 2012;
 
 b) in the case of the statement of profit and loss, of the loss for the
 year ended on that date; and
 
 c) in the case of cash flow statement, of the cash flows for the year
 ended on that date.
 
 Re: Ester Industries Limited
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All fixed assets have not been physically verified by the
 management during the year but there is a regular program of
 verification which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. No material
 discrepancies were noticed on such verification.
 
 (c) There was no substantial disposal of fixed assets during the year.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 (b) 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) The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) (a) According to the information and explanations given to us,
 the Company has not granted any loans, secured or unsecured to
 companies, firms or other parties covered in the register maintained
 under section 301 of the Companies Act, 1956.  Accordingly, the
 provisions of clause 4(iii)(a) to (d) of the Order are not applicable
 to the Company and hence not commented upon.
 
 (b) According to information and explanations given to us, the Company
 has not taken any loans, secured or unsecured, from companies, firms or
 other parties covered in the register maintained under section 301 of
 the Companies Act, 1956.  Accordingly, the provisions of clause
 4(iii)(e) to (g) of the Order are not applicable to the Company and
 hence not commented upon.
 
 (iv) 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 and fixed assets and for the sale of goods. There
 is no sale of service; hence provisions of this clause, to the extent
 of sale of services are not applicable to the Company. During the
 course of our audit, we have not observed any major weakness or
 continuing failure to correct any major weakness in the internal
 control system of the company in respect of these areas.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in section 301 of the Companies Act, 1956 that
 need to be entered into the register maintained under section 301 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 and exceeding the value of Rupees five lakhs have been
 entered into during the financial year at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 
 (vi) The Company has not accepted any deposits from the public.
 
 (vii) In our opinion, the 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 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, related to the manufacture of polyester films and
 engineering plastics and are of the opinion that prima facie, the
 prescribed accounts and records have been made and maintained.
 
 (ix) (a) 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
 other material statutory dues have generally been regularly deposited
 with the appropriate authorities.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees'' state insurance, income-tax,
 wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and
 material other undisputed statutory dues were outstanding, at the year
 end, for a period of more than six months from the date they became
 payable.
 
 (c) According to the records of the Company, the dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, custom duty, excise
 duty and cess on account of any dispute, are as follows:
 
 Name of the             Nature of Dues                        Amount
 Statute                                                      (Rs. in
                                                               lacs)
 
 Central Excise     Dispute on MODVAT credit taken on chips     30.04 
 Act, 1944          used in yarn and on exempted clearance of
                    chips. Demand raised for duty on removal 
                    of PET Chips in custody
 
 Central Excise     Dispute on MODVAT credit taken on inputs   173.86 
 Act, 1944          and Capital Goods used in chips which 
                    were cleared at NIL duty.
 
 Central Excise     Dispute on disallowance of MODVAT on TEG     4.80 
 Act, 1944          as documents were more than six months old.
 
 The Customs        Demand for Custom Duty forgone on value     57.71 
 Act, 1962          based advance license.
 
 Central Excise     Demand on PET Chips waste cleared at nil     4.57 
 Act, 1944          rate of duty. MEG received under chapter
                    X after rescinding of Notification 
                    No. 34/87 CE. Inadmissibility of MODVAT 
                    credit against PBT Chips and Polyester
                    films.
 
 Name of the Statute       Period to which the     Forum where dispute 
                           amount relates          is pending
 
 Central Excise Act,1944   July 87 to June 93 and  Commissioner Central
                           Jan 95                  Excise (Noida)
 
 Central Excise Act,1944   March 90 to Feb 92      Commissioner 
                           and Oct 94 to Feb 95   (Appeals), Central
                                                   Excise Ghaziabad
 
 Central Excise Act,1944   March 92                Customs, Excise,
                                                   Service Tax Appellate
                                                   Tribunal (Delhi)
 
 The Customs Act,1962      June 93 to April 95     Commissioner/
                                                   Additional 
                                                   Commissioner Customs
                                                  (DEEC) Mumbai
 
 Central Excise Act,1944   July 93 to May 94 and   Deputy Commissioner
                           Feb to Aug 2000         Central Excise, Rampur
 
 Name of the         Nature of Dues                             Amount
 Statute                                                       (Rs. in 
                                                                lacs)
 
 Central Excise   Demand raised on account of differences in     7.72 
 Act, 1944        stocks as per physical and book records.
 
 The Customs      Dispute on disallowance of remission on MEG   32.99 
 Act, 1962        lost in Transit and utilization of MODVAT
                  credit
 
 Central Excise   Demand on shortages on inputs on               3.09 
 Act, 1944        department physical verificatioin.
 
 Income Tax Act,  Penalty imposed on difference of loss          1.84 
 1961             assessed by Income Tax Department and tax
                  return filed by the Company.
 
 Income Tax Act,  Dispute on Disallowance of advertisement       1.68
 1961             expenditure pursuant to Rule 6B of IT Rules,
                  1962 by ITAT
 
 Income Tax Act,  Dispute on Disallowances of club expenditure   1.80 
 1961             on the contention that expenses not incurred
                  wholly and exclusively for the business needs.
 
 Income Tax Act,  Dispute on Disallowances of 50% of             5.10 
 1961             entertainment expenses on the contention
                  of non participation of the employee for 
                  incurring such expenditure
 
 Income Tax Act,  Dispute on disallowances of expenses relating 14.68
 1961             to previous year.  
 
 Income Tax Act,  Disallowance of 80HHC benefit in MAT          16.94
 1961             computation
 
 Income Tax Act,  Dispute on disallowances of excess            37.47 
 1961             depreciation claimed by company, bonus
                  provision, expenses incurred on earning 
                  exempt income by invoking section 14A of 
                  the Act
 
 Name of the Statute       Period to which the    Forum where dispute 
                           amount relates         is pending
 
 Central Excise Act,1944   November 1992          Commissioner Meerut II
 
 The Customs Act,1962      June 87 to Oct 88,     Assistant 
                           March 91 to May 91     Commissioner, 
                           and 1993               Rampur
 
 Central Excise Act,1944   July 2010              Assistant Commissioner,
                                                  Rampur
 
 Income Tax Act,1961       1988-89                High Court, Delhi
 
 Income Tax Act,1961       A.Y. 1990-91, 1993-     Income Tax Appellate
                           94 to 1997-98           Tribunal, Delhi
 
 Income Tax Act,1961       A.Y. 1990-91, 1993-     Income Tax Appellate 
                           94 to 1 994-95 &        Tribunal, Delhi & 
                           A.Y.2005-06             Commissioner of 
                                                   Income Tax (Appeals) 
                                                   Delhi
 
 Income Tax Act,1961       A.Y. 1993-94 to 1997-   Income Tax Appellate
                           98                      Tribunal, Delhi
 
 Income Tax Act,1961       A.Y. 1993-94 to 1997-   Income Tax Appellate 
                           98                      Tribunal, Delhi
 
 Income Tax Act,1961       AY: 2004-05 to 2005-    Income Tax Appellate 
                           06                      Tribunal, Delhi
 
 Income Tax Act,1961       A.Y. 2006-07 to A.Y.    Commissioner 
                           2009-10                 Appeals
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a financial
 institution and banks. The Company has no outstanding debentures during
 the current year.
 
 (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 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 a 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.
 
 (xiv) In respect of dealing/trading in shares, securities, debentures
 and other investments, in our opinion and according to the information
 and explanations given to us, proper records have been maintained of
 the transactions and contracts and timely entries have been made
 therein. The shares, securities, debentures and other 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 bank
 or financial institutions.
 
 (xvi) Based on information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that no funds raised on short-term basis have been used for long- term
 investment.
 
 (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.
 
 (xix) The Company did not have any outstanding debentures during the
 year.
 
 (xx) The Company has not raised any money through a public issue during
 the year.
 
 (xxi) 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 by the management, we report
 that no fraud on or by the Company has been noticed or reported during
 the year.
 
                                          For S. R. BATLIBOI & CO.
 
                                    Firm Registration No. 301003E 
 
                                            Chartered Accountants
 
                                                  per Manoj Gupta
 
 Date : 4th May 2012                                      Partner
 
 Place : Gurgaon                            Membership No.: 83906