1) We have audited the attached Balance Sheet of GAGAN GASES Limited (
 the Company ) as at March 31 ,2012, and the Profit and Loss Account for
 the year ended on that date annexed thereto and the Cash Flow Statement
 for the year ended on that date, 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 have conducted our audit in accordance with auditing standards
 generally accepted in India. These 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 (Auditors Report) order, 2003 , as
 amended by the companies (Auditors Report) (Amendment) order 2004
 (together the order) issued by the Government of India Ministry of
 Finance 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 paragraph 4 and 5 of the said order.
 
 4) 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 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 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.  In our opinion, the Balance Sheet, Profit and Loss account and Cash
 Flow Statement dealt with by this report comply with the Accounting
 Standards refereed to in section 211 (3C) of the Act;
 
 e. On the basis of the written representations received from the
 Directors, as on 31st March 2012 and taken on record by the Board of
 Directors of the Company, none of the Directors is disqualified as on
 March 31, 2012 from being appointed as Director is 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, the Balance Sheet, Profit & Loss Account
 and the Cash Flow Statement together with the notes thereon and annexed
 thereto give in the prescribed manner, the information required by the
 Act and also 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 on March 31, 2012 and 
 
 (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.
 
                               
 ANNEXURE TO AUDITOR''S REPORT
 
 Statement as required by Companies (Auditors'' 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'') :
 
 1.  i.  The Company is maintaining proper records showing full
 particulars, including quantitative details and situation of fixed
 assets;
 
 ii. Fixed assets except LPG cylinders have been physically verified by
 the management at reasonable intervals during the year. LPG cylinders
 being in the physical possession of consumers and dealers which are
 verified in routine as and when these pass through the company for
 refilling. We have not noted any discrepancies on such verification.
 
 iii. No substantial part of fixed assets have been disposed off during
 the year.
 
 2.  i. As per records produced before us and in accordance with
 Management representation Physical verification of inventory has been
 conducted at reasonable intervals by the management.
 
 ii. The procedures of physical verification of inventory followed by the
 management is reasonable and adequate in relation to the size of the
 company and the nature of its business.
 
 iii. The company is maintaining proper records of inventory. No Material
 discrepancies noticed on physical verification .
 
 3.  The company has not granted loans, secured or unsecured to
 companies, firms or other parties covered in the register maintained
 under section 301 of the Act. The company has taken loans, secured or
 unsecured form companies, firms or other parties covered in the
 register maintained under section 301 of the Act. Terms and conditions
 were prima facie not prejudicial to the interest of the company.
 
 4. There is adequate internal control procedure 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. There is
 no continuing failure to correct major weakness in internal controls.
 
 5. We are informed that transaction during the year that need to be
 entered into a register in pursuance of section 301 of the Act have
 been so entered. The transaction have been made at prices which are
 prima facie reasonable having regard to the prevailing market prices at
 relevant time.
 
 6. The company has not accepted deposits from the public where the
 directives issued by RBI and the provisions of sec. 58A, 58AA or any
 other relevant provision of the Act and rule framed there under where
 applicable.
 
 7. The company have followed in-house internal audit system
 commensurate with its size and nature of its business as applicable to
 it.
 
 8. On the basis of information given to us by management of the 
 company, maintenance of cost records has not prescribed by the central.
 government under clause (d) of sub section (I) of section 209 of the
 Act.
 
 9. As per the books and records as produced before us and in accordance
 with Management representation , the company is regular in depositing
 undisputed statutory dues including Provident Fund, Investor Education
 and Protection Fund, Employee State Insurance, Income Tax, Sales Tax.
 Wealth Tax, Service Tax, Custom Duty, Excise Duty for the year
 2011-2012 (whichever is applicable ) which have not been deposited on
 account of dispute.
 
 10. The company has accumulated losses as at march 31, 2012 exceeds 50%
 of net worth of the company but the company has not incurred any cash
 losses during the current year as well as immediately preceding
 financial year.
 
 11. As per the books and records as produced before us and in
 accordance with Management representation the Company has not defaulted
 in repayment of any dues to bank .
 
 12. The company is not involved in business of granting loans and
 advances on the basis of security by way of pledge of shares,
 debentures and other securities.
 
 13. The company is not involved in business of chit fund.
 
 14 .The company is not dealing or trading in shares, securities,
 debentures and other investment.
 
 15. The company has not given any guarantee for loans taken by others
 from bank or financial institutions.
 
 16. On the basis of books of accounts and declaration given by the
 management, the company has not taken terms loans during the year under
 audit hence clause not applicable for comment.
 
 17. On the basis of books of accounts and declaration given by the
 management, the company has not utilized the funds raised on short
 terms basis for long term investment
 
 18. As per the books and records as produced before us and in
 accordance with Management representation 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.
 
 19. As per the books and records as produced before us and in
 accordance with Management representation no debentures were issued
 during the year by the company.
 
 20. The company has not raised capital through public issue during the
 year.
 
 21. To the best of our knowledge and belief and according to the
 information and explanation given to us, no fraud on or by the company
 was noticed or reported during the year.
 
 
 
                                 For M/s Dilip K. Neema & Associates 
                                               Chartered Accountants
 
                                                    (Dilip K. Neema)
                                                          Proprietor
                                                         M.No. 74067
                                                         FRN:005279C
 
 Place : INDORE 
 Date  : 26.05.2012