1.  We have audited the attached Balance Sheet of Gillanders Arbuthnot
 And Company Limited, as at 31st March 2011, and the related Profit and
 Loss Account and Cash Flow Statement for the year ended on that date
 annexed thereto, 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.  The report on the audit of Modern India Construction Company
 Division and GIS Cotton Mill Division carried out by Bagree & Co and
 Dutta Ghosh and Associates respectively has been forwarded to us as
 required under clause (c) of sub-section 3 of Section 228 of the
 Companies Act 1956 of India (''the Act'') and has been considered in
 preparing our report.
 
 3.  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 rea- sonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes ex- amining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and sig- nificant estimates
 made by management, as well as evalu- ating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 4.  As required by the Companies (Auditor''s 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'') and on the basis of such checks of the books and
 records of the company as we considered appropriate and according to
 the information and explanations given to us, we give in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the said
 Order.
 
 5.  Further to our comments in the Annexure referred to in paragraph 4
 above, we report that:
 
 5.1 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;
 
 5.2 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;
 
 5.3 The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 5.4 In our opinion, the Balance Sheet, Profit and Loss Account 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 Act;
 
 5.5 On the basis of written representations received from the directors
 as on 31st March, 2011 and taken on record by the Board of Directors,
 none of the directors is disqualified as on 31st March 2011 from being
 appointed as a director in terms of clause (g) of sub- section (1) of
 Section 274 of the Act;
 
 5.6 In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements read
 together with the notes thereon and attached thereto give the
 information required by the Act, in the manner so required 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 at 31st March 2011:
 
 (ii) in the case of the 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 flows for the
 year ended on that date.
 
 ANNEXURE TO AUDITORS'' REPORT [Referred to in paragraph 4 of the
 Auditors'' Report of even date to the members of Gillanders Arbuthnot
 and Company Limited on the financial statements for the year ended 31st
 March 2011]
 
 1.  (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 have been physically verified
 during the year by the management at reasonable intervals and no
 material discrepancies were noticed on such verification. In our
 opinion, the frequency of verification is reasonable.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 of by the Company during the year.
 
 2.  (a) As explained to us, the inventory of the Company (excluding
 stocks with third parties) has been physically verified during the year
 by the management or by a firm of Chartered Accountants on behalf of
 the management during the year. In respect of stock lying with third
 parties, those have substantially been confirmed by them and/or have
 been verified with reference to subsequent sale. In our opinion the
 frequency of such verification is reasonable.
 
 b) In our opinion, 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) On the basis of our examination of the inventory records, in our
 opinion, the Company has maintained proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 3.  (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 Act. Accordingly, paragraphs 4 (iii)(b), (c), and (d) of the
 Order are not applicable.
 
 (b) According to the information and explanations given to us, the
 Company 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, paragraphs 4 (iii) (f) and (g) of the
 Order are not applicable.
 
 4.  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 the business for the
 purchase of inventory, fixed assets and for the sale of the goods and
 services. Further, on the basis of our examination of the books and
 records of the Company, and according to the information and
 explanations given to us, we have neither come across nor have been
 informed of any continuing failure to correct major weaknesses in the
 aforesaid internal control system.
 
 5.  (a) In our opinion and according to the information and
 explanations given to us, the particulars of contracts or arrangements
 referred to in Section 301 of the Act have been entered in the register
 required to be maintained under that section.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements entered in the register maintained under Section 301 of
 the Act and exceeding the value of Rupees Five Lakhs 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.
 
 6.  In our opinion and according to the information and explanations
 given to us, the Company has complied with the directives issued by
 Reserve Bank of India and the provisions of Sections 58A, 58AA or any
 other relevant provisions of the Act and the Companies (Acceptance of
 Deposits) Rules, 1975 with regard to the deposits accepted from the
 public. According to the information and explanations given to us, no
 Order has been passed by the Company Law Board or National Company Law
 Tribunal or Reserve Bank of India or any Court or any other Tribunal on
 the company in respect of the aforesaid deposits.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 Company relating to certain products (Tea Plantation, Textile and
 Chemical) 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 (1) of Section 209 of the Act, and are of the
 opinion that prima facie, the prescribed accounts and records have been
 made and maintained.  To the best of our knowledge and according to the
 information and explanations given to us, the Central Government of
 India under the aforesaid Act have not prescribed the maintenance of
 cost records for other products of the Company. We have not, however,
 made a detailed examination of the records with a view to determine
 whether they are accurate or complete.
 
 9.  (a) According to the information and explanations given to us and
 the records of the Company examined by us, in our opinion, the Company
 is generally regular in depositing the undisputed statutory dues
 including Provident Fund, Investor Education and Protection Fund,
 Employees'' State Insurance, Income-Tax, Sales- Tax, Wealth Tax, Service
 Tax, Customs Duty, Excise duty, Cess and other material statutory dues
 as applicable, with the appropriate authorities. As at 31st March 2011,
 there were no arrears in respect of the aforesaid dues for a period of
 more than six months from the date they became payable, except in
 respect of service tax as stated below:
 
 Name of         Nature of 
                  Dues       Amount    Period to 
                                        which      Due Date    Date of
 the Statute             (Rs. in lacs) the amount 
                                       relates                 Payment
 
 Finance Act, 
 1997           Service 
                Tax on       2.27      1997-98    June, 2002   Not paid
                freight bills
 
 b) Further, since the Central Government of India has till date not
 prescribed the amount of cess payable under Section 441A of the Act, we
 are not in a position to comment upon the regularity or otherwise of
 the Company in depositing the same.
 
 (c) According to the information and explanations given to us and the
 records of the Company examined by us, the particulars of dues of
 income-tax, sales-tax, wealth tax, service tax, customsst duty, excise
 duty and cess as applicable as at 31 March 2011 which have not been
 deposited on account of a dispute, are as follows –
 
 Name of the                 Nature of Dues         Amount
 Statute                                           (Rs. in lacs)
 
 Central Sales Tax Act,        Sales Tax             82.01
 1956
 
                                                    249.37
 
 The West Bengal Sales         Sales Tax             31.17
 Tax Act, 1944
 
                                                      9.68
 
 West Bengal Value Added       Sales Tax            184.38
 Tax Act, 2005
 
                                                    178.55
 
 Bengal Finance                Sales Tax             15.66
 (Sales Tax) Act, 1941
 
 Orissa Sales Tax Act, 1947    Sales Tax              0.53
 
 Central Sales Tax (Orissa)    Sales Tax              9.30
 Rules, 1957
 
 Central Excise Act, 1944      Excise Duty           34.32
                                                     63.33
 
 Finance Act, 1997             Service Tax           42.46
                                                  (Paid under
                                                  protest Rs. 15)
 
 Income Tax Act, 1961          Income Tax             5.86
 
 
 
 
 Name of the           Period to which the       Forum where Dispute
 Statue                 amount relates                 is Pending
 
 Central Sales Tax Act,
 1956                  2003-04, 2004-05 & 
                       2005-06               West Bengal Commercial
                                             Taxes Appellate and
                                             Revisional Board, Kolkata
 
                       2006-07 & 2007-08     Sr. Joint Commissioner of
                                             Sales Tax, Kolkata
 
 
 The West Bengal Sales
 Tax Act, 1944         1996-97, 1998-99,
                       2001-02 &             Additional/Deputy 
                                             Commissioner
                       2004-05               of Commercial Taxes, Kolkata
                                             Revisional Board, Kolkata
 
                       2003-04               West Bengal Commercial
                                             Taxes Appellate and
                                             Revisional Board, Kolkata
 
 West Bengal Value Added
 Tax Act, 2005         2005-06, 2007-08      Sr. Joint Commissioner of
                       & Quarter ended Jun 
                       06 & Dec 06           Sales Tax, Kolkata
 
                       Quarter ended Sep 06 
                       & Mar 07              West Bengal Commercial
                                             Taxes Appellate and
                                             Revisional Board, Kolkata
 
 Bengal Finance
 (Sales Tax) Act, 1941 1985-86               West Bengal Commercial
                                             Taxes Appellate and
                                             Revisional Board, Kolkata
 
 Orissa Sales Tax Act, 
 1947                  1998-99               Additional Commissioner
                                             of Sales Tax, Cuttack
 
 Central Sales Tax (Orissa)
 Rules, 1957           1998-99 & 1999-2000   Additional Commissioner
                                             of Sales Tax, Cuttack
 
 Central Excise Act, 
 1944                  Upto 1987-88         Office of the Commissioner-
                                             Central Excise
 
                       Various periods from
                       1994-95 to           Office of the Additional/
                                            Deputy
                       2007-08              Commissioner of Central 
                                             Excise
 
 Finance Act, 1997     2003-04 to 2006-07   CCE (Appeal), Kolkata
 
 Income Tax Act, 1961  1987-88              High Court, Kolkata
 
 10.  The Company has no accumulated losses as at 31st March 2011 and it
 has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 11.  According to the records of the Company examined by us and the
 information and explanation given to us, the Company has not defaulted
 in repayment of dues to any financial institution or banks at the
 Balance Sheet date.  The Company had neither any outstanding debenture
 at the beginning of the year nor has it issued any debenture during the
 year.
 
 12.  According to the information and explanation given to us, the
 Company has not granted any loans and advances on the basis of security
 by way of pledge of shares, debentures and other securities.
 
 13.  The provisions of any special statute applicable to chit fund/
 nidhi / mutual benefit fund/societies are not applicable to the
 company.
 
 14.  In our opinion and according to the information and explanation
 given to us, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 15.  In our opinion and according to the information and explanations
 given to us, the Company has given guarantee for loans taken by others
 from banks or financial institutions in an earlier year is prima facie
 not prejudicial to the interests of the Company.
 
 16.  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.
 
 17.  On the basis of an overall examination of the Balance Sheet of the
 Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short-term
 basis which have been used for long-term investment.
 
 18.  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 during the year.
 
 19.  The Company has not issued any debentures and accordingly the
 question of creation of securities in this regard does not arise.
 
 20.  The Company has not raised any money from public issue during the
 year.
 
 21.  During the course of our examination of the books and records of
 the Company, carried out in accordance with the Generally Accepted
 Auditing Practices in India, and according to the information and
 explanations given to us, we have neither come across any instance of
 material fraud on or by the Company, noticed or reported during the
 year, nor have we been informed of such case by the management.
 
                                              For Singhi & Co.
 
                            Firm Registration Number - 302049E
 
                                         Chartered Accountants
 
                                                  Rajiv Singhi
 
                                                       Partner
 Kolkata, 30th May, 2011                 Membership No. 053518