1.  We have audited the attached Balance Sheet of GODFREY PHILLIPS
 INDIA LIMITED (the Company) as at March 31, 2011, the Profit and Loss
 Account and the Cash Flow Statement of the Company for the year ended
 on that date, both 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 the 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 misstatements. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and the disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and the 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.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 (CARO)
 issued by the Central Government in terms of Section 227(4A) 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 in paragraph 3
 above, we report as follows:
 
 (a) 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;
 
 (b) in our opinion, proper books of account as required by law have
 been kept by the Company so far as it appears from our examination of
 those books;
 
 (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (d) in our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report are in compliance
 with the Accounting Standards referred to in Section 211(3C) of the
 Companies Act, 1956;
 
 (e) 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:
 
 (i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 (ii) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 5.  On the basis of the written representations received from the
 Directors as on March 31, 2011 and taken on record by the Board of
 Directors, none of the Directors is disqualified as on March 31, 2011
 from being appointed as a director in terms of Section 274(1)(g) of the
 Companies Act, 1956.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 (Referred to in paragraph 3 of our report of even date)
 
 Having regard to the nature of the Company''s
 business/activities/result, clauses 4 (x) and (xiii) of the Companies
 (Auditor''s Report) Order, 2003 (hereinafter referred to as the Order)
 are not applicable.
 
 (i) In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of the fixed assets.
 
 (b) As explained to us, the Company has a system of physical
 verification of fixed assets which is designed to cover all fixed
 assets once in a period of three years and in accordance therewith, no
 physical verification was due during the current year. In our opinion,
 the frequency of physical verification is reasonable having regard to
 the size of the Company and the nature of its fixed assets.
 
 (c) The fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial part of the fixed assets of the Company
 and such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 (ii) In respect of its inventory:
 
 (a) As explained to us, the inventories were physically verified during
 the year by the Management at reasonable intervals.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the Management were reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of its
 inventories and no material discrepancies were noticed on physical
 verification and have been properly dealt with in the books of account.
 
 (iii) In respect of loans, secured or unsecured, granted by the Company
 to companies, firms or other parties covered in the Register maintained
 under Section 301 of the Companies Act, 1956(the Act), according to
 the information and explanations given to us:
 
 (a) The Company has granted unsecured loan amounting to Rs. 100 lacs to
 a company during the year.  The maximum amount due during the year in
 respect of the said loan and the year-end balance is Rs. 100 lacs.
 
 (b) The rate of interest and other terms and conditions of such loan
 are, in our opinion, prima-facie, not prejudicial to the interest of
 the Company.
 
 (c) As per the terms and conditions of the loan made no principal
 amount or interest thereon was due during the year.
 
 According to the information and explanations given to us, the Company
 has not taken any loans, secured or unsecured, from companies, firms or
 other parties listed in the Register maintained under Section 301 of
 the Companies Act, 1956.
 
 (iv) In our opinion and according to the information and explanations
 given to us, having regard to the explanations that some of the items
 purchased are of special nature and suitable alternative sources are
 not readily available for obtaining comparable quotations, there is an
 adequate internal control system commensurate with the size of the
 Company and the nature of its business with regard to purchases of
 inventory and fixed assets and the sale of goods. There are no sale of
 services during the year. During the course of our audit, we have not
 observed any major weakness in such internal control system.
 
 (v) In respect of contracts or arrangements entered in the Register
 maintained in pursuance of Section 301 of the Companies Act, 1956, to
 the best of our knowledge and belief and according to the information
 and explanations given to us:
 
 (a) The particulars of contracts or arrangements referred to in Section
 301 that needed to be entered in the Register maintained under the said
 Section have been so entered.
 
 (b) Where each of such transaction is in excess of Rs. 5 lacs in
 respect of any party, the transactions have been made at prices which
 are prima facie reasonable having regard to the prevailing market
 prices at the relevant time except in respect of certain purchases for
 which comparable quotations are not available and in respect of which
 we are unable to comment.
 
 (vi) According to the information and explanations given to us, the
 Company has not accepted any deposits from the public during the year.
 In respect of unclaimed deposits, the Company has complied with the
 provisions of Sections 58A & 58AA or any other relevant provisions of
 the Companies Act, 1956.
 
 (vii) In our opinion, the internal audit functions carried out during
 the year by a firm of Chartered Accountants appointed by the Management
 have been commensurate with the size of the Company and the nature of
 its business.
 
 (viii) We are informed that the maintenance of cost records has not
 been prescribed by the Central Government under section 209(1) (d) of
 the Companies Act, 1956 in respect of the Company''s products.
 
 (ix) According to the information and explanations given to us in
 respect of statutory dues:
 
 (a) The Company has been regular in depositing undisputed dues
 including Provident Fund, Investor Education and Protection Fund,
 Employees'' State Insurance, Income-tax, Wealth Tax, Customs Duty, Entry
 tax, Excise Duty, Cess and other material statutory dues applicable to
 it with the appropriate authorities and has generally been regular in
 respect of dues of tax deducted at source, service tax and value added
 tax. We are informed that there are no undisputed statutory dues as at
 the year-end outstanding for a period of more than six months from the
 date they became payable.
 
 (b) There are no dues of Wealth Tax, Service Tax, Customs Duty and Cess
 matters which have not been deposited on account of any dispute. The
 details of dues of Sales Tax, Excise Duty and Income-tax as at March
 31, 2011, which have not been deposited by the Company on account of
 disputes are as follows:
 
 Name of      Nature of     Amount     Amount    Period to 
                                                 which the Forum where
 the statute  the dues     of dues*  deposited   amount
                                                 relates   dispute is
                          (Rs. lacs)(Rs. lacs)             pending
 
 Sales Tax 
 Laws         Sales tax        0.83      0.25  1995-96,    Sales Tax
                                               2001-02     Tribunal
 
                              77.72     26.54  1998-99 to 
                                               1999-00,    Upto
                                               2005-06 to 
                                               2010-11     Commissioners''
                                                           Level
 
                               6.48      6.48  2006-07     High court
 
 Central      Excise duty     96.72         –  2008-09 to 
                                               2010-11     Upto
 Excise Law                                                Commissioners''
                                                           Level
 
                             453.67         –  2002-03 to 
                                               2006-07,    Customs Excise
                                               2008-09,
                                               2009-10     Service Tax
                                                           Appellate 
                                                           Tribunal
 
 Income-Tax   Income-tax     244.00    244.00  1980 to 
                                               1983,       High Court
 Law                                           1995-96 to
                                               1997-98
 
                             301.27    301.27  2000-01,
                                               2002-03 to  Income Tax
                                               2006-07     Appellate
                                                           Tribunal
 
                             316.50    269.85  1999-00,
                                               2004-05 to  Upto
                                               2008-09     Commissioners''
                                                           Level
 
 *amount as per demand orders, including interest and penalty, where
 quantified in the Order.
 
 Further, as per information available with the Company, the concerned
 authority is in appeal against favourable orders received by the
 Company in respect of the following matters:-
 
 Name of the   Nature of      Amount  Period to which
                                      the             Forum where 
                                                      department
 statute       the dues    (Rs. lacs) amount relates  has preferred 
                                                      appeal
 
 Income Tax 
 Law           Income tax      318.42  1969, 1974 to 
                                       1977,          High Court
                                       1991-92 to 
                                       1994-95, 
                                       2001-02, 
                                       2004-05
 
                               151.70  2002-03 to
                                       2003-04        Income Tax 
                                                      Appellate
                                                      Tribunal
 
                                 6.07  2000-01        Upto Commissioners''
                                                      Level
 
 U.P. Krishi 
 Utpadan       Mandi cess      108.20  1997-98 to
                                       1998-99        Supreme Court
 Mandi 
 Adhiniyam
 
 Central 
 Excise Law    Excise duty       2.61  2009-10        Customs Excise
                                                      Service
                                                      Tax Appellate 
                                                      Tribunal
 
 Sales Tax 
 Laws          Sales Tax        10.40  2007-08        High Court
 
 (x) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in the repayment of dues to
 banks.
 
 (xi) In our opinion and according to the explanations 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 during the
 year.
 
 (xii) As the Company is not dealing or trading in shares, securities,
 debentures and other investments, paragraph 4(xiv) of the Order is not
 applicable.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, the Company has not given any guarantees for loans taken
 by others from banks or financial institutions during the year.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purposes for
 which they were obtained.
 
 (xv) In our opinion and according to the information and explanations
 given to us and on an overall examination of the Balance Sheet, we
 report that funds raised on short-term basis have not been used for
 long- term investment.
 
 (xvi) The Company has not made any preferential allotment of shares
 during the year.
 
 (xvii) The Company has not issued any debentures during the year.
 
 (xviii) The Company has not raised money by way of public issue, during
 the year.
 
 (xix) To the best of our knowledge and according to the information and
 explanations given to us, no fraud by the Company and no fraud on the
 Company has been noticed or reported during the year, other than
 defalcation of Rs. 2.47 lacs by an employee, which sum was subsequently
 recovered from him.
 
                                              For A. F. FERGUSON & CO.
 
                                                Chartered Accountants
 
                                            (Registration No. 112066W)
 
                                                     Jaideep Bhargava
 
                                                              Partner
 
 Place: New Delhi                               (Membership No. 90295)
 
 Date : May 29, 2011