We have audited the attached Balance Sheet of GOKUL REFOILS AND SOLVENT
 LIMTED (the Company) as at 31st March, 2011and the Profit and Loss
 Account and also the Cash Flow Statement of the Company for the year
 ended on that date annexed thereto. These financial statements are
 responsibility of the Company''s 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 applied and significant estimates
 made by management, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides reasonable
 basis for our opinion.
 
 1.  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.
 
 2.  In our opinion, the Company has kept proper books of account as
 required by law, so far, as it appear from our examination of the
 books.
 
 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 of
 the Company.
 
 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
 Companies Act, 1956.
 
 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,
 we report that none of the Directors is as on 31st March, 2011, prima
 facie disqualified from being appointed as a Director in terms of
 Clause (g) of Sub-Section (1) of Section 274 of Companies Act, 1956.
 
 6.  In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read with the
 Significant Accounting Policies and notes thereon give the information
 required by the Companies Act, 1956, in the manner so required and give
 a true and fair view in conformity with accounting principles generally
 accepted in India.
 
 (a) In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011 ;
 
 (b) In the case of Profit and Loss Account, of the Profit 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.
 
 As required by the Companies (Auditor''s Report) Order, 2003, as amended
 by the Companies (Auditors Report) (Amendment) Order, 2004 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 of books and
 records of the Company as considered appropriate and as per the
 information and explanations given to us, we further report that
 
 (i) In respect of Fixed Assets:
 
 1) The Company has generally maintained proper records showing full
 particulars including quantitative details and location of the fixed
 assets.
 
 2) As explained to us, the fixed assets have been verified by the
 management at reasonable intervals, according to a physical
 verification programme 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.
 
 3) In our opinion and according to the information and explanation
 given to us the Company has not made any substantial disposals during
 the year.
 
 (ii) In respect of its Inventories:
 
 1) As explained to us, inventories have been physically verified during
 the year by the management. In our opinion the frequency of
 verification is reasonable.
 
 2) In our opinion and according to information and explanations given
 to us, the procedures of physical verification of inventories followed
 by the management are reasonable and adequate in relation to the size
 of the Company and the nature of its business.
 
 3) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper record of its
 inventories. As explained to us no material discrepancies were noticed
 on physical verification, of inventories as compared to the book
 records.
 
 (iii) In respect of loans, secured or unsecured, granted or taken by
 the Company to or from companies, firms or others parties covered in
 the register maintained u/s Section 301 of the Companies Act 1956,
 according to the information and explanation given to us: -
 
 A In respect of Loan taken
 
 1) The Company has not taken any unsecured loan during the year from
 companies, firm or the other parties listed in the register maintained
 under Section 301 of the Companies Act, 1956.  Consequently, the
 requirements of clauses (iii) (f) and (iii) (g) of paragraph 4 of the
 Order are not applicable.
 
 B In respect of Loan granted
 
 1) The Company has granted unsecured loans aggregating to Rs. 9,756
 lacs to four companies covered in the register maintained under Section
 301 of the Companies Act 1956. The maximum amount involved during the
 year was Rs. 8,586 lacs and the year-end balance of loans granted to
 such parties was Rs. 3,966 lacs.
 
 2) In our opinion and according to information and explanations given
 to us ,the rate of interest and other terms and conditions of the loans
 given by the Company, are not prima facie prejudicial to the interest
 of the Company.
 
 3) The principal amount is repayable on demand and there is no
 repayment schedule. The interest is payable on demand.
 
 4) In respect of said loans, the same are repayable on demand and
 therefore the question of overdue amounts do not arise. In respect of
 interest, there are no overdue amounts.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are, generally, adequate internal control procedures
 commensurate with the size of the Company and nature of its business
 with regard to purchase of inventory and fixed assets and also for the
 sale of goods and services .During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses in internal
 control system.
 
 (v) In respect of transactions entered in the register maintained in
 pursuance of Section 301 of the Companies Act, 1956.
 
 1.  On the basis of the audit procedures performed by us, and according
 to the information, explanations and representation given to us the
 particulars of all transactions in which Directors were interested, as
 contemplated under Section 297 and Section 299 of the Companies Act,
 1956 and which were required to be entered in the register maintained
 under Section 301 of the said Act have been so entered.
 
 2.  In our opinion and according to the information and explanation
 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 exceeding value of Rs. 5 lacs in respect of any
 party during the year have been made at prices which appear reasonable
 as per information available with the Company.
 
 The Company has not accepted any deposits from public during the year
 within the meaning of Section 58A and Section 58AA of the Companies
 Act, 1956. Therefore the requirements of clauses (vi) of paragraph 4 of
 the Order are not applicable.
 
 (vi) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (vii) The Central Government has prescribed maintenance of cost records
 under Section 209 (1) (d) of the Companies Act, 1956 in respect of
 certain manufacturing activities of the Company. We have broadly
 reviewed the accounts and records of the Company in this connection and
 are of the opinion that prima facie the prescribed accounts and records
 have been maintained/are being made up. We have not, however, made a
 detailed examination of the records with a view to determining whether
 they are accurate or complete.
 
 (viii) According to information and explanations given to us in respect
 of statutory and other dues:
 
 a.  According to the records of the Company apart from certain
 instances of delays in depositing undisputed statutory dues, the
 Company has been regular in depositing undisputed statutory dues,
 including provident fund, income tax, sales tax, wealth tax, custom
 duty, cess , excise duty, service tax and other material statutory dues
 with the appropriate authorities during the year. According to the
 information and explanations given to us, no undisputed amounts payable
 in respect of the aforesaid dues were outstanding as at 31st March,
 2011 for a period of more than six months from the date of becoming
 payable.
 
 b.  According to the information and explanation given to us and the
 records of the Company, the Company has not deposited disputed
 statutory dues aggregating to Rs. 730.94 lacs on account of disputed
 matters pending before appropriate authority as mentioned below.
 
 Sr.  Nature of     Nature of        Amount    Forum where 
 No   Statute       Dues            (Rs .in
                                      lacs)    dispute is
                                               pending
 
 1    Customs       DEPB             730.94    Commissioner of
      Act 1962                                 Custom Kandla
 
 (ix) The Company neither has accumulated losses at the end of the
 financial year, nor incurred cash losses during the current and the
 immediately preceding financial year.
 
 (x) Based on our audit procedures and on the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in the repayment of dues to banks. The
 Company has not borrowed funds from Financial Institution or Debenture
 holders.
 
 (xi) According to the information and explanations given to us, the
 Company has not given any loans and advances on the basis of security
 by way of pledge of shares, debenture and other securities.
 
 (xii) In our opinion, the Company is not a chit fund /Nidhi / mutual
 benefit fund/society. Therefore, the provisions of the clause (xiii) of
 paragraph –4 of the Order are not applicable to the Company.
 
 (xiii) According to the information and explanation given to us, the
 Company is not trading in shares, securities and debentures. The
 Company has maintained proper records of the transactions in respect of
 dealing in shares and other investments and timely entries have been
 made there in. All shares and other investments have been held by the
 Company in its own name.
 
 (xiv) According to the information and explanations given to us and
 representations made by the management, the Company has given guarantee
 for loans taken by its subsidiary and firm in which the Company is a
 partner, from banks .According to the information and explanations
 given to us, we are of the opinion that the terms and conditions of
 such guarantees are not prima facie prejudicial to the to the interests
 of the Company.
 
 (xv) To the best of our knowledge and belief and according to the
 information an explanations given to us, term loans availed by the
 Company were, prima facie, applied by the Company during the year for
 the purposes for which the loans were obtained.
 
 (xvi) According to the information and explanations given to us, and on
 an overall examination of the financial statements of the Company, we
 are of the opinion that prima facie, short term funds have not been
 used for long term investment.
 
 (xvii) According to the information and explanations given to us the
 Company has not made any preferential allotment of share to parties and
 Companies covered in the register maintained u/s 301 of the Act.
 
 (xviii) According to the information and explanations given to us and
 the records examined by us, the Company has not issued any debenture
 during the financial year and therefore the question of creating
 security or charge in respect thereof does not arise.
 
 (xix) The Company has not raised any money by way of public issues
 during the year.
 
 (xx) To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the Company
 was noticed or reported during the year nor we have been informed of
 such case by the management.
 
                                      For, M.R.Pandhi and Associates
 
                                               Chartered Accountants
 
                                           (Registration No. 112360W)
 
                                                         M.R. Pandhi
 
 Ahmedabad                                                   Partner
 
 15th June, 2011                               Membership No.: 33057