Gokul Refoils and Solvent

We have audited the attached Balance Sheet of GOKUL REFOILS AND SOLVENT
 LIMTED (the Company) as at March 31, 2009 and 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 Companys 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 appears 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, and read with Note No 4 of Schedule 20 regarding
 accounting for custom duty on goods lying in bonded godown ,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, 2009 and taken on records by the Board of Directors ,
 we report that none of the Directors is as on March 31 ,2009, 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 and subject to note
 no. 4 regarding non provision of custom duty, 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 March 31, 2009;
 
 (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 (Auditors 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 phased 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 there were no material discrepancies
 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 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 taken unsecured loan aggregating to Rs. 0.60 Lacs
 during the year from one party covered in the register maintained u/s
 301 of the Companies Act 1956. The Company had taken in the past loans
 from other parties. The maximum amount involved during the year was Rs.
 5.48 Lacs and the year end balance of loans taken from such parties was
 Rs. Nil.
 
 2) The said loans are interest free. Other terms and conditions of such
 loans are, in our opinion prima facie not prejudicial to the interest
 of the Company.
 
 3) The Company is regular in repaying the principal amounts as
 stipulated.
 
 4) There is no overdue amount in respect of loan taken by the Company B
 In respect of Loan granted
 
 1) The Company has granted interest free unsecured loans aggregating to
 Rs.2,435.04 Lacs to three Companies covered in the register maintained
 u/s 301 of the Companies Act, 1956. The maximum amount involved during
 the year was Rs. 2,435.04 Lacs and the year-end balance of loans
 granted to such parties was Rs.2,435.04 Lacs.
 
 2) The other terms and conditions of such loans are , in our opinion
 prima facie not prejudicial to the interest of the Company.
 
 3) As per the information and explanation given to us the said loans
 are given interest free on account of commercial prudence to have long
 term benefits due to the nature of association with the said Companies.
 
 4) There is no overdue amount in respect of loan granted by the
 Company.
 
 (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 regards 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
 the 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 transacations 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 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 are reasonable
 having regard to prevailing market prices at the relevant time.
 
 (vi) 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.
 
 (vii) On the basis of internal audit Reports broadly reviewed by us, we
 are of the opinion that, the coverage of internal audit functions
 carried out by a firm of chartered accountants appointed by the
 management as well as the Companys internal audit department is
 commensurate with the size of the Company and the nature of its
 business.
 
 (viii) We have broadly reviewed the books of accounts maintained by the
 Company relating to the manufacture of Vanaspati, pursuant to the
 notification of the Central Government for the maintenance of the cost
 records under section 209(i)(d) of the Companies Act, 1956 and on the
 basis of information received, 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. To the best
 of our knowledge and according to the information given to us, the
 Central Government has not prescribed maintenance of the cost records
 under section 209(i)(d) of the Companies Act, 1956 for any other
 products of the Company.
 
 (ix) 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.
 
 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. 2.40 Lacs on account of disputed
 matters pending before appropriate authority as mentioned below.
 
 Sr.  Nature of Statute                  Nature of Dues
 No.
 
 1    Sales Tax Act of Gujarat           Sales Tax
 
      Amount                Forum where
 (Rs. in Lacs)              dispute is pending
 
      2.40                  Joint Commissioner
                            of Sales Tax,
                            Ahmedabad.
 
 (x) The Company neither have accumulated losses at the end of the
 finanacial year, nor incurred cash losses during the current and the
 immediately preceding financial year.
 
 (xi) 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
 holder.
 
 (xii) 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
 
 (xiii) 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.
 
 (xiv) In our opinion, the Company is not dealing or trading in shares,
 securities, debenture and other investments during the year.
 
 (xv) 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, form banks . The terms and conditions of such guarantees are
 not prima facie prejudicial to the to the interests of the Company.
 
 (xvi) 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, other than temporary
 deployment pending application.
 
 (xvii) 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.
 
 (xviii) 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.
 
 (xix) 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.
 
 (xx) According tSchedule XIII as amended. The Directors, therefore,
 recommend passing of the relevant Ordinary Resolution as mentioned at
 item no. 9 of the Notice.
 
 (xxi) 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 & ASSOCIATES, 
                                              Chartered Accountants
 
 Place: Ahmedabad                                        M.R.Pandhi
 Date:  30th May, 2009                                      Partner
                                               Membership No. 33057