1.  We have audited the attached Balance Sheet of Golden Tobacco
 Limited as at 31st March, 2012, the Statement of Profit and Loss and
 also the Cash Flow Statement for the year ended on that date 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 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 (Auditor''s Report) Order, 2003 issued
 by the Central Government of India in terms of Section 227 (4A) of the
 Companies Act, 1956 (herein after referred to as the ''Act''), 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 that:
 
 (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 accordance with the consistent practice followed by the Company,
 no provision has been made in the accounts in respect of the estimated
 total liability for future payment of gratuity of Rs. 4,87,29,868
 determined on the basis of actuarial valuation as on March 31,2012. The
 accounting method of providing gratuity liability as and when due is
 not in accordance with the accounting method prescribed in Accounting
 Standard 15 of Accounting for Employee Benefits issued by
 Companies (Accounting Standards) Rules, 2006. (Refer Note 7.1 in notes
 to financial statements);
 
 (c) Certain Trade Receivables and Loans & Advances aggregating to Rs.
 6,05,07,890 which, have been classified by the Management as
 ''considered good'' are, in our opinion, doubtful of recovery and are
 therefore required to be provided for as doubtful debts. (Refer Note
 12.1 and 14.1 in notes to financial statements);
 
 (d) Subject to what is stated in paragraph 4(b) above, 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;
 
 (e) The Balance Sheet, Statement of Profit and Loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (f) Subject to what is stated in paragraph 4(b) above, in our opinion,
 the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement
 dealt with by this report comply with the Accounting Standards
 prescribed by Companies (Accounting Standards) Rules, 2006, to the
 extent applicable;
 
 (g) On the basis of written representations received from Directors as
 on 31st March, 2012 and taken on record by the Board of Directors, we
 report that none of the Directors is disqualified as on 31st March,
 2012 from being appointed as a Director of the Company in terms of
 Section 274(1)(g) of the Act;
 
 (h) We further report that, without considering the matter referred to
 in clause 1(b) of the Annexure to this report, the effect of which could
 not be determined, had the observations made by us in paragraph 4(b)
 and 4(c) above been considered, the loss for the year would have been
 Rs. 39,97,15,410 (as against reported loss figure ofRs.29,04,77,652),
 accumulated losses would have been Rs. 1,04,01,96,524(as against
 reported figure of Rs. 93,09,58,766), Assets would have been Rs.
 3,44,50,50,289(as against reported figure of Rs3,50,55,58,179) and
 Equity and Liabilities would have been Rs. 3,55,42,88,047(as against
 reported figure ofRs3,50,55,58,179);
 
 (i) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements subject to
 our comments in paragraph 4(h) above and read together with Note 25.1
 regarding contingent liabilities, Note 10.1 regarding amount invested
 in and advances due from a subsidiary Company, Note 9.1 regarding
 carrying value of certain long term investments and other accompanying
 notes give the information required by the Act, in the manner so
 required and give a true and fair view in conformity with the
 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, 2012;
 
 (b) in the case of the Statement of Profit and Loss, of the loss of the
 Company for the year ended on that date; and
 
 (c) in the case of the Cash Flow statement, of the Cash Flows of the
 Company for the year ended on that date.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 
 (Referred to in paragraph 3 of Auditors'' Report of even date on the
 financial statements for the year ended and as at 31st March, 2012 of
 Golden Tobacco Limited)
 
 On the basis of such checks as we considered appropriate and according
 to the information and explanations given to us during the course of
 audit, we state that:
 
 1.  (a) The Company has generally maintained proper records showing
 full particulars including quantitative details and situation of fixed
 assets.
 
 (b) During the year, the management has physically verified the fixed
 assets generally in accordance with a phased programme which, in our
 opinion needs to be strengthen to be reasonable having regard to the
 size of the Company and nature of its assets. The discrepancies noticed
 on such verification have been dealt with in the books of account
 except a Flat-Gross Block ofRs.66,44,825 (Net Block Rs.41,50,744) as on
 31st March, 2012 which, as explained by the Management, is in the
 wrongful possession of the family member of an ex- employee for a long
 time. The Company has already initiated legal proceedings against the
 said ex- employee and on his demise, the names of his family members
 were substituted. The Company is rigorously following litigation so
 that flat can be vacated at the earliest. We are, however, unable to
 comment as to when the said flat would be released to the Company and
 on the ultimate realisability of the carrying value thereof (Refer Note
 no. 8 (d) of the financial statements).
 
 (c) During the year, no substantial part of the fixed assets has been
 disposed off by the Company.
 
 2.  (a) The inventories of the Company at all its locations have been
 physically verified by the management at reasonable intervals during
 the year. Inventory lying with third parties and in-transit as on 31st
 March, 2012 have been verified by the management with reference to
 confirmation or statement of account or correspondence obtained from
 the third parties and /or subsequent receipt of inventory.
 
 (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) The Company has maintained proper records of inventory and the
 discrepancies noticed between the physical stocks and the book records
 were not material considering the operations of the Company and have
 been properly dealt with in the books of account.
 
 3.  The Company has not taken or granted any loans, secured or
 unsecured, from / to companies, firms or other parties covered in the
 register maintained under Section 301 of the Act.
 
 4.  In our opinion and according to the information and explanation
 given to us, having regard to the explanations that purchase of certain
 items of fixed assets and inventory are of special nature for which
 suitable alternative sources do not exist for obtaining comparative
 quotations, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business for the
 purchase of inventory and fixed assets and for the sale of 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 we have been
 informed of any continuing failure to correct major weaknesses in the
 aforesaid internal control system.
 
 5.  a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in Section 301 of the Act that need to be
 entered into the register maintained under the said Section have been
 so entered.
 
 b) In our opinion, and according to the information and explanations
 given to us, the transactions made in pursuance of contracts and
 arrangements referred to in (a) above and exceeding the value of Rs 5
 lacs with 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.  The Company has not accepted any fixed deposits from the public
 within the meaning of Section 58A, 58AAorany other relevant provisions
 of the Act and rules framed thereunder.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business with respect to
 coverage of area such as, human resource department, statutory dues and
 banks etc.
 
 8.  On the basis of records produced, we are of the opinion that prima
 facie, the cost records and accounts prescribed by the Central
 Government under Section 209 (1) (d) of the Act have been maintained.
 However, we are not required to and thus have not carried out any
 detailed examination of such accounts and records, with a view to
 ascertain whether these are accurate and complete.
 
 9.  (a) According to the information and explanations given to us and
 according to the books and records as produced and examined by us, 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 have generally been regularly
 deposited by the Company during the year with the appropriate
 authorities and there were no arrears as at 31st March, 2012 for a
 period of more than six months from the date they became payable.
 
 (b) According to the records of the Company and the information and
 explanations given to us by the management, there are no amounts in
 respect of income tax, sales tax, wealth tax, service tax, custom duty,
 excise duty and cess that have not been deposited with the appropriate
 authorities on account of any dispute except for the amounts mentioned
 below:
 
 NAME OF THE                 NATURE OF            PERIOD TO WHICH
 STATUTES                    DUES                 IT RELATES
 
 Tamilnadu General Sales     Sales Tax            1993-98 
 Tax Act, 1959
 
 Employees''State             E.S.I.C.             Various Years
 Insurance Act, 1948
 
 Entry Tax (Bihar)           Entry Tax            Various Years
 
 Entry Tax (Madars)          Entry Tax            Various Year
 
 Entry Tax - Madhya Pradesh  Entry Tax            Various Years
 
 Entry Tax (Luknow)          Entry Tax            Various Year
 
 Income Tax Act,1961         Income Tax           Various Years
 
 Central Excise Act, 1944    Excise Duty          Various Years
 
 NAME OF THE STATUTES         AMOUNT        FORUM WHERE
                             (IN RS.)       DISPUTED
 
 Tamilnadu General Sales        6,88,531    Sales Tax Commissioner 
 Tax Act,1959                              (Appeals)
 
 Employees'' State
 Insurance Act,1948            19,17,978    Deputy Regional Officer
 
 Entry Tax (Bihar)          13,70,39,667    High Court
 
 Entry Tax (Madars)          3,03,59,060    Supreme Court
 
 Entry Tax-Madhya Pradesh      44,19,012    Supreme Court
 
 Entry Tax (Luknow)            68,66,890    Joint Commissioner Sales Tax
 
 Income Tax Act,1961        74,40,52,749    Income tax Appellate Tribunal
 
                            84,42,41,328    Income Tax Commissioner 
                                           (Appeals)
 
                            48,82,91,307    Assessing Officer
 
 Central Excise Act,1944    30,17,57,160    Supreme Court
 
                             5,03,56,013    High Court
 
                            39,59,84,327    Customs, Excise, Service Tax
                                            Appellate Tribunal
 
                             2,63,74,237    Commissioner
 
 10.  The accumulated losses of the Company at the end of the financial
 year are more than 50% of its net worth after considering, interalia,
 the matters referred in para 4 (b) and 4(c) of the auditors'' report and
 without considering the matters referred to in clause
 
 1(b) herein above, the effect of which could not be determined. The
 Company has incurred cash losses during the current financial year as
 well as in the immediately preceding financial year.
 
 11.  The Company has not defaulted in repayment of dues to banks and
 debenture holder.
 
 12.  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.  As the Company is not a nidhi /mutual benefit fund/society, the
 provisions of clause 4(xiii) of the Order are not applicable to the
 Company.
 
 14.  As the Company is not dealing or trading in shares, securities,
 debentures and other investments, the provisions of clause 4(xiv) of
 the Order are not applicable to the Company.
 
 15.  In our opinion and according to the information and explanations
 given to us, the terms and conditions on which the Company has given
 guarantee for loans taken by others from banks or financial
 institutions are, prima facie, not prejudicial to the interest of the
 Company.
 
 16.  In our opinion and according to the information and explanations
 given to us, the term loan was applied for the purposes for which it
 was obtained.
 
 17.  According to the information and explanations given to us and on
 an overall examination of the Cash Flow statement and Balance Sheet of
 the Company, in our opinion, the funds raised on short-term basis have,
 prima facie, not been used for long term investment.
 
 18.  During the year, 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 or in the recent past.
 
 19.  The Company has not raised any money by way of issue of debentures.
 
 20.  The Company has not raised any money by way of public issue during
 the year or in the recent past.
 
 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
 fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by the management.
 
                                                     For LODHA & CO.
 
                                               Chartered Accountants
 
                                                    A.  M. Hariharan
 
                                                             Partner
 
 Place: Mumbai                                   Membership No.38323
 
 Dated: May 25,2012                   Firm Registration No.: 301051E