1.  We have audited the attached Balance Sheet of Graphite India
 Limited (the Company) as at 31st March, 2012, and the related Profit
 and Loss Statement 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.  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, 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 further report that:
 
 i. (a) The Company is maintaining proper records showing full
 particulars, including quantitative details and situation, of fixed
 assets.
 
 (b) The fixed assets of the Company have been physically verified by
 the Management during the year and no material discrepancies between
 the book records and the physical inventory have been noticed. 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.
 
 ii. (a) The inventory(excluding stocks with third parties) has been
 physically verified by the Management during the year. In respect of
 inventory lying with third parties, these have substantially been
 confirmed by them. In our opinion, the frequency of 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 is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 iii. (a) 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 other than unsecured loan of Rs. 12.00
 lakhs to a director of the Company. The maximum amount involved during
 the year and the year-end balance of such loan is Rs. 12.00 lakhs and
 Rs. 10.80 lakhs respectively.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 of such loan are not prima facie prejudicial to the interest of the
 Company.
 
 (c) In respect of the aforesaid loan, the party is repaying the
 principal amount, as stipulated, and is also regular in payment of
 interest, as applicable.
 
 (d) In respect of the aforesaid loan, there is no overdue amount more
 than Rupees One Lakh.
 
 (e) The Company has not taken any loans, secured or unsecured, from
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.
 
 iv. 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 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, no major weakness has been noticed or
 reported.
 
 v. (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 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.
 
 vi. The Company has not accepted any deposits from the public within
 the meaning of Sections 58A and 58AA of the Act and the rules framed
 there under.
 
 vii. In our opinion, the Company has an internal audit system
 commensurate with its size and the nature of its business.
 
 viii. We have broadly reviewed the books of account maintained by the 
 Company in respect of products 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. We have not, 
 however, made a detailed examination of the records with a view to
 determine whether they are accurate or complete.
 
 ix. (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 regular in depositing the undisputed statutory dues, including
 investor education and protection fund, employees'' state insurance,
 sales tax, wealth tax, service tax, customs duty, excise duty and other
 material statutory dues, as applicable with the appropriate authorities
 and is generally regular in respect of provident fund and income tax.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, the particulars of dues of
 customs duty, sales tax, service tax and excise duty as at 31st March,
 2012 which have not been deposited on account of a dispute (there being
 no such cases with regard to income tax and wealth tax), are as
 follows:
 
 Name of                 Nature of                       Amount
 the statute             the dues                 (Rs. in Lakhs)
 
 Central Excise Act      Excise Duty, Interest            13.70
                         And Penalty
 
                                                           7.94 
 
                                                         144.13 
 
                                                         447.10
 
                                                          19.28
 
 Central & State         Sales Tax, Interest               6.62
 Sales Tax Acts          and Penalty
 
                                                           3.39
 
                                                          24.88
 
                                                          54.76
 
                                                           5.32 
 
                                                         201.32
 
 Customs Act             Custom Duty, Interest           877.75
                         and Penalty
 
                                                         112.97
 
 Finance Act,            Service Tax, Interest             7.98
 1994 - Service Tax      and Penalty
 
                                                           5.52
 
                                                          61.56 
 
                                                         292.79
 
 
 
 Name of the            Period to which the   Forum where the
 statue                 amount relates        dispute is 
                                              pending
 
 Central Excise Act     1996-97, 2008-09 to   Assistant / Deputy 
                        2010-11               Commissioner of
                                              Central Excise
 
                        2008-09               Additional Commissioner
                                              of Central Excise
 
                        2004-05 to 2005-06    Commissioner, Central
                                              Excise Division, Patna
 
                        1999-2000 to 2009-10  Customs, Excise &
                                              Service Tax Appellate
                                              Tribunal
 
                        2000-01               Calcutta High Court
 
 Central & State        1998-99               Sales Tax Officer
 Sales Tax Acts
 
                        2006-07               Deputy Commissioner
                                              of Commercial Taxes
 
                        2006-07 to 2007-08    Additional Commissioner
                                              of Commercial Taxes
 
 
                        2003-04               Joint Commissioner
                                              of Commercial Taxes
 
                        2003-04               Commissioner (Appeals)
 
                        1996-97, 2001-02 to   Sales Tax Tribunal
                        2003-04,
                        2005-06 to 2008-09
 
 Customs Act            1991-92, 2005-06 to   Commissioner of
                        2007-08               Customs
 
                        1996-97 to 2000-01    Customs, Excise &
                                              Service Tax
                                              Appellate Tribunal
 
 Finance Act,           2006-07 to 2007-08    Assistant / Deputy
 1994 - Service                               Commissioner,
 Tax                                          Central Excise
 
                        2004-05 to 2007-08    Additional Commissioner
                                              Service Tax
                                              Commissionerate,
                                              Kolkata
 
                        2004-05 to 2010-11    The Commissioner
                                             (Appeals), Kolkata
 
                        1996-97, 2005-06 to   Customs, Excise &
                        2010-11               Service Tax
                                              Appellate Tribunal
 
 x. The Company has no accumulated losses as at 31st March, 2012, and it
 has not incurred any cash losses in the financial year ended on that
 date and in the immediately preceding financial year.
 
 xi. 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 bank as at the balance sheet date. The Company
 does neither have any outstanding dues to any debenture holder or any
 financial institution at the beginning of the year nor has it obtained
 any loans from such parties during the year.
 
 xii. The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 xiii. The provisions of any special statute applicable to chit
 fund/nidhi/mutual benefit fund/societies are not applicable to the
 Company.
 
 xiv. In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 xv. In our opinion, and according to the information and explanations
 given to us, the Company has not given any guarantee for loans taken by
 others from banks or financial institutions during the year.
 
 xvi. In our opinion, and according to the information and explanations
 given to us, the term loans have been applied, on an overall basis, for
 the purposes for which they were obtained.
 
 xvii. 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 short- term
 basis which have been used for long-term investment.
 
 xviii. 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.
 
 xix. The Company has not issued any debentures during the year; and
 does not have any debentures outstanding as at the year end.
 
 xx. The Company has not raised any money by public issues during the
 year.
 
 xxi. 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 any such case by the Management.
 
 4.  Further to our comments in paragraph 3 above, we report that:
 
 i. 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;
 
 ii. 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;
 
 iii. The Balance Sheet, Profit and Loss Statement and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 iv. In our opinion, the Balance Sheet, Profit and Loss Statement and
 Cash Flow Statement dealt with by this report comply, in all material
 respects, with the accounting standards referred to in sub- section
 (3C) of Section 211 of the Act;
 
 v. On the basis of written representations received from the directors
 and taken on record by the Board of Directors, none of the directors is
 disqualified as on 31st March, 2012 from being appointed as a director 
 in terms of clause (g) of sub-section (1) of Section 274 of the Act;
 
 vi. In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto give, in the prescribed
 manner, the information required by the Act, 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 Profit and Loss Statement, of the profit for the
 year ended on that date; and
 
 (c) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 
                                                 For PRICE WATERHOUSE
 
                                   Firm Registration Number - 301112E
 
                                                Chartered Accountants
 
 
                                                    (Pinaki Chowdhury)
 
                                                              Partner
 
                                                 Membership No. 57572
 
 Kolkata
 
 11th May, 2012