We have audited the attached Balance Sheet of Gujarat Alkalies and
 Chemicals Limited as at 31st March, 2011 and the Profit and Loss 
 Account for the year ended on that date, annexed thereto and the 
 cash flow statement for the year ended on that date. These 
 financial statements are the re- sponsibility of the Company''s 
 management. Our responsibility is to express an opinion on these 
 financial statements based on our audit. 
 
 1.  We conducted our audit in accordance with auditing standards
 generally accepted in India.  These 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 the management, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 2.  As required by the Companies (Auditor''s Report) Order, 2003 (CARO)
 issued by the Central Government in terms of sub section (4A) of
 Section 227 of the Companies Act, 1956, we give in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the said
 Order.
 
 3.  Further to our comments in the Annexure referred 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 our opinion, proper books of accounts as required by law have
 been kept by the Company so far as appears from our examination of
 these books.
 
 c.  The Balance Sheet and Profit and Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account.
 
 d.  In our opinion and to the best of our information, the Balance
 Sheet and the Profit and Loss Account comply with the Accounting
 Standards referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956.
 
 e.  On the basis of the written representations received from the
 Directors as at 31st March, 2011 and taken on record by the Board of
 Directors, we report that none of the Directors is disqualified as on
 31st March, 2011 from being appointed as a director in terms of clause
 (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
 
 Subject to the foregoing, 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 31st March, 2011;
 
 ii. in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 iii. in the case of Cash Flow Statement , of the Cash Flow for the year
 ended on that date.
 
 
 
 
 (Referred to in paragraph 2 of our report of even date on the accounts
 of Gujarat Alkalies and Chemicals Limited as at 31st March, 2011)
 
 i) a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b) The Company has a programme of physical verification of all its
 fixed assets over a period of three years, which in our opinion, is
 reasonable having regard to the size of the Company and the nature of
 its assets. In accordance with this programme, certain fixed assets
 have been physically verified by the management during the year and
 according to the information and explanations given to us, no material
 discrepancies have been noticed on such verification.
 
 c) During the year, the Company has not disposed off a substantial part
 of its fixed assets.
 
 ii) a) The inventory has been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 b) 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.
 
 c) On the basis of our examination of the records of inventory, we are
 of the opinion that the Company is maintaining proper records of
 inventory. The discrepancies noticed on verification between the
 physical stocks and the book records were not material.
 
 iii) According to the information and the explanations given to us,
 there are no loans, secured or unsecured, granted or taken by the
 Company to or from companies firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 Accordingly, paragraphs 4(iii) (b) , (c) and (d ) of the order are not
 applicable.
 
 iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business with regard to purchases of inventory, fixed assets and with
 regard to the sale of goods. During the course of our audit, no major
 weakness has been noticed in the internal controls.
 
 v) a) Based on the audit procedures applied by us and according to the
 information and explanations provided by the management, we are of the
 opinion that the transactions that need to be entered into the register
 maintained under section 301 have been so entered.
 
 b) According to the information and explanations given to us, there are
 no transactions of purchase of goods and materials and sale of goods,
 materials and services aggregating during the year to Rs 500000/- or
 more in respect of each party, as per the register maintained under
 section 301 of the Companies Act, 1956.
 
 vi) The Company has not renewed/accepted any deposit during the year
 from public and shareholders within the meaning of Sections 58A and
 58AA of the Companies Act, 1956 and the rules framed there under.
 
 vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 viii) We have broadly reviewed, without carrying out detailed
 examination of the books of account maintained by the Company pursuant
 to the order made by the Central Government of the maintenance of Costs
 records under Section 209(1 )(d) of the Companies Act, 1956 and are of
 the opinion that prima facie the prescribed accounts and records have
 been made and maintained.
 
 ix) a) According to the information and explanations given to us and
 records of the Company examined by us, in our opinion, the Company is
 generally regular in depositing undisputed statutory dues including
 Provident Fund, Investor Education and Protection Fund, Employee''s
 State Insurance, Income tax, Sales-tax, Wealth Tax, Service Tax, Custom
 duty, Excise duty, Cess and other material statutory dues as applicable
 with appropriate authorities. According to the information and
 explanations given to us, there were no undisputed amounts payable in
 respect of Provident Fund, Investor Education and Protection Fund,
 Employee''s State Insurance, Income tax, Sales-tax, Wealth Tax, Service
 Tax .Custom duty, Excise duty, Cess and other statutory dues
 outstanding as at 31.03.2011 for a period of more than six months from
 the date they became payable.
 
 b) According to the information and explanations given to us and
 records of the Company examined by us there are no dues of Sales tax,
 Income tax, Custom tax / Wealth tax, Excise duty/Cess which have not
 been deposited on account of any dispute pending except as under:-
 
 
 Sr.  Name of The        Nature of the               Amount
 No.  statute            dues                        (Rs in Lakhs)
 
 1.  Gujarat Sales      Tax, Interest &     Interest & Penalty on 
     Tax, 1969          Penalty             purchase tax Rs453.04
 
 2.  Gujarat Sales      Tax, Interest &     Purchase tax/Additional tax 
     Tax, 1969          Penalty             of Rs 1,923.77 plus Interest
                                            and Penalty of Rs 1,838.08
 
 3.  Gujarat Sales      Tax, Interest &     Purchase tax ofRs 1,803.31 
     Tax, 1969          Penalty             plus Interest and Penalty of
                                            Rs 4,038.61
 
 4.  Gujarat Sales      Tax, Interest &     Purchase tax ofRs 1,638.95 
     Tax, 1969          Penalty             plus Interest and Penalty of
                                            Rs 3,456.31
 
 5.  Gujarat Sales      Tax, Interest &     Sales Tax and Purchase tax 
     Tax, 1969          Penalty             of Rs 1,343.74 plus Interest
                                            and Penalty ofRs 2,977.51
 
 6.  Gujarat Sales      Tax, Interest &     Sales Tax and Purchase tax 
     Tax, 1969          Penalty             ofRs 693.67 plus Interest
                                            and Penalty of Rs 277.84
 
 7.  Gujarat Sales      Tax, Interest &      Purchase tax ofRs 279.67 
     Tax, 1969          Penalty              plus Interest and Penalty of
                                             Rs 223.38
 
 Name of the            Period to which      Forum where
 Statue                 the Amount relates   dispute is pending
 
 Gujarat Salaes Tax, 
 1969                   Second Appeal cum     Gujarat Sales Tax
                        Revision Application  Tribunal, Ahmedabad.  
                        for the F.Y. 
                        1998-1999
 
 Gujarat Sales Tax      Appeal preferred 
 Tax, 1969              for the               Jt.Commissioner of
                        F.Y. 2000-01.         Appeals, Baroda.
 
 Gujarat Sales Tax      Appeal preferred 
 Tax, 1969              for the               Jt.Commissioner of
                        F.Y, 2001 -02         Appeals, Baroda.
 
 Gujarat Sales Tax,     Appeal preferred 
 Tax, 1969              for the               Jt.Commissioner of
                        F.Y. 2002-03          Appeals, Baroda.
 
 Gujarat Slaes Tax      Appeal preferred  
 Tax, 1969              for the               Jt.Commissioner of
                        F.Y. 2003-04          Appeals, Baroda.
 
 Gujarat Sales Tax      Appeal preferred  
 Tax, 1969              for the               Jt.Commissioner of
                        F.Y. 2004-05          Appeals, Baroda.
 
 Gujarat Slaes Tax      Appeal preferred 
 Tax, 1969              for the               Jt.Commissioner of
                        F.Y. 2005-06          Appeals, Baroda.
 
 
 x) The Company has no accumulated losses as at March 31, 2011 and has
 not incurred cash losses during the financial year ended on that date
 or in the immediately preceding financial year.
 
 xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 financial institutions, banks or debenture holders.
 
 xii) The Company has not made any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 Accordingly, the provisions of clause 4 (xii) of the Companies
 (Auditor''s Report) order 2003 are not applicable to the Company.
 
 xiii) In our opinion, the Company is not a chit fund or a nidhi mutual
 benefit fund / society. Therefore, the provisions of clause 4 (xiii) of
 the Companies (Auditor''s Report) order 2003 are not applicable to the
 Company.
 
 xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities debentures and other investments.  Accordingly the
 provisions of clause 4 (xiv) of the Companies (Auditor''s Report) order,
 2003 are not applicable to the Company.
 
 xv) In our opinion, the terms and conditions on which the Company has
 given guarantees for loans taken by employees of the Company from
 Bank(s) and financial institutions are not prejudicial to the interest
 of the Company.
 
 xvi) In our opinion, the term loans availed by the Company have been
 applied for the purpose for which they were raised.
 
 xvii) According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, funds
 raised on short term basis have, prima facie, not been used during the
 year 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.
 
 xix) According to the information and explanations given to us the
 Company has not issued any debentures during the year and no debentures
 are outstanding and therefore, no securities are required to be
 created.
 
 xx) The Company has not raised any money by way of Public / Rights /
 Preferential issue during the year.
 
 xxi) Based upon audit procedures performed and information and
 explanation given by the Management, we report that no fraud on or by
 the Company has been noticed or reported during the course of our
 audit.
 
                                      For Prakash Chandra Jain & Co.
 
                                              Chartered Accountants
 
                                      Firm Registration No. 002438C
 
                                                    P.  C.  Nalwaya
 
 Place : Gandhinagar                                        Partner
 
 Date : 25.05.2011                            Membership No. 033710