1.  We have audited the attached Balance Sheet of Gujarat
 Fluorochemicals Limited (the Company), as at 31st March, 2011 and
 also the Profit and Loss Account and 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 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 sub-section (4A) of
 section 227 of the Companies Act, 1956, we enclose in the Annexure a
 statement on the matters specified in paragraph 4 and 5 of the said
 Order.
 
 4.  Further to our comments in the Annexure referred to 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 Account 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 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;
 
 (v) 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 director 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;
 
 (vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts, read with the 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
 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, 2011.
 
 b) in the case of the 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.
 
 ANNEXURE REFERRED TO IN PARAGRAPH 3 OF THE AUDITOR’S REPORT TO THE
 MEMBERS OF GUJARAT FLUOROCHEMICALS LIMITED ON THE ACCOUNTS FOR THE YEAR
 ENDED 31ST MARCH, 2011
 
 In terms of the Companies (Auditor’s Report) Order, 2003, on the basis
 of information and explanations given to us and the books and records
 examined by us in the normal course of audit and such checks as we
 considered appropriate, to the best of our knowledge and belief, we
 state as under:
 
 1.  The Company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 The Company has drawn out a regular program of verification of fixed
 assets which, in our opinion, is reasonable having regard to the size
 of the company and the nature of its assets. No material discrepancies
 have been noticed on such verification.
 
 Fixed assets disposed of during the year were not substantial and
 therefore do not affect the going concern assumption.
 
 2.  The inventories were physically verified by the management at
 reasonable intervals during the year.
 
 In our opinion, 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.
 
 In our opinion, the Company has maintained proper records of its
 inventories and no material discrepancies were noticed on physical
 verification of inventories as compared to book records.
 
 3.  The Company has granted loan to one company covered in the register
 maintained under section 301 of the Companies Act, 1956. The maximum
 amount involved during the year is Rs. 13300 lacs and the year-end
 balance is Rs. 13300 lacs. In our opinion, the rate of interest and
 other terms and conditions on which this loan is granted are not, prima
 facie, prejudicial to the interest of the Company. The company is
 regular in repayment of interest and no amounts were due towards
 repayment of principal.
 
 The Company has not taken any loan, secured or unsecured, from the
 parties covered in the register maintained under section 301 of the
 Companies Act, 1956.
 
 4.  In our opinion, there are generally adequate internal control
 systems commensurate with the size of the Company and nature of its
 business for purchase of inventory and fixed assets and for the sale of
 goods. During the course of our audit, no major weakness has been
 noticed in the internal control systems in respect of these areas.
 
 5.  In our opinion, the transactions that need to be entered into the
 register maintained under section 301 of the Companies Act, 1956 have
 been so entered.
 
 In our opinion, the transactions made in pursuance of contract or
 arrangement entered in the register maintained under section 301 of the
 Companies Act, 1956 and exceeding value of rupees five lacs in respect
 of any party during the year have been made at a price which are, prima
 facie, reasonable having regard to the prevailing market prices at the
 relevant time.
 
 6.  The Company has not accepted any deposits from the public within
 the meaning of section 58A, 58AA or any other relevant provisions of
 the Companies Act,1956 and the Rules framed there under and hence the
 provisions of clause 4(vi) of the Companies (Auditor’s Report) Order,
 2003 are not applicable to the Company.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 Company pursuant to the Rules made by the Central Government for the
 maintenance of cost records under section 209(1) (d) of the Companies
 Act, 1956 in respect of the Company’s products to which the said Rules
 are made applicable, and are of the opinion that, prima facie, the
 prescribed accounts and records have been made and maintained.
 
 9.  The Company is generally regular in depositing with appropriate
 authorities undisputed statutory dues including Provident Fund,
 Investor Education & Protection Fund, Employee’s State Insurance,
 Income-tax, Sales-tax, Wealth- tax, Service-tax, Customs Duty, Excise
 Duty, Cess and other material statutory dues applicable to it.
 
 No undisputed amounts payable in respect of Income-tax, Wealth-tax,
 Sales-tax, Service-tax, Customs Duty, Excise Duty and Cess were in
 arrears, as at the end of the year, for a period of more than six
 months from the date they became payable.
 
 Particulars of dues of Income-tax, Sales-tax, Wealth-tax, Service-tax,
 Custom Duty, Excise Duty or Cess which have not been deposited on
 account of disputes are as under:
 
 Name of the       Nature of dues and the period             Amount
 Statute           to which the amount relates          (Rs. in lacs)
 
 West Bengal       Sales Tax for the period 1995-96          2.83
 Sales Tax
 
                   Sales Tax for the period1997-98           1.30
 
 Gujarat Sales     Sales Tax for the year 1995-96           13.35
 Tax
 
                   Sales Tax for the year 2001-02            1.79
 
 Income Tax        TDS & Interest on TDS for 2007-08,       71.53
                   2008-09 & 2009-10
 
 Income Tax        Income Tax for the financial year      3083.99
                   2007-08
 
 Service Tax       Service tax interest and penalty for      6.85
                   the period 10.09.2004 to 30.06.2007
 
 Service Tax       Service tax interest & penalty for       15.41
                   the period 01.04.2005 to 30.09.2009
 
 
 
 Name of the Statue                  Forum where dispute is pending
 
 West Bengal Sales Tax          Sales Tax Appellate Tribunal, Kolkatta
 
                                Asst.  Commissioner (Appeals), WBST, 
                                Kolkatta
 
 Gujarat Sales Tax              Joint Commissioner of Sales Tax, Vadodara
 
                                Deputy Commissioner (Appeals), of 
                                Sales Tax, Ahmedabad
 
 Income Tax                     Commissioner of Income Tax (Appeals) 
                                (VI), Vadodara.
 
 Income Tax                     Commissioner of Income Tax (Appeals) 
                                (I), Vadodara.
 
 Service Tax                    Customs, Excise and Service Tax Appellate  
                                Tribunal, Ahmedabad
 
 Service Tax                    Commissioner Central Excise and Customs
                                (Appeals), Vadodara.
 
 10.  The Company does not have accumulated losses. The Company has not
 incurred cash losses during the current year and in t e immediately
 preceding financial ye r.
 
 11.  The Company has not defaulted in repayment of d es to banks
 
 12.  The Company has not granted loans and advance on the bas s of
 security by way of pledge of shares, debentures o other securities.
 
 13.  The Company s not a chit fund or a nidhi/mutual benefit fund/soci
 ty. Therefore, the provisions of clause 4(xiii) of the Companies
 (Auditor’s Report) Order, 2003 are not applicable to the Company.
 
 14.  The Company has invested in shares, mutual funds, bonds,
 debentures and other securities in the course of its investment
 activity. In our opinion, proper records have been maintained of the
 transactions and contracts and timely entries have been made therein.
 These investments are held by the Company in its own name except to the
 extent of the exemption granted under section 49 of the Companies Act,
 1956.
 
 15.  According to information and explanation given to us, the Company
 has not given any guarantee for loans taken by others from banks and
 financial institutions.
 
 16.  In our opinion, the term loans availed during the year by the
 Company were applied for the purpose for which they were raised.
 
 17.  In our opinion, on an overall examination of the Balance Sheet and
 the Cash Flow Statement, funds raised on short term basis have, prima
 facie, not been used during the year 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 Companies Act, 1956.
 
 19.  There are no debentures issued and outstanding during the year and
 hence the provisions of clause 4(xix) of the Companies (Auditor’s
 Report) Order, 2003 are not applicable to the Company.
 
 20.  The Company has not raised any money by way of public issues
 during the year.
 
 21.  No fraud on or by the Company was noticed or reported during the
 course of our audit.
 
 
                                            For Patankar & Associates
 
                                                Chartered Accountants
 
                                        Firm Registration No. 107628W
 
                                                 Pune, (M.Y.Kulkarni)
 
 Dated: 27th May, 2011                                        Partner
 
                                                 Membership No. 35524