1) We have audited the attached Balance Sheet of GUJARAT RAFFIA
 INDUSTRIES LIMITED (The Company) as at 31st March 2012 and the
 Statement of Profit and Loss Account and Cash-flow Statement for the
 period ended on that date annexed thereto. These financial statements
 are the responsibility of the Company'' 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 statement. 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 (Auditors 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 give in the
 annexure a statement on the matters specified in paragraphs 4 and 5 of
 the said order to the extent applicable.
 
 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 our opinion, proper books of accounts as required by Law have
 been kept by the Company so far as appears from our examination of the
 books;
 
 c) The Balance Sheet, the Statement of Profit and Loss Account and Cash
 Flow Statement dealt with by this report are in agreement with the
 books of accounts;
 
 d) In our opinion the Balance Sheet, the statement of 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 Act;
 
 e) On the basis of the written representation received from the
 directors, as on March 31, 2012 and taken on record by the Board of
 Directors, we report that none of the directors of the company are
 disqualified as on March 31, 2012 from being appointed as director in
 terms of clause (g) of sub- section (1) of Section 274 of the Act;
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements read
 together with the significant accounting policies and notes attached
 thereto 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:
 
 i.  In the case of the Balance Sheet, of the state of affairs of the
 company as at 31st March, 2012;
 
 ii.  In the case of the Statement of Profit and Loss Account, of the
 profit of the Company for the period ended on that date;
 
 iii. In case of Cash Flow Statement, of the cash flows for the period
 ended on that date.
 
 Annexure to Auditors'' Report Referred to in Paragraph 3 of our report
 of even date
 
 i.  In respect of its fixed assets:
 
 a) The company has maintained proper records showing full particulars
 including quantitative details and situation of the fixed assets on the
 basis of available information.
 
 b) As explained to us, the fixed assets are physically verified by the
 Management according to a phased programme designed to cover all the
 items over a period, which in our opinion, is reasonable having regard
 to the size of the Company and the nature of its assets. Pursuant to
 the programme, apportion of the fixed assets has been physically
 verified by the Management during the year and no material
 discrepancies between the book stock and the physical inventory have
 been noticed.
 
 c) In our opinion, the Company has not disposed off a substantial part
 of its fixed assets during the year and the going concern status of the
 company is not affected.
 
 ii.  In respect of its Inventories:
 
 a) As explained to us, inventory has been physically verified by the
 management at reasonable intervals during the year. In our opinion, the
 frequency of verification is reasonable.
 
 b) In our opinion and according to the information and explanation
 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 nature of its business.
 
 c) In our opinion and according to the information and explanations
 given to us, the company has maintained proper records of inventories.
 As explained to us, there was no material discrepancy noticed on
 Physical Verification of Inventories as compared to the book records.
 
 iii. In respect of loans, secured or unsecured, granted or taken by
 company to/from companies, firms or other parties covered in the
 register maintained under section 301 of the Act:
 
 a) According to information and explanations given to us and on the
 basis of the records produced before us, the company has not granted
 any loan, secured or unsecured to the companies or firms or other
 parties covered in the register maintained under section 301 of the
 Companies Act 1956 and hence sub-clause b, c and d are not applicable.
 
 b) According to information and explanation given to us and on the
 basis of records produced before us the company has taken loan from
 three companies covered in the register maintained under section 301 of
 the companies Act, 1956. The maximum amount involved during the year
 was Rs. 25000/- and year end balance of loans taken from such party is
 Rs. 41727651/-
 
 c) In our opinion and according to the information and explanation
 given to us, the rate of interest
 
 and other terms and conditions on which loan has been taken from
 company listed in the register maintained under section 301 of the Act
 are not prima facie prejudicial to the interest of the company.
 
 d) The company is regular in repaying the principal amount as
 stipulated and has been regular in the payment of interest.
 
 iv.  In our opinion and according to the information & explanations
 given to us, there are adequate internal control systems which
 commensurate with the size of the company & nature of its business for
 purchase of inventory, fixed assets and also for the sales of goods and
 services. Further, on the basis of our examination of our books and
 records of the Company, and according to the information and
 explanation given to us, we have neither come across nor have been
 informed of any continuing failure to correct major weaknesses in the
 aforesaid internal control system.
 
 v.  In respect of the Contracts and arrangements referred to in section
 301 of the Companies Act, 1956:
 
 a) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements that need to be entered in the register maintained
 referred to in section 301 of the companies Act, 1956 have been so
 entered.
 
 b) In our opinion, and according to information and explanation given
 to us, the transactions made in pursuance of such contracts or
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956 and exceeding the value of Rupees Five Lacs or
 in respect of any party during the period have been made at prices
 which appears reasonable, having regard to the prevailing market prices
 at the relevant time.
 
 vi.  In our opinion, and according to information and explanation given
 to us, the company has neither accepted nor reviewed any deposit from
 the public during the period covered by audit report, attracting the
 provisions of section 58A and 58AA or other provisions of the companies
 Act, 1956 and the Companies (Acceptance of Deposit) Rules,1975.
 Therefore, the provisions of Clause (vi) of paragraph 4 of the Order
 are not applicable to the Company.
 
 vii. The company has appointed internal auditors and has carried out
 internal audit during the year. In our opinion based on size, nature
 and extent of the business the internal audit system of the company is
 commensurate with the size and nature of the business.
 
 viii.  We have broadly reviewed the cost records maintained by the
 Company pursuant to the Companies (Cost Accounting Records) Rules, 2011
 prescribed by the Central Government under Section 209(1)(d) of the
 Companies Act, 1956 and are of the opinion that prima facie the
 prescribed cost records have been maintained. We have, however, not
 made a detailed examination of the cost records with a view to
 determined whether they are accurate or complete.
 
 ix.  I n respect of Statutory Dues:
 
 a) According to the records of the Company, undisputed statutory dues
 including provident fund, investor education and protection fund, ESI,
 income tax, sales tax, service tax, wealth tax, custom duty, excise
 duty, cess and other statutory dues have been generally regularly
 deposited with the appropriate authorities. According to the
 information and explanations given to us, no undisputed amount payable
 in respect of the aforesaid dues were outstanding as at March 31, 2012
 for a period of more than six months from the date of becoming payable.
 
 b) According to the records of the company and according to the
 information and explanations given to us, there are no dues of income
 tax, sales tax, wealth tax, service tax, custom duties, excise duty and
 cess which have been deposited on account of any dispute except the
 followings:
 
 Sr. Nature of the Nature of Forum where Unpaid
 
 No. Statute Dues the matter pending Amount (Rs)
 
 1.  The Industrial Labour Matters Labour Court, 5,00,000/- Dispute Act,
 1947 Ahmedabad.
 
 2.  Employee''s State ESIC ESI Tribunal, 7,00,000/- Insurance Act, 1948
 Ahmedabad.
 
 x.  On the basis of information and explanations given to us and on the
 basis of records produced before us the company does not have any
 accumulated loss at the end of the year and has not incurred cash
 losses in the relevant financial year and in the immediately preceding
 financial year.
 
 xi.  According to the records of the company examined by us and on the
 basis of the information and explanations given to us, the company has
 not defaulted in repayment of dues to any bank as at the balance sheet
 date. The company has not taken loans from financial institutions and
 has not issued debentures during the period under review.
 
 xii. In the opinion and according to the information and explanation
 given to us, no loans and advances have been granted by the company on
 the basis of security by way of pledge of shares, debentures and other
 securities.
 
 xiii.  In our opinion, the company is not a chit fund or a nidhi /
 mutual benefit fund/society. Therefore, the provisions of clause (xiii)
 of paragraph 4 of the Order are not applicable to the company.
 
 xiv. According to the information and explanation given to us, the
 company is not dealing in or trading in shares. Accordingly the
 provisions of clause (xiv) are not applicable to the company.
 
 xv.  In our opinion and according to the information and explanation
 given to us, the company has not given any guarantee for loan taken by
 others from bank or financial institution hence the provision of this
 clause is not applicable to the company.
 
 xvi. During the year under report, Company has not taken any term loan.
 Hence, the provisions of this clause are not applicable to the company.
 
 xvii.  According to the information and explanation given to us and on
 an overall examination of the balance sheet of the company, we are of
 the opinion that there are no funds raised on short term basis that
 have been used for long term investment by the company.
 
 xviii.  During the period covered under audit report, 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. During the period covered under audit report the company has not
 issued any debentures and does not have any debenture outstanding as at
 the year end. Accordingly the provisions of clause (xix) of the
 Companies (Auditors Report) Order are not applicable to the Company.
 
 xx.  During the period covered under audit report the company has not
 raised any money by way of public issue 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 and based on management representation, we
 have neither come across any instance of material fraud on or by the
 company, noticed or reported during the year, nor have we been informed
 of any such case by the Management.
 
                                               For P G T & Associates
 
                                                Chartered Accountants
 
                                              (Firm Reg. No.: 116277W)
 
 Date : 30.05.2012                                 (Pradeep G Tulsian)
 
 Place : Ahmedabad.                                        Proprietor
 
                                               Membership No.: 100968