Hatsun Agro Products

1.  We have audited the attached Balance Sheet of Hatsun Agro Product
 Limited (the Company) as at March 31, 2009 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 Companys 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 (Auditors Report) Order, 2003 (as
 amended) 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 paragraphs 4
 and 5 of the said Order.
 
 4.  As more fully described in Note 2(a)(iii) of Schedule 19 to the
 Financial Statements, certain income tax matters in respect of the
 financial year ended 31 March 1996 (financial estimate by the
 management of Rs. 15 million) are being contested by the Company and
 the matter is pending with the High Court of Judicature, Madras.
 Pending a final resolution of the uncertainties in this connection, no
 provision towards tax and other consequential adjustment relating to
 this matter, if any, have been considered in the financial statements.
 Audit report issued on the financial statements for the year ended
 March 31, 2008 was also qualified in respect of this matter.
 
 5.  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 the written representations received from the
 directors, as on March 31, 2009, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2009 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, subject to the effect of adjustments, if
 any, that may be required had the outcome of the matter referred to
 paragraph (iv) above been known, 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;
 
 a) in the case of the balance sheet, of the state of affairs of the
 Company as at March 31, 2009;
 
 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 TO AUDITORS REPORT
 
 Annexure referred to in paragraph 3 of our report of even date Re:
 Hatsun Agro Product Limited (the Company)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All fixed assets have not been physically verified by the
 management during the year but there is a regular programme of
 verification which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. As informed, no
 material discrepancies were noticed on such verification.
 
 (c) There was no substantial disposal of fixed assets during the year.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 (b) 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 is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) As informed, the Company has not granted or taken any loans,
 secured or unsecured to companies, firms or other parties covered in
 the register maintained under section 301 of the Companies Act, 1956
 (the Act). Therefore, the provisions of clause (iii) (b), (c) (d),
 (f) and (g) of the Companies (Auditors Report) Order, 2003 (as
 amended) are not applicable to the Company.
 
 (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.
 During the current year, the activities of the Company did not involve
 any sale of services. During the course of our audit, no major weakness
 has been noticed in the internal control system in respect of these
 areas.
 
 (v) According to the information and explanations provided by the
 management, we are of the opinion that there are no contracts and
 arrangements that need to be entered into the register maintained under
 section 301 of the Act during the period. Therefore, the provisions of
 clause (v) (b) of the Companies (Auditors Report) Order, 2003 (as
 amended) are not applicable to the Company.
 
 (vi) In respect of deposits accepted, in our opinion and according to
 the information and explanations given to us, directives issued by the
 Reserve Bank of India and the provisions of sections 58A, 58AA or any
 other relevant provisions of the Companies Act, 1956 and the rules
 framed there under, to the extent applicable, have been complied with.
 We are informed by the management that no order has been passed by the
 Company Law Board, National Company Law Tribunal or Reserve Bank of
 India or any Court or any other Tribunal.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) To the best of our knowledge and as explained, the Central
 Government has not prescribed maintenance of cost records under clause
 (d) of sub-section (1) of section 209 of the Companies Act, 1956 for
 the products of the Company.
 
 (ix) (a) Undisputed statutory dues including provident fund, investor
 education and protection fund, or employees state insurance,
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty, cess have generally been regularly deposited with the appropriate
 authorities though there has been a slight delay in a few cases
 relating to remittance of provident fund and employees state insurance
 dues.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees state insurance, income-tax,
 wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and
 other undisputed statutory dues were outstanding, at the year end, for
 a period of more than six months from the date they became payable.
 
 (c) According to the records of the Company, the dues outstanding of
 income-tax, sales-tax, on account of any dispute, are as follows. There
 are no dues outstanding of wealth-tax, service tax, customs duty,
 excise duty and cess on account of any dispute.
 
 Name of the Statute           Nature of the Dues
 
 Income tax Act, 1961         Disallowance of non compete fees
 The Tamil Nadu General      Sales tax in dispute
 Sales Tax Act
 The Tamil Nadu General     Sales tax in dispute
 Sales Tax Act
 The Tamil Nadu General    Penalty in dispute
 Sales Tax Act
 
 Amount        Period to which          Forum where dispute
 (Rs In 000s) the amount relates           is pending
 
 -            1996-97              High Court of Judicature,Madras
   932        1996-97               Commercial Tax Officer
 1,083        1996-97             Appellate Assistant Commissioner
   556        2003-04          High Court of Judicature,Madras
 
 ** - Refer to note 2(a)(iii) of Schedule 19 to the financial statements
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a financial
 institution or bank. The Company has no borrowing by way of debentures.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances 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
 4(xiii) of the Companies (Auditors Report) Order, 2003 (as amended)
 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 (Auditors Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 (xvi) Based on information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained.
 
 (xvii) According to the information and explanations given to us and on
 overall examination of the balance sheet of the Company, we report that
 the Company has used funds raised on short-term basis for long-term
 investment. The Company has purchased certain fixed assets aggregating
 Rs. 677 Millions out of short term loans from banks and others.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties or companies covered in the register maintained under
 section 301 of the Companies Act, 1956.
 
 (xix) The Company did not have any outstanding debentures during the
 year.
 
 (xx) The Company has not raised any money by public issues during the
 year and accordingly, the provisions of clause 4(xx) of the Companies
 (Auditors Report) Order, 2003 (as amended) are not applicable.
 
 (xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations 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 S.R. BATLIBOI & ASSOCIATES
                                        Chartered Accountants,
                                              Sd/-
 Place : Chennai                  per S Balasubrahmanyam
 Date : June 23rd, 2009                      Partner
                                     Membership No. 053315