1.  We have audited the attached Balance Sheet of M/s. HERITAGE FOODS
 (INDIA) LIMITED, as at 31st March, 2012 and also the statement of
 Profit and Loss for the year ended on that date annexed thereto and
 cash flow statement for the year ended on that date. 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 (Auditors'' Report) Order 2003, as
 amended by the Companies (Auditors'' Report) Order 2004, issued by the
 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 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 purpose of our
 audit.
 
 ii.  In our opinion the Company as required by law has kept proper
 books of account so far as it appears from our examination of the books
 and proper returns adequate for the purpose of our audit have been
 received from the units not visited by us.
 
 iii. The Balance Sheet and statements of Profit and Loss dealt with by
 this report are in agreement with the books of account maintained.
 
 iv.  In our opinion the Balance sheet, statement of Profit and Loss and
 the cash flow statement comply with the accounting standards referred
 to in Sec.211 (3C) of the Companies Act.1956.
 
 v.  On the basis of written representation given to us, no director of
 the Company, as at 31st March 2012 and taken on record by the Board of
 Directors we report that none of the Directors as on 31st March, 2012
 is disqualified from being appointed as a director under 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 financial statements 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:
 
 a.  in the case of Balance Sheet, of the state of affairs of the
 Company, as at 31st March, 2012.
 
 b.  in the case of the Statement of Profit and Loss, 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
 
 (Referred to in paragraph 3 of our report of even date)
 
 i) a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b) These fixed assets have been physically verified by the management
 during the year and discrepancies noticed on such verification have
 been properly dealt with in the books of account. In our opinion, the
 frequency of verification is reasonable having regard to the size of
 the company and the nature of the assets.
 
 c) No substantial part of fixed assets has been disposed off during the
 year.
 
 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) 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) 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 Companies Act, 1956 or to companies under the
 same management as defined in Section 370(1-B) of the Companies Act,
 1956.  Consequently, Clauses (iii)(b), (iii)(c) and (iii)(d) are not
 applicable.
 
 e) The company had taken unsecured loan from a company, covered in the
 register maintained under Section 301 of the Companies Act, 1956. The
 maximum amount involved during the year was Rs. 1 Crore and the year-end
 balance of loan is Rs. 1 Crore.
 
 f) In our opinion, the rate of interest and other terms and conditions
 on which loan taken from the above company are not, prima facie,
 prejudicial to the interest of the company.
 
 g) As per the agreed terms, no repayment of loan was required during
 the F.Y 2011-12. The company has been regular in the payment of
 interest.
 
 iv) In our opinion and according to the information and explanation
 given to us, Considering the size of the company and nature of business
 of various divisions of the company with regard to purchase of
 inventory and fixed assets and with regard to sale of goods and
 services, the internal control system commensurate with the size of the
 company and nature of its business. During the course of our audit, we
 have not observed any continuing failure to correct major weaknesses in
 internal control system.
 
 v) a) According to the information and explanations given to us, we are
 of the opinion that the transactions that need to be entered into the
 register maintained under Section 301 of the Companies Act, 1956 have
 been so entered.  b) In our opinion and according to the information
 and explanations given to us, the transactions made in pursuance of
 contracts or arrangements entered in the register maintained under
 Section 301 of the Companies Act, 1956 and exceeding value of rupees
 five lakhs in respect of any party during the year, have been made at
 prices which are reasonable, having regard to prevailing market prices
 at the relevant time.
 
 vi) The Company has not accepted deposits from the public governed by
 Section 58A and 58AA of the Companies Act, 1956 for the year under
 reference.
 
 vii) In our opinion, the Company has an adequate internal audit system
 commensurate with the size and nature of its business.
 
 viii) The Central Government has prescribed maintenance of Cost records
 under Section 209 (1) (d) of the Companies Act, 1956, in respect of its
 products manufactured during the year. We are of the opinion that,
 prima facie, the prescribed accounts and records are properly prepared
 and maintained.  We have not, however, carried out detailed examination
 of the same.
 
 ix) a) The Company is regular in depositing undisputed statutory dues
 with the appropriate authorities including Provident Fund, Investor
 Education and Protections Fund, Employees State Insurance, Income Tax,
 Sales Tax, Wealth Tax and Other Statutory dues applicable to it. There
 are no undisputed statutory dues outstanding for more than six months
 as on 31.03.2012.
 
 b) According to the information and explanations given to us following
 are the disputed dues relating to income tax, wealth tax, cess and
 sales tax, which have not been deposited as at 31st March, 2012:
 
 Name of the 
 statue               Nature of the 
                      dispute                Amount (Rs.in
                                             lakhs)
 
 The A.P.G.S.T 
 Act, 1957            General sales tax          7.41
 
 The A.P.GST
 ACT, 1957            General sales tax         95.11
 
 The C.S.T ACT        General sales tax         37.34
 
 The C.S.T ACT        FILING OF C Forms          1.42
 
 AP VAT ACT           ITC                      127.06
 
                      Exemption Claim
 Central Excise 
 Tariff Act, 1985     vide Tariff No.            3.99
                      21069099
 
 Name of the statue     Period to which the.    Forum where the disputes 
                                                is pending
                        amounts relate (F.Y) 
 
 The A.P.G.S.T  
 Act, 1957             1999-00 to 2004-05       Writ Petition filed
                                                with A.P.H.C (15493, 
                                                15497).
 
 The A.P.GST
 ACT, 1957             2001-02                  Writ petition filed
                                                with Tribunal (1267/
                                                2007 2001-02)
 
 The C.S.T ACT         2002-03                  A.P.S.T.A.T (952/2008
                                                2002-03)
 
 The C.S.T ACT         1998-99                  A.P.S.T.A.T. (1266/2007
                                                1998-99)
 
 AP VAT ACT            2007-08                  A.P.S.T.A.T (419/2011
                                                2007-08)
 
 Central Excise 
 Tariff Act, 1985                               Central Excise Tariff
                                                Act, 1985 (V/19/15/
                                                14/2012/
                       2011-12                  ADJN/533A)
 
 x) The Company does not have any accumulated losses as at the end of
 the financial year under reference and the company has not incurred
 cash loss in the financial year under reference and in the financial
 year immediately proceeding such financial year.
 
 xi) The Company has not defaulted in the repayment of its dues to
 financial institutions or banks.
 
 xii) 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 nidhi / mutual
 benefit fund / society. Therefore the provisions of Clause 4 (xiii) of
 the Companies (Auditors'' 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.  Investments have
 been held by the company in its own name.
 
 xv) The Company has not given any guarantee for loans taken by others
 from banks or financial institutions.
 
 xvi) In our opinion, the term loans taken by the Company were applied
 for the purpose for which they were taken.
 
 xvii) In our opinion and according to explanations and information
 given to us, funds raised on short-term basis have not been used for
 long term investment.
 
 xviii) According to the information and explanation given to us, during
 the year the Company has not made any preferential allotment of equity
 shares/warrants to parties and Companies covered in the register
 maintained under Section 301 of the Companies Act, 1956.
 
 xix) The company has not issued any debentures
 
 xx) The Company, during the year, has not raised money by public
 issues.
 
 xxi) According to explanations and information given to us no material
 frauds on or by the Company has been noticed during the year.
 
 Place: Hyderabad                            For Raju & Prasad,
 
 Date: 29th May 2012                     Chartered Accountants
 
                                                  (FRN:003475S)
 
                                                 S.Ranganathan
 
                                                       PARTNER
 
                                          Membership No: 22738