1.  We have audited the attached Balance Sheet of HIND SYNTEX LIMITED
 as at March 31,2012 and also the Profit and Loss Account and the Cash
 Flow Statement of the Company 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 financialstatements 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 in terms of Section 227(4A) of the Companies
 Act, 1956, we enclose in the Annexure a statement on the basis of such
 checks, we considered appropriate and the information and explanations
 given to us, on the matters specified in paragraphs 4 of the said
 Order.
 
 4.  Further to our comments in the Annexure referred to 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
 those books;
 
 (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 (d) Refer to Note No. 28 to Accounts relating to the charge to the
 Profit & Loss Account of Rs. 25,71,545 in respect of Gratuity and of
 17,21,679 in respect of Compensated Absences. In the absence of
 detailed information from an independent actuary, interalia, as to the
 present value of obligation and employee benefits cost to be recognised
 respectively in the Balance Sheet and Profit & Loss Account, we are
 unable to ascertain the adjustment and the charges which should have
 been made to the Profit & Loss Account, respectively, in respect of
 Gratuity and Compensated Absences, as contemplated by the Accounting
 Standard-15 (AS-15) on Employees Benefits [AS-15 (Revised)] and
 accordingly, we are unable to comment on the effect thereof on the Loss
 for the year and the consequential effect on Debit balance in the
 Profit & Loss Account, and Current Liabilities and Provisions carried
 forward at the year end.
 
 Further, in view of the absence of the information as aforesaid, the
 Company has not made disclosures of reconciliation of obligation, fair
 value of plan assets, actuarial assumptions, etc. as required by AS-15
 (Revised).
 
 Further, as stated in Note 34 to the Accounts, on the basis of the
 working prepared by the Company to ascertain the impairment in terms of
 Accounting Standard-28, Impairment of Assets, no impairment loss has
 been recognised. However, in view of the uncertainty Involved with the
 internal restructuring (refer note 26 of the accounts), and since the
 future cash flow prepared to determine the value in use are on basis of
 such restructuring, we are unable to comment whether there is an
 impairment of assets.
 
 Subject to our observation as mentioned in paragraph (d) above, in our
 opinion, the Balance Sheet, Profit and Loss Account and Cash Flow
 Statement comply with the Accounting Standards referred to in
 sub-section (3C) of Section 211 of the Companies Act, 1956;
 
 (e) On the basis of written representations 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 is disqualified as on
 March 31,2012 from being appointed as a director in terms of clause (g)
 of sub-section (1) of Section 274 of Companies Act, 1956;
 
 (f) Based on a technical opinion, the Company has provided depreciation
 on all plant and machinery (including Power Plant) as continuous
 process plants at the rate pursuant to notification in GSR No.756E
 dated 16.12.1993 on straight line method.
 
 On the basis of the Guidance Note issued by the Institute of Chartered
 Accountants of India on Some Important Issues Arising From The
 Amendments To Schedule XIV to the Companies Act, 1956, in our opinion,
 depreciation should have been provided at the rate other than that
 provided for continuous process plant Schedule XIV of the Companies
 Act, 1956.
 
 Had depreciation been provided at the rate other than that provided for
 continuous process plant, depreciation for the year would have been Rs.
 1,00,18,680 (instead of Rs. 3,63,45,678), Loss for the year (Net of
 Deferred Tax Assets of Rs. 85,41,795 for such depreciation) would have
 been 17,10,29,139 (instead of 110,58,97,941) and at the year end, Net
 Block of Fixed Assets would have been Rs. 13,40,48,404 (instead of Rs.
 29,19,18,598), Debit Balance in the Profit and Loss Account, after
 adjusting balances in Reserves and Surplus (except to the extent of X
 89,17,860 on account of Capital Reserves), (Net of Deferred Tax Asset
 of Rs. 5,12,20,984 for such depreciation) would have been Rs. 50,83,66,206
 [instead of Debit Balance in the Profit and Loss Account, after
 adjusting balances in Reserves and Surplus (except to the extent of Rs.
 89,17,860 on account of Capital Reserves), of 140,17,16,996] and there
 would have been Deferred Tax Asset (Net) of Rs. Nil (instead of Deferred
 Tax Assets (Net) of Rs. Nil).
 
 (g) We would like to draw attention to Note 26(b) to the Accounts
 relating to non availability of loan statement and balance confirmation
 of loans outstanding from some of the lender banks/institutions as on
 March 31, 2012, due to which the interest charged to Profit & Loss
 Account is determined on the basis of the interest rate specified in
 the Corporate Debt Restructuring Scheme and therefore, the outstanding
 loan and interest balance has been taken as per the records of the
 Company;
 
 (h) Subject to our observations as mentioned in paragraph (d) and (f)
 above, in our opinion and to the best of our information and according
 to the explanations given to us, the said accounts, read together with
 notes thereon and significant Accounting Policies siatsd in Schedule
 XIV give the information required by the Companies Act, 1956 in the
 manner so required and give a true and fair view: 
 
 (i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31,2012; 
 
 (ii) in the case of the Profit and Loss Account, of the Loss of the
 Company for the year ended on that date;
 
 (iii) in the case of Cash Flow Statement, of the Cash Flows of the
 Company for the year ended on that date.
 
 Annexure referred to in paragraph 3 of the Auditors'' Report of even
 date to the members of HIND SYNTEX LIMITED on the accounts for the year
 ended March 31, 2012.
 
 On the basis of such checks as we considered appropriate and in terms
 of information and explanations given to us, we state that:
 
 (i) (a) The Company is generally maintaining proper records to show
 full particulars, including quantitative details and situation of fixed
 assets.
 
 (b) As explained to us, the Company has a phased programme of physical
 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 were noticed on such verification.
 
 (c) The Company has not disposed off any substantial part of its fixed
 assets during the year so as to affect its going concern, subject to
 Note 27 of Notes to the Accounts relating to assets transferred to
 Pillukhedi Unit from Birgod Unit.
 
 (ii) (a) The inventories have been physically verified by the
 management during the year. In our opinion, the frequency of
 verification is reasonable.
 
 (b) In our opinion and according to the information and explanations
 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 the nature of its business.
 
 (c) The Company is maintaining proper records of inventory. The
 discrepancies noticed on verification between physical inventories and
 book records were not material in relation to the operations of the
 Company and the same have been properly dealt with in the books of
 account.
 
 (iii) (a) As per the information furnished, 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.
 
 (b) As the Company has not granted any loans, secured or unsecured to
 Companies, firms or other parties covered in
 
 (c) the register maintained under Section 301 of the Companies Act,
 1956, Clause (iii) (b) of the Order relating to the & rate of interest
 and terms and conditions being prima facie prejudicial to the Company,
 Clause (iii) (c) relating to
 
 (d) regularity of receipt of principal amount and interest and Clause
 (iii) (d) relating to steps taken for recovery of overdue principal and
 interest of more than rupees one lakh, are not applicable.
 
 (e) During the year, the Company has not taken any loans, secured or
 unsecured from companies, firms or other parties covered in the
 register maintained under section 301 of the Act.
 
 (f) As the Company has not taken any loans, secured or unsecured from
 companies, firms or other parties covered in & Register maintained
 under Section 301 of the Act, Clause (iii) (f) of the Order relating to
 rate of interest and terms
 
 (g) and conditions being prima facie prejudicial to the interest of
 Company, Clause (iii) (g) relating to regularity in repayment of
 principal amount and interest, are not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there is 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. As
 informed to us, the Company is not engaged in the sale of any services.
 During the course of our audit, no major weakness has been noticed in
 these internal control systems.
 
 (v) According to the information and explanations given to us, we are
 of the opinion that there are no transactions that need to be entered
 into the register maintained under section 301 of the Companies Act,
 1956. Consequently, reporting on clause 4(v)(b) of the said Order does
 not arise.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposits from the public
 during the year. Hence, the question of complying with the directives
 issued by the Reserve Bank of India and provisions of Section 58A and
 58AA or any relevant provision of the Act, and the rules framed there
 under, does not arise. Accordingly clause 4(vi) of the order is not
 applicable.
 
 (vii) In lieu of Corporate Debt Restructuring, the Monitoring committee
 has appointed an independent firm of Chartered Accountants as
 Concurrent Auditor to conduct concurrent audit of the Company on
 monthly basis, in view of which, the Board of Directors had decided to
 discontinue separate internal audit of the Company.
 
 (viii) 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 manufacturing activities of the Company to
 which the said rules are applicable and are of the opinion that prima
 facie the t prescribed accounts and records have been made and
 maintained. We have, however, not made a detailed examination of the
 records with a view to determine whether they are accurate or complete.
 (ix) (a) According to the information and explanations given to us and
 the records examined by us, the Company has been regular in depositing
 undisputed statutory dues including Provident Fund, Investor Education
 and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax,
 Wealth-tax, Service-tax, Customs Duty, Excise-duty, Cess and other
 material Statutory dues, applicable to it and there were no arrears of
 such statutory dues as on March 31,2012 for a period of more than six
 months from the date they became payable.  (b) According to the
 information and explanations given to us, given herein below are the
 details of dues of sales tax, income tax, wealth tax, service tax,
 customs duty, excise duty, cess which have not been deposited on
 account of disputes and the forum where the dispute is pending:
 
 Name of the    Nature of  Amount in   Period to which   Forum where 
 statue         the dues   Rs.         the amount relate dispute is 
                                                         pending
 
 Entry Tax Act,
 1976           Entry Tax  4,10,968    1997-98           Tribunal, 
                                                         Bhopal
 
 (x) in our opinion, the accumulated losses of the Company as at the end
 of the financial year are more than fifty percent of its net worth. The
 Company has incurred cash losses during the year under audit. However
 in the immediately preceding financial year there were no cash losses.
 
 (xi) In view of the sanction of CDR package and related extension of
 the due dates, the Company has defaulted in following repayment of dues
 to Banks or Institutions:
 
 I. Period                                        Amount in Rs.
 
 Period       Total          Amount paid        Default
              Amount due     on or before       amount
                             due date
 
 2006-07      5,19,40,846    1,69,37,863        3,50,02,983
 
 2007-08      6,65,26,092    2,52,92,744        4,12,33,348
 
 2008-09      7,51,11,312      28,00,000        7,23,11,312
 
 2009-10      7,51,11,312              -        7,51,11,312           
 
 2010-11      8,12,79,485    1,84,00,000        6,28,79,485
 
 2011-12      7,87,79,485              -        7,87,79,485
 
 Total       42,87,48,532    6,34,30,607       36,53,17,925
 
 
 Period         Amount of          Year in which    Amount of
                Default made       default made     default as on
                good               good             March 31,2012
 
 
 2006-07           97,27,401          2007-08          2,52,75,582
 
 2007-08           29,08,204          2008-09          3,83,25,144
 
 2008-09                   -                -          7,23,11,312
 
 2009-10                   -                -          7,51,11,312
 
 2010-11                   -                -          6,28,79,485
 
 2011-12                   -                -          7,87,79,485
 
                 1,26,35,605                -         35,26,82,320
 
 
 
 
 II.  Interest                                        Amount in Rs.
 
 
 
 Period         Total              Amount paid      Default
                Amount due         on or before     amount
                                   due date
 
 2006-07       3.80,10,844         1,75,48,156      2,04,62,688
 
 2007-08       5,66,94,298         2,64,29,413      3,02,64,885
 
 2008-09       6,08,18,220           90,42,313      5,17,75,907
 
 2009-10       6,17,02,017           25,76,644      5,91,25,373
 
 2010-11       7.02,73,125           47,75,462      6,54,97,663
 
 2011-12       7,51,77,927         1,41,27,308      6,10,50,619
 
 Total        36,26,76,431         7,44,99,296     28,81,77,135
 
 
 Period            Amount of          Year in which    Amount of
                   Default made       default made     default as on
                   good               good             March 31,2012
 
 2006-07                      -                  -       2,04,62,688
 
 2007-08              10,97,696            2008-09       2,91,67,189
 
 2008-09                      -                  -       5,17,75,907
 
 2009-10                      -                  -       5,91,25,373
 
 2010-11                      -                  -       6,54,97,663
 
 2011-12              67,87,415         2008-09 to       5,42,63,204
                                        2010-11
 
 Total                78,85,111                  -      28,02,92,024
 
 (xii) Based on our examination of the records and the information and
 explanations given to us, the Company has not granted any loans and /
 or advances on the basis of security by way of pledge of shares,
 debentures and other securities.
 
 (xiii) As the Company is not a chit fund, Nidhi, mutual benefit fund or
 society the provisions of Clause 4 (xiii) of the Order are not
 applicable to the Company.
 
 (xiv) According to the information and explanations given to us, in our
 opinion the Company is not dealing or trading in shares, securities,
 debentures and other investments and hence, the requirements of Clause
 4(xiv) of the Order are not applicable to the Company.
 
 (xv) As the Company has not given any guarantee for loans taken by
 others from banks or financial institutions, clause 4(xv) of the Order
 is not applicable to the Company.
 
 (xvi) In our opinion, the term loans availed by the Company were prima
 facie, applied for the purpose for which the loans were obtained.
 
 (xvii) According to the information and explanations given to us and on
 examination of the financial statements of the Company, we report that,
 the Company has utilized short-term funds for long- term purpose
 amounting to Rs.730.39 lacs. The utilization of short term funds
 towards long terms funds is due to recovery of interest on term loan by
 the bank.
 
 (xviii) According to the information and explanations given to us, as
 the Company has not made any preferential allotment of shares during
 the year, Clause 4 (xviii) of the Order is not applicable.
 
 (xix) According to the information and explanations given to us, as the
 Company has not issued any debentures and hence, the question of
 creating security or charges in respect thereof does not arise, Clause
 4 (xix) of the Order is not applicable.
 
 (xx) As the Company has not raised any money by public issues during
 the year, Clause 4 (xx) of the Order is not applicable.
 
 (xxi) Based on the audit procedures performed and information and
 explanations given to us 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 Bansi S Mehta & Co.
 
                                                  Chartered Accountants
 
                                          Firm Registration No. 100991W
 
 Place : Plllukhedi                                     Divyesh I. Shah
 
 Dated : May 25, 2012                                           Partner
 
                                                   Membership No: 37326