We have audited the attached Balance Sheet of INDIA GLYCOLS LIMITED as
 at 31st March 2011, the Profit and Loss Account and the also Cash Flow
 Statement for the year ended on that date annexed thereto. These
 financial statements are the responsibility of Company''s management.
 Our responsibility is to express an opinion on these financial
 statements based on our audit.
 
 We conducted our audit in accordance with the 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 the management, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 1.  As required by the Companies (Auditor’s Report) Order, 2003 (“The
 Order”) as amended by the Companies (Auditor’s Report) Order, 2004
 issued by the Central Government of India in terms of Section 227 (4A)
 of the Companies Act, 1956 (“The Act”), we enclose in the Annexure a
 statement on the matters specified in the paragraphs 4 & 5 of the said
 Order.
 
 2.  Further to our comments in the Annexure referred to in paragraph 1
 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 account 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) 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 subsection (3C) of Section 211 of the
 Companies Act, 1956 to the extent applicable.
 
 e) As per explanations and information given to us, none of the
 directors of the Company is disqualified from being appointed as
 director in terms of clause (g) of sub-section (1) of section 274 of
 the Companies Act, 1956.
 
 f) Without qualifying attention is invited to:
 
 (i) Note no. 1 (B) of schedule ‘L’ regarding pending export obligation
 against custom duty saved on raw material consumed imported under
 advance licenses as stated in the said note. In the opinion of the
 management considering the Going Concern Concept and past export
 performance at this stage there is no need to make provision against
 duty saved.
 
 (ii) Note no. 8 (i) & (ii) of schedule ‘L regarding investment in
 subsidiaries amounting to Rs. 5454.91 Lacs where in the opinion of
 management no provision for diminution is necessary considering the
 long term in nature and the intrinsic value of assets of subsidiary
 companies as stated in the said note and note no. 8 (iii) regarding
 loans to a subsidiary amounting to Rs. 463.39 Lacs (including interest
 accrued thereon) where management is confident about recoverability/
 realisability
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the said statements of account read together
 with notes thereon, give the information as 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:
 
 (i) in the case of Balance Sheet, of the State of Affairs of the
 Company as at 31st March, 2011;
 
 (ii) in the case of Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 (iii) in the case of Cash Flow Statement, of the Cash Flows for the
 year ended on that date.
 
 Annexure to the Auditors'' Report
 
 (Referred to in paragraph (1) of our Report of even date of INDIA
 GLYCOLS LIMITED for the year ended 31st March, 2011)
 
 i. (a) The Company has maintained records in respect of fixed assets
 showing full particulars including quantitative details and situation
 of its fixed assets.
 
 (b) As per information & explanation given to us, certain fixed assets
 have been physically verified by the management. As explained to us
 there is regular programme of physical verification once in every three
 years, in phased manner, which in our opinion is reasonable having
 regard to the size of the company and the nature of its fixed assets.
 The discrepancies noticed on such physical verification were not
 material.
 
 (c) As per the records and information & explanation given to us, fixed
 assets disposed off during the year were not substantial.
 
 ii. (a) The inventory of the Company (except stock lying with the third
 parties and in transit) has been physically verified by the management
 at reasonable intervals.
 
 (b) In our opinion and according to information & explanation given to
 us, the procedures of physical verification of inventory followed by
 the management are generally reasonable and adequate in relation to the
 size of the Company and nature of its business.
 
 (c) In our opinion and according to information & explanation given to
 us, the Company is generally maintaining proper records of inventory.
 The discrepancies noticed on such physical verification of inventory as
 compared to book records were not material.
 
 iii. (a) According to the information and explanations given to us, the
 Company has not granted during the year any loans, secured or unsecured
 to companies, firms or other parties listed in the register maintained
 under section 301 of the Act. Accordingly, the provisions of clause 4
 (iii) (b) to (d) of the Order are not applicable to the Company.
 
 (b) The Company has taken unsecured loan from three Companies covered
 in the register maintained under section 301 of the Companies Act,
 1956. The maximum amount involved during the year and the year end
 balance of such loans are aggregate of Rs.1597 Lacs and Rs.1583 Lacs
 respectively.
 
 (c) In our opinion and according to information and explanations given
 to us, the rate of interest and other terms and conditions on which
 aforesaid loan has been taken are not, prima facie, prejudicial to the
 interest of the Company.
 
 (d) The company is regular in repaying the principal and interest
 amounts whenever the same are stipulated.
 
 iv In our opinion and according to the information and explanations
 given to us, having regard to the explanation that some of the items
 purchased are
 of special nature and for which suitable alternative sources do not
 exist for obtaining comparable quotation or where user department has
 shown specific preference, where, as explained, rates were determined
 considering the quality, volume, nature of the items and market
 conditions prevailing at that time in certain cases, there is an
 adequate internal control system which needs to be further strengthened
 to be made the same commensurate with the size of the Company and
 nature of its business for the certain purchases of Inventory & fixed
 assets, and for the sale of goods and services (read with note no.12 &
 19 (a) of schedule L). Based on the audit procedure performed and
 information & explanations provided by the management, during the
 course of our audit, we have not observed any continuing failure to
 correct major weaknesses in internal control system.
 
 v. According to the information and explanations provided by the
 management and based on the audit procedure performed, we are of the
 opinion that the particulars of the contracts or arrangements referred
 to in section 301 of the Act have been entered in the register
 maintained under that section and having regard to our comment in para
 (iv) above, the transaction made in pursuance of such contracts or
 arrangements (exceeding the value of Rs. 5 Lacs in respect of each
 party during the financial year) have been made at prices which are
 generally reasonable having regard to the prevailing market prices at
 the relevant time.
 
 vi. In our opinion and according to the information and explanations
 given to us, the Company has complied with the directive issued by the
 Reserve Bank of India and the provisions of Section 58A and 58 AA of
 the Act or any other relevant provisions of the Act and the rules
 framed there under with regard to deposit accepted from the public. We
 have been informed that no order has been passed by the company Law
 Board or National Company Law Tribunal or Reserve Bank of India or any
 Court or other tribunal in this regard.
 
 vii. The Company has an internal audit system commensurate with the
 size of the company and nature of its business. However, scope and
 coverage of balance confirmation as stated in note no. 19 (a) of
 schedule L needs to be further strengthened.
 
 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 Act 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
 records have been made and maintained. We have, however, not made a
 detailed examination of the said records with a view to determine
 whether they are accurate and complete.
 
 ix. (a) According to the records of the Company, the Company is
 generally 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 with the
 appropriate authorities to the extent applicable.  According to the
 information and explanations given to us, generally there are no
 undisputed amounts payable in respect of statutory dues which have
 remained outstanding as at 31st March, 2011 for a period of more than
 six months.
 
 (b) According to the records and information and explanations given to
 us, there are no dues in respect of Income Tax, Sales Tax and Wealth
 Tax that have not been deposited with the appropriate authorities on
 account of any dispute and dues in respect of Custom Duty, Service Tax,
 Excise Duty and Cess that have not been deposited with appropriate
 authority on account of dispute and the forum where the dispute is
 pending are given below:-
 
 Name of the   Nature of    Amount    Period      Forum where dispute 
 Statue                     (Rs.in.               is pending
                             Lacs)
   
 Custom Act    Custom        11.42    1992-93      High Court-
               duty         193.05    2004-05      Uttaranchal
                                      2009-10      Asstt.Commissioner 
                                                   of Custom
 
 Central       Excise          0.94    1996-97,    CESTAT
 Excise        Duty           69.99    2007-2008   CESTAT
 Act                          56.54    2005-06     Asstt.Commissioner 
                           4,183.63    to          Haldwani
                              59.40    2010-11     Asst.Commissioner
                              11.97    2006-07     Haldwani
                               3.59    to          Additional
                                       2010-11     Commissioner
                                       2009-10     Joint Commissioner
                                       to          Asst.Commissioner
                                       2010-11     Allahabad     
                                       2009-10 
                                       to 
                                       2010-11
 
 State        Export         993.25  2007-2011     High Court 
 Excise       Fees                                 Nainital
 Act
 
 Finance      Service         7.93   2005-2009     CESTAT
 Act          Tax            36.31   2004-2008     Commissioner 
 1994                       111.18   2004-  05     (Appeal) 
                              6.39   2005-  06     Commissioner  
                                     2005-  06     Asstt.Commissioner  
 
 This is to be read with note no.1 (A) (i) of schedule L
 
 x. The Company does not have accumulated losses at the end of financial
 year and has not incurred cash losses during the current financial year
 and in the immediately preceding financial year.
 
 xi. Inouropinion, based on audit procedures and according to the
 information and explanations given to us, the Company has not defaulted
 in repayment of dues to financial institution, banks or debenture
 holders.
 
 xii. According to the information and explanation 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, debenture and other securities.
 
 xiii. The Company is not a chit fund or a nidhi/ mutual benefit fund
 /society and therefore, the provisions of clause 4 (xiii) of the Order
 are not applicable.
 
 xiv According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 xv. According to the information and explanations given to us, the
 Company has given corporate guarantees to banks for Loans taken by
 Shakumbari Sugar & Allied Industries Limited (‘SSAIL a Subsidiary
 Company) amounting to Rs.22,633.13 lacs as stated in note no.1(A)(iv)
 of schedule ‘L, the terms and conditions on which the Company has given
 guarantees for loans taken by SSAIL from banks are not, prima facie,
 prejudicial to the interest of the Company since the is/are on account
 of commercial expediency. As explained to us, the Company has not given
 any guarantee for loans taken by others from financial institution.
 
 xvi. According to the information and explanations given to us, term
 loans have been applied for the purposes for which they were obtained.
 
 xvii. On the basis of information and explanations given to us and on
 overall examination of the financial statements of the Company, funds
 raised on short- term basis have, prima facie not been used for long-
 term investments.
 
 xviii.According to the information and explanation given to us, the
 Company has not made any preferential allotment of shares to any
 parties or companies covered in the register maintained under section
 301 of the Act.
 
 xix. On the basis of record made available to us and according to the
 information and explanations given to us, the Company does not have
 outstanding debentures during the year and also at year end.
 
 xx. The Company has not raised any money through a 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 provided by the management, no material fraud on or by the
 Company has been noticed or reported during the course of the audit.
 
 
                                                   For Lodha& Co.
                                            Chartered Accountants
                                    Firm Registration No: 301051E
 
                                                     (N. K. Lodha)
                                                          Partner
                                                  M. No.: - 85155
 
 Place : Noida
 Date : 20th May, 2011