1.  We have audited the attached Balance Sheet of INDIAN SUCROSE
 LIMITED as at 31st March, 2011 the Profit & Loss Account and also the
 Cash Flow Statement 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
 financial statements based on our audit.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted in In-dia. 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 au-dit also
 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 over-all 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 (''The
 Order 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 paragraphs 4 & 5 of
 the said Order.
 
 4.  Further to our comments in 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 purpose 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 such
 books;
 
 c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with books of account;
 
 d) In our opinion, Balance Sheet, Profit & Loss Account and Cash Flow
 Statement dealt with by this report comply with Accounting standards
 referred to in Section 211(3C) of the Companies Act, 1956.
 
 e) On the basis of written representations received from the directors
 and taken on record by the Board of Directors, we report that none of
 the Directors are disqualified as on 31st March, 2011 from being
 appointed as Directors in terms of clause (g) of Sub Section (1) of
 Section of 274 of the Companies Act, 1956.
 
 f) Non-provision of disputed Purchase Tax liability on purchase of
 Sugar Cane aggregating to Rs.119.63 Lakhs for the financial year
 1999-2000 to 2003-04 pending at appellate levels and Rs. 995.07 Lakhs
 estimated for financial years from 2005-06 to 2010-11 as per Note No:
 9(iii) of schedule 20 for Notes to the Accounts.
 
 g) Non-provision of disputed liabilities created by the Sales Tax
 Department & State Electricity Board aggregating to Rs.21.39 Lakhs as
 per Note No.9(i) & (ii) of Schedule 20 for Notes to the accounts.
 
 h) Regarding change in cost formula for computation of the cost of
 stock of Finished Goods at the close of the year from FIFO Method as is
 permissible under Accounting Standard AS 2 ''Valuation of Inventories''
 issued by the Institute of Chartered Accountants of India to the other
 permissible formula ''Weighted Average Cost''. As result the net profit
 for the year, inventories as well as reserve and surplus are higher by
 Rs. 485.83 Lakhs as compare to the position which would have prevailed,
 had this change not been made.
 
 i) Subject to our comments in paragraph 4(f) & (g) which if had been
 considered, the loss for the year would have been Rs.1559.13 Lakhs as
 against the reported profit of Rs. 62.79 Lakhs and the balance in
 Reserves & Surplus would have been Rs.980.72 Lakhs as against the
 reported figure of Rs.  2602.54 Lakhs similarly, the current
 liabilities would have been Rs.8695.41 Lakhs as against the reported
 figure of Rs.7073.60 Lakhs, and note no 21 of schedule 20 of notes to
 the accounts regarding Micro, small, & Medium Enterprises, in our
 opinion, and to the best of our in-formation and according to the
 explanations given to us, the said accounts read together with the
 significant accounting policies and others notes thereon, and attached
 thereto, 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:
 
 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 & Loss Account, of the Profit of the Company
 for the year ended on that date; and
 
 iii) in the case of Cash Flow Statement, for the cash flows for the
 year ended on that date.
 
 Annexure to the Auditors'' Report
 
 1. (a) The company is generally maintaining records showing particulars
 including quantitative details and situation of its fixed assets,
 however, their final compilation is under process.
 
 (b) The fixed assets of the Company have been physically verified
 during the year by the management at reasonable intervals and no
 material discrepancies between the book re-cords and the physical
 inventory have been noticed on such verification.
 
 (c) As per records and information and explanation given to us company
 has not disposed off during the year substantial part of its fixed
 assets.
 
 2.  (a) The physical verification of inventory has been conducted by
 the management at reason-able intervals.
 
 (b) In our opinion and according to the information and explanation
 given to us, 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) On the basis of our examination, in our opinion, the Company has
 maintained proper re-cords of inventory & discrepancies noticed on such
 physical verification on inventory as compared to the books records
 were not material.
 
 3.  (a) According to information made available to us, 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 Act, accordingly clause 4(iii) (b) to (d) of the Order are not
 applicable to the company.
 
 (b) According to information made available to us, the company has
 taken interest free unsecured loans from the Directors and their
 relative as covered in the register maintained un-der section 301 of
 the Act. Total outstanding for such loans at the year end was at the
 amount of Rs.435 Lakhs and maximum outstanding during the year amounted
 to Rs. 460.00 Lakhs. Further, the company has not taken any secured
 loan from the aforesaid referred parties.
 
 (c) The other terms and conditions of the unsecured Loans taken by the
 company are prime facie not prejudicial to the interest of the company.
 
 (d) As informed to us, presently, there is no stipulation as regards to
 repayment of Principal amount. However, payment of interest is regular.
 
 4.  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 nature of its business, for purchase
 of inventory and fixed assets and for the sale of goods and services.
 Further, on the basis of our examination and according to the
 information and explanation given to us, we have not observed any
 continuing failure to correct major weaknesses in internal control
 system.
 
 5.  (a) Based on our examination and according to the information and
 explanation given to us, we are of the opinion that the particulars of
 contracts or arrangements referred to in Section 301 of the Act have
 been entered in the register required to be maintained under that
 section.
 
 (b) In our opinion and according to the information and explanation
 given to us, the transactions made in pursuance of such contracts or
 arrangements have been made at prices which are reasonable having
 regard to prevailing market price at the relevant time.
 
 6.  On the basis of information and explanations given to us, the
 company has not accepted any public deposits from the public within the
 meaning of Section 58A, 58AA or any other relevant provisions the
 Act, and rules framed there under.
 
 7.  The company has an internal audit system which needs to be more
 strengthened to make it commensurate with the size and nature of the
 Company''s business.
 
 8.  We have broadly reviewed the books of account maintained by the
 company pursuant to the order made by the Central Government for the
 maintenance of the cost records under section 209(1) (d) of the Act and
 are of the opinion that, primafacie, the prescribed account and
 re-cords have been maintained and are being made up. We however as not
 required have not made a detailed examination of such records with a
 view to determine whether these are ac-curate or complete.
 
 9.  (a) According to the information and explanations given to us the
 company is regular in de-positing with appropriate authorities,
 undisputed statutory dues including Provident Fund, Income Tax, Sales
 Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other
 statutory dues applicable to it. As explained to us, the provisions of
 Employees State Insurance are not applicable to the company, No amount
 was due to be deposited under investor Education and Protection Fund.
 Further, there was no arrears of undisputed statutory dues outstanding
 as at 31st March, 2011 for a period of more than six months from the
 date they became payable.
 
 (b) According to the information and explanation given to us, the
 disputed statutory dues of Sales Tax, & Purchase Tax aggregating to
 have not been deposited are given below:-
 
 Name of 
 Statue        Nature 
               of         Financial 
                          year to         Amount (Rs.     Forum where Due
                          which it
                          pertains        in Lakhs)       dispute is
                                                           pending.
 
 Sales 
 Tax 
 Laws          Sales
               tax        1997-98 & 
                            2000-01          11.19         Deputy Excise
                                                           & Taxation
                                                           Commissioner
                                                          (Appeal)
 
 Sales
 Tax 
 Laws          Purchase   1999-2000          16.64         Sales Tax
                                                           Tribunal.
               Tax        2000-01 &           
                            2001-02          52.78         Punjab & 
                                                           Haryana
                                                           High Court.
                          2002-03 &
                            2003-04          50.21         Deputy Excise
                            2004-05          41.48         Taxation
                                                           Commissioner
                                                          (Appeals)
 Provi
 dent
 Funds         Provident 1997-98 to 
                            2007-08          14.36         EPF Appellate
 & Misc. 
 Provi-        Fund                                        Tribunal
 sions
 Act,1952
 1952
 
 Service
 Tax Act       Service 
               Tax          2003-04          8.00          CESTAT
                                           194.66 
 
 Further, in respect of Income Tax, Custom Duty, Wealth Tax, Service Tax
 and Cess it has been informed that there are no dues, which have not
 been deposited on account of any dispute.
 
 10.  The company does not have accumulated losses. The company has not
 incurred any cash losses during the current financial year and in the
 immediately preceding financial year.
 
 11.  In our opinion and according to the information and explanations
 given to us the company has de-faulted in repayment of its dues to the
 bank. The Particulars of delays relates to the Interest/Installments
 during the year ended on 31st March 2011, are as follows:-
 
 Particulars            Amount (including             Period of 
                                                      delay 
                        Interest)               
                        Rs. In lacs
 
 Banks                   148.47                       1- to 30
 
                         144.86                      31- to 60
 
 There are no due of Debenture holders.
 
 12.  According to the information and explanations given to us, the
 company has not granted any loans and advances on the basis of security
 by way of pledge of shares, debentures and other securities.
 
 13.  The company is not a chit fund or a Nidhi / mutual benefit fund /
 society, therefore provisions of clause 4(xiii) of the order are not
 applicable to the company.
 
 14.  In our opinion, the company is not dealing or trading in shares,
 securities, debentures and other investments. Accordingly, provisions
 of clause 4(xiv) of the order are not applicable to the company.
 
 15.  According to the information and explanation given to us, the
 company has not given corporate guarantees for loans taken by others
 from Banks. The terms & conditions of these guarantees are not
 prejudicial to the interest of the company.
 
 16.  In our opinion and on the basis of information and explanation
 given to us, the term loans availed by the company has been on overall
 basis utilised for the purpose for which it were sanction.
 
 17.  On the basis of overall examination of the Balance sheet of the
 company in our opinion and according to the information and
 explanations given to us funds raised on short term basis to the extent
 of Rs. 3710.36 lakhs up to the date of Balance sheet , have been used
 for long term investments primarily in the nature of capital
 expenditures and repayment of loans .
 
 18.  The company has made preferential allotment of shares to parties
 and companies covered in the register maintained under section 301 of
 the Act. In our opinion, prices at which shares have been issued is not
 prejudicial to the interest of the company.
 
 19.  The company has not issued any debenture, therefore, no comments
 is required under para 4(xix) of CARO, 2003.
 
 20.  The company has not raised any money through public issues during
 the year.
 
 21.  To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the Company
 has been noticed or reported during the course of our audit.
 
                                                 For B.K. Kapur & Co.
                                               Chartered Accountants,
 
 Place : Ghaziabad                                (M.S. Kapur) F.C.A.
 
 Dated : 30-05-2011                                          Partner
                                                 Membership No.74615