1.  We have audited the attached Balance Sheet of Indo Rama Synthetics
 (India) Limited (the Company) as at 31 March 2011 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 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 (‘the
 Order), 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.  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, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (iv) in our opinion, the Balance Sheet, the Profit and Loss Account and
 the 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, to the extent applicable;
 
 (v) on the basis of the written representations received from the
 directors as on 31 March 2011, and taken on record by the Board of
 Directors, we report that none of the directors of the Company is
 disqualified as on March 31, 2011 from being appointed as a director in
 terms of clause (g) of sub-section (1) of section 274 of the Companies
 Act, 1956; and
 
 (vi) in our opinion, and to the best of our information and according
 to the explanations given to us, 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 31 March 2011;
 
 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 the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 Annexure to the Auditors Report
 
 Annexure referred to in paragraph 3 of the Auditors Report to the
 Members of Indo Rama Synthetics (India) Limited on the accounts for the
 year ended 31 March 2011.
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) As explained to us, the fixed assets are physically verified by the
 management in accordance with a phased programme designed to cover all
 items of fixed assets over a period of three years, which, in our
 opinion, is reasonable having regard to the size of the Company and
 nature of its fixed assets. In accordance with this programme, certain
 categories of fixed assets at certain locations have been physically
 verified by the management during the year. As informed to us, no
 material discrepancies were noticed on such verification.
 
 (c) Fixed assets disposed off during the year were not substantial and,
 therefore, do not affect the going concern assumption.
 
 (ii) (a) According to the information and explanations given to us, the
 inventories, except goods in transit and stocks lying with third
 parties, have been physically verified by the management during the
 year. In our opinion, the frequency of such verification is reasonable.
 For stocks lying with third parties at the year end, written
 confirmations have been obtained.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures for 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 of the records of inventories, we
 are of the opinion that the Company is maintaining proper records of
 inventories. As informed to us, the discrepancies noticed on physical
 verification of inventories as compared to the book records were not
 material and have been properly dealt with in the books of account.
 
 (iii) According to the information and explanations given to us, the
 Company has neither granted nor taken any loans, secured or unsecured,
 to or from companies, firms or other parties covered in the register
 maintained under section 301 of the Companies Act, 1956. Accordingly,
 paras 4 (iii) (b) to (g) of the Order are not applicable.
 
 (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 with regard
 to purchase of inventories and fixed assets and with regard to the sale
 of goods. The activities of the Company do not involve sale of
 services.  Further, on the basis of our examination and according to
 the information and explanations given to us, we have neither come
 across nor have been informed of any instances of major weaknesses in
 the aforesaid internal control system.
 
 (v) (a) In our opinion, and according to the information and
 explanations given to us, the particulars of contracts or arrangements
 referred to in section 301 of the Companies Act, 1956 have been entered
 in the register required to be maintained under that section.
 
 (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 Rs 5 lacs 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 any deposits from the public during
 the year.
 
 (vii) In our opinion and according to the information and explanations
 given to us, the Company has an internal audit system commensurate with
 the size and nature of its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company in respect of products where, pursuant to the rules made by the
 Central Government, the maintenance of cost records has been prescribed
 under section 209(1)(d) of the Companies Act, 1956 and are of the
 opinion that, prima facie, the prescribed accounts and records have
 been made and maintained. However, we have not made a detailed
 examination of such records with a view to determine whether they are
 accurate or complete.
 
 (ix) (a) According to the information and explanations given to us and
 on the basis of our examination of the records of the Company, amounts
 deducted/ accrued in the books of account in respect of 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 and other material
 statutory dues, to the extent applicable, have generally been regularly
 deposited during the year by the Company with the appropriate
 authorities.
 
 There were no dues on account of Cess under section 441A of the
 Companies Act, 1956 since the date from which the aforesaid section
 comes into force has not yet been notified by the Central Government.
 
 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,
 Sales tax, Wealth tax, Service tax, Customs duty, Excise duty and other
 material statutory dues were in arrears as at 31 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, and on
 the basis of the records of the Company examined by us, there are no
 dues of Income tax, Wealth tax, Service tax, Sales tax, Customs duty,
 Excise duty and cess which have not been deposited with the appropriate
 authorities on account of any dispute, except as mentioned below:
 
                                                           (Rs. crore)
 
 Name of the     Nature of       Amount       Amount       Period to
 Statute         dues            of           paid under   which it
                                 dispute*     protest      relates
 
 The Central 
 Excise          Excise duty         3.91            -     2002-03 to
 Act, 1944                                                 2004-05
 
                                    58.03         5.97     1996-97 to
                                                           2008-09
 
                                     9.81         0.08     1996-97 to
                                                           2008-09
 
                                     0.26            -     1997-98 to
                                                           2010-11
 
 Bombay Sales   
 Tax             Sales tax           0.43         0.13     1998-99 to
 Act,1959/                                                 1999-00
 Central                                         
 Sales Tax Act, 
 1956
 
 Maharashtra 
 VAT             VAT               13.62          1.70     2008-09 to
 Act, 2002                                                 2009-10
 
 Customs Act,
 1962            Custom             0.08             -     2002-03
                 duty
 
                                   15.79          1.12     2010-11
 
                                    0.79          0.79     2010-11
 
                                    0.04             -     1997-98 to
                                                           1998-99
 
 Income 
 Tax Act,        Income tax         0.01             -     Assessment
 1961                                                      year 
                                                           2007-08
 
 Finance 
 Act, 1994       Service Tax        2.84             -     2004-05 to
                                                           2009-10 
 
                                    0.22             -     2002-03 to
                                                           2005-06
 
 
 Name of the              Forum where dispute is
 Statute                  pending
 
 The Central Excise       Bombay High Court, Nagpur
 Act, 1944                Bench
 
                          Customs, Excise and Service
 
                          Tax Appellate Tribunal
                          Commissioner Appeal
 
                          Assistant Commissioner/
                          Deputy Commissioner
 
 Bombay Sales Tax         Joint Commissioner Sales Tax
 Act,1959/ Central        (Appeals), Nagpur
 Sales Tax Act, 1956
 
 Maharashtra VAT          Joint Commissioner Sales tax
 Act, 2002                (Appeals), Nagpur
 
 Customs Act, 1962        Customs, Excise and Service
                          Tax Appellate Tribunal
 
                          Commissioner Appeal
 
                          Special Valuation Branch, Delhi
                          
                          Assistant Commissioner/
                          Deputy Commissioner
 
 
 
 
 * Excluding cases where losses / unabsorbed depreciation have been
 adjusted by the tax authorities without raising any demands, though
 disputed by the Company.
 
 (x) The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the financial year
 and in the immediately preceding financial year.
 
 (xi) According to the information and explanations given to us, the
 Company has defaulted in repayment of dues to a bank amounting to Rs.
 104.20 crore (for delays ranging upto one year) and Rs. 63.76 crore
 (for delays ranging from one year to two years). During the year, out
 of total overdue amounts the Company has paid Rs. 89.35 crore to the
 said bank and Rs. 78.61 crore is outstanding as at the year end.
 
 Further, with regard to the delays in repayment of dues to certain
 other bank and financial institution, the Company has entered into
 reschedulement arrangements with them, involving amounts aggregating
 Rs. 67.88 crore.  Before such arrangements, the delays in payments of
 dues ranged upto two years. The Company has initiated steps to comply
 with terms and conditions, where applicable, stated in these
 arrangements. Considering the above referred reschedulement, the delays
 in the above cases have presently been considered as regularised.
 
 (xii) 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.
 
 (xiii) According to the information and explanations given to us, the
 Company is not a chit fund or a nidhi/ mutual benefit fund/ society.
 
 (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 not given any guarantees for loans taken by others from
 banks or financial institutions.
 
 (xvi) According to the information and explanations given to us, term
 loans have been applied for the purpose for which such 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 funds raised on short-term basis have not been used for long term
 investment.
 
 (xviii) During the year, the Company has issued convertible
 preferential warrants to companies covered in the register maintained
 under Section 301 of the Companies Act, 1956.  According to the
 information and explanations given to us, these warrants have been
 issued at a price which is not prejudicial to the interest of the
 Company.
 
 (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.
 
 (xxi) Based on the audit procedures performed and according to the
 information and explanations given to us, no fraud on or by the Company
 has been noticed or reported during the year.
 
                                           For B S R and Associates
                                              Chartered Accountants
                                  Firm registration number: 128901W
 
                                                    Kaushal Kishore
                                                            Partner
                                             Membership No.: 090075
 
 Place : Gurgaon 
 Date  : 26 April 2011