1.  We have audited the attached Balance Sheet of Jagatjit Industries
 Limited, as at March 31, 2011, and the related Profit and Loss Account
 and the Cash Flow Statement for the year ended on that date, annexed
 thereto, which we have signed under reference to this report. 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 have 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 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, as
 amended by the Companies (Auditor''s Report) (Amendment) Order, 2004,
 issued by the Central Government of India in terms of sub section (4A)
 of Section 227 of ''The Companies Act, 1956'' of India (the ''Act'') and on
 the basis of such checks of the books and records of the Company as we
 considered appropriate and according to the information and
 explanations given to us, we give in the Annexure a statement on the
 matters specified in paragraphs 4 and 5 of the said Order.
 
 4.  Further to our comment in paragraph 3 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
 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 & Loss Account and Cash
 Flow Statement dealt with by this report comply with the applicable
 Accounting Standards referred to in sub section (3C) of Section 211 of
 the Act;
 
 (e) On the basis of written representation received from Directors, as
 on March 31, 2011 and taken on record by the Board of Directors, none
 of the Directors 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 Act;
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with the notes thereon and attached thereto give in the prescribed
 manner the information required by the Act, and also give a true and
 fair view in conformity with the accounting principles generally
 accepted in India:
 
 (i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2011 ;
 
 (ii) in the case of the Profit & Loss Account, of the profit for the
 year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO AUDITORS'' REPORT
 
 (Referred to in paragraph 3 of the Auditors'' Report of even date to the
 members of Jagatjit Industries Limited on the financial statements for
 the year ended March 31, 2011)
 
 (i) (a) The Company is maintaining proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) The fixed assets are physically verified by the management
 according to a phased programme designed to cover all the items over a
 period of three years, which in our opinion, is reasonable having
 regard to the size of the Company and the nature of its assets.
 Pursuant to the programme, a portion of the fixed assets has been
 physically verified by the management during the year and no material
 discrepancies between the book records and the physical inventory have
 been noticed.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 of by the Company during the year.
 
 (ii) (a) The inventory (excluding stocks with third parties) has been
 physically verified by the management during the year. In respect of
 inventory lying with third parties, these have substantially been
 confirmed by them. In our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion, 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 of the inventory records, in our
 opinion, the Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 (iii) (a) The Company has not granted loans, unsecured, to companies,
 firms or other parties covered in the register maintained under Section
 301 of the Act. Accordingly, clauses (iii)(b) to (iii)(d) of the
 paragraph 4 of the Order are not applicable to the Company during the
 current year.
 
 (e) 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. Accordingly, clauses (iii)(f) to (iii)(g)
 of the paragraph 4 of the Order are not applicable to the Company
 during the current year.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there is, in general, an adequate internal control system
 commensurate with the size of the Company and the nature of its
 business for the purchase of inventory, fixed assets and for the sale
 of goods and services. Further, on the basis of our examination of the
 books and records of the Company, and according to the information and
 explanations given to us, we have neither come across nor have been
 informed of any continuing failure to correct major weakness 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 Act 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 such contracts or
 arrangements and exceeding the value of Rupees Five Lakhs in respect of
 any party during the year have been made at prices which are prima
 facie reasonable, having regard to the prevailing market prices at the
 relevant time where such prices are available.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 58A and 58AA or any other relevant provisions of the Act and the
 Companies (Acceptance of Deposits) Rules, 1975 with regard to the
 deposits accepted from the public. According to the information and
 explanations given to us, no Order has been passed by the Company Law
 Board or National Company Law Tribunal or the Reserve Bank of India or
 any Court or any other Tribunal on the Company in respect of the
 aforesaid deposits.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with its 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 of India, the maintenance of cost records has been
 prescribed
 
 under clause (d) of sub-section (1) of Section 209 of the Act and are
 of the opinion that prima facie, the prescribed accounts and records
 have been made and maintained. We have not, however, made a detailed
 examination of the records with a view to determine whether they are
 accurate or complete.
 
 (ix) (a) The Company has been 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, Custom duty, Excise duty, Cess and other
 material statutory dues with the appropriate authorities.
 
 (b) According to the information and explanations given to us, there
 were no undisputed dues in respect of Provident Fund, Investor
 Education and Protection Fund, Employees'' State Insurance, Income Tax,
 Sales Tax, Wealth-tax, Service tax, Custom duty, Excise duty, Cess and
 other statutory dues which were outstanding, at the Balance Sheet date,
 for a period of more than six months from the date they became payable.
 
 (c) According to the information and explanations given to us and the
 records of the Company examined by us, the particulars of dues of sales
 tax, income tax, custom duty, wealth tax, service tax, excise duty and
 cess as at March 31, 2011 which have not been deposited on account of a
 dispute, are as follows:-
 
 Name of the         Nature of dues                   Amount
 statute                                              (Rs.)
 
 EXCISE DUTY
 
 Central Excise      Demand of Excise               3,088,547
 Act, 1944           duty on sale of Spent Grain
 
 Central Excise
 Act, 1944           Penalty in the above matter    2,690,619
 
 SERVICE TAX
 
 The Finance         Wrong availment of Service    13,127,235
 Act, 1994           Tax Cenvat Credit
 
 The Finance
 Act, 1994           Penalty in the above matter   13,127,235
 
 The Finance         Wrong availment of             6,970,632
 Act, 1994           Service Tax Cenvat Credit
 
 The Finance         Penalty in the above matter    6,970,632 
 Act, 1994
 
 SALES-TAX
 
 Punjab Haryana      Purchase Tax                     325,247
 General Sales 
 Tax Act
 
 Sales Tax 
 under Bihar         Inclusion of excise duty to    1,896,695
 Finance Act         determine gross turnover
 
 Central Sales 
 Tax Act             Liquor stock destroyed,          133,017
                     reprocessed and resold
 
 U.P. Trade Tax Act  Demand in respect of           6,446,192
                     Entry Tax
 
 State and Central   Sales tax on Sales of ENA      7,300,201
 Sales Tax Acts      and Spent Grain
 
 INCOME TAX ACT*
 
 Name of the         Period to which       Forum where the
 statue              the amount relates    dispute is pending
 
 EXCISE DUTY
 
 Central Excise
 Act, 1944           September 2001        CESTAT, New Delhi
                     to June 2005
 
 Central Excise
 Act, 1944           September 2001        CESTAT, New Delhi
                     to June 2005
 
 SERVICE TAX
 
 The Finance
 Act, 1994           October 2003          CESTAT, New Delhi
                     to September 2007
 
 The Finance
 Act, 1994           October 2003          CESTAT, New Delhi
                     to September 2007
 
 The Finance
 Act, 1994           October 2007          CESTAT, New Delhi
                     to September 2008
 
 The Finance
 Act, 1994           October 2007          CESTAT, New Delhi
                     to September 2008
 
 SALES-TAX  
 
 Punjab Haryana
 General Sales 
 Tax Act             1999-2000             Deputy Excise & Taxation
                                           Commissioner (Appeals),
                                           Patiala
 
 Sales Tax under 
 Bihar Finance Act   1984-1985             Commercial Tax
                                           Tribunal, Ranchi
 
 Central Sales 
 Tax Act             1988-89               Sales Tax Appellate
                                           Tribunal, Hyderabad
 
 U.P. Trade Tax Act  2005-2006             Allahabad, High Court.
 
 State and Central
 Sales Tax Acts      2001-02 to 2002-03    Allahabad, High Court.
 
 INCOME TAX ACT*
 
 *Departmental Appeals in respect of Income Tax Act, 1961 before the
 Higher Authorities are not being considered as there is no stay on the
 Order of Lower Authority favouring the Company and the amount is not
 ascertainable.
 
 (x) The Company has no accumulated losses as at March 31, 2011 and it
 has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 (xi) According to the records of the Company examined by us and the
 information and explanation given to us, the Company has not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holders as at the balance sheet date.
 
 (xii) 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) The provisions of any special statute applicable to chit
 fund/nidhi/mutual benefit fund/societies are not applicable to the
 Company.
 
 (xiv) In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 (xv) In our opinion, and according to the information and explanations
 given to us, the Company has not given any guarantee for loans taken by
 others from banks or financial institutions during the year.
 
 (xvi) In our opinion, and according to the information and explanations
 given to us, on an overall basis, the term loans have been applied for
 the purposes for which they were obtained.
 
 (xvii) On the basis of an overall examination of the balance sheet of
 the Company, in our opinion and according to the information and
 explanations given to us, there are no funds raised on a short-term
 basis, which have been used for long-term investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties and companies covered in the register maintained under
 Section 301 of the Act during the year.
 
 (xix) The Company has not issued any debentures accordingly, no
 securities has been created.
 
 (xx) The Company has not raised any money by public issues 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 given to us, we have neither come across any instance of
 fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by the management.
 
                                                        Nitin Chaudhry
                                                               Partner
                                                Membership No. F 91463
 
                                                  For and on behalf of
                                                 Mittal Chaudhry & Co.
                                                 Chartered Accountants
                                         Firm Registration No. 002336N
 
 Place : New Delhi 
 Date  : 20th July, 2011