1.  We have audited the attached Balance Sheet of''JBF INDUSTRIES
 LIMITED'' (the Company) as at 31 st March 2011, the Profit and Loss
 Account and also 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 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 misstatements. 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.
 
 3.  As required by the Companies (Auditor''s 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 give in
 the Annexure hereto, a statement on the matters specified in the
 paragraphs 4 and 5 of the said Order.
 
 4.  Attention is drawn to the:
 
 Note No.25(c) of the Schedule P regarding the non-provision of
 marked to market losses of derivative contracts amounting to Rs. 144,63
 Crores as on 31st March 2011 on account of reasons as explained in the
 aforesaid note. Had the same been provided the profit after tax for the
 year ended 31st March 2011 and Reserves as at 31st March 2011 would
 have been Rs. 33.72 Crores and f. 758.37 Crores respectively as against
 the reported figures of 7 131.42 Crores and Rs. 856.07 Crores
 respectively
 
 5.  Further to our comments in the annexure referred to in paragraph 3
 above and subject to our comment in paragraph 4 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
 such 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 mandatory
 Accounting Standards referred to in Sub-section (3C) of Section 211 of
 the Companies Act, 1956:
 
 e) On the basis of the written representations received from the
 directors as on 31st March, 2011 and taken on records by the Board of
 Directors, we report that none of the directors is disqualified as on
 31st March, 2011 from being appointed as a director in terms of clause
 (g) of sub- section (1) of Section 274 of the Companies Act 1956. As
 regards to the Directors nominated by Financial Institution, they are
 exempted from the provisions of Section 274 (1) (g) in view of general
 circular issued by the Department of Company Affairs.
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with
 significant accounting policies and other notes thereon, 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 the 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 of the
 Company for the year ended on that date.
 
 ANNEXURE TO AUDITOR''S REPORT (Referred to in paragraph 3 of our report
 of even date to the members of JBF Industries Limited on the accounts
 for the year ended 31 st March, 2011)
 
 (i) In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets on the
 basis of available information.
 
 (b) As explained to us, all the fixed assets have been physically
 verified by the management in accordance with the programme of
 verification, which in our opinion is reasonable, considering the size
 of the Company and nature of its assets. No material discrepancies were
 noticed on such physical verification as compared with the available
 records.
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company has not made any substantial disposal of fixed
 assets during the year and the going concern status of the Company is
 not affected.
 
 (ii) In respect of its inventories:-
 
 (a) As explained to us, inventory has been physically verified during
 the year by the management at reasonable intervals.
 
 (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) In our opinion, and according to the information and explanations
 given to us, the Company has maintained proper records of its
 inventories and no material discrepancies were noticed on physical
 verification of inventories as compared to the book records.
 
 (iii) In respect of loans, secured or unsecured, granted or taken by
 the Company to / from companies, firms or other parties covered in the
 Register maintained under section 301 of the Companies Act, 1956: -
 
 (a) The Company has given loans to two subsidiaries. In respect of the
 said loans, the maximum amount outstanding at any time during the year
 was f. 238.02 crores and the year-end balance is 7 38.99 Crores
 
 (b) In our opinion and according to the information and explanation
 given to us, the rate of interest and other terms and conditions of
 such loans are not prima facie prejudicial to the interest of the
 Company.
 
 (c) As per the terms of the loans, neither the interest nor the
 principal amounts are due for recovery,
 
 (d) In respect of the said loans, the same are not due for repayment
 and therefore the question of overdue amounts does not arise.
 
 (e) The Company has not taken any loan during the year from companies,
 firms or other parties covered in the Register maintained under section
 301 of the Companies Act, 1956. Consequently, the requirements of sub
 clauses (f) and (g) of clause (iii) of paragraph 4 of the said 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 for the
 purchase of inventory, fixed assets and also for the sale of goods. The
 Company has not sold any services during the year. During the course of
 audit we have not observed any continuing failure to correct major
 weaknesses in such internal control system.
 
 (v) In respect of transactions entered in the register maintained in
 pursuance of Section 301 of the Companies Act, 1956:
 
 (a) To the best of our knowledge and belief and according to the
 information and explanations given to us, transactions that needed to
 be entered in the register have been so entered.
 
 (b) According to the information and explanations given to us, the
 transactions made during the year in pursuance of such contracts or
 arrangements exceeding value of Rupees five lacs for each party, have
 been made at prices which are prima facie reasonable as per information
 available with the Company.
 
 (vi> According to the information and explanations given to us, the
 Company has not accepted any deposit from the public. Therefore, the
 provisions of clause (vi) of paragraph 4 of the said Order are not
 applicable to the Company.
 
 (vii) In our opinion, the Company has an adequate internal audit system
 commensurate with the size and nature of its business.
 
 (viii) We have been informed by the management that the Central
 Government has prescribed the maintenance of Cost Records pursuant to
 clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956
 in respect of its manufacturing activities. We have broadly reviewed
 the accounts and records of the Company in this connection 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 and complete.
 
 (ix) (a) According to the records of the Company in respect of
 statutory and other dues, the Company has generally been regular in
 depositing undisputed statutory dues, including Provident Fund,
 Investor Education and Protection Fund, and Employees'' State Insurance,
 Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise
 Duty, Cess and any other material statutory dues as applicable with the
 appropriate authorities during the year. According to the information
 and explanations given to us, no undisputed amounts payable in respect
 of the aforesaid statutory dues were outstanding as at 31 st March,
 2011 for a period of more than six months from the date they became
 payable.
 
 Further, since the Central Government has till date-not prescribed the
 amount of cess payable under section 441A of the Companies Act, 1956,
 we are not in a position to comment upon the regularity or otherwise of
 the Company in depositing the same.
 
 (b) According to the information and explanations given to us, the
 disputed statutory dues aggregating to Rs. 9.06 Crores , that have not
 been deposited on account of matters pending before appropriate
 authorities, are as under:
 
 Name of the 
 statute       Nature of   Rs.in    Period to which      Forum where
               the dues    Crores     the amount         dispute is
                                       relates           pending
 
 Central 
 Excise        Excise Duty  0.00*     2005-06            Supreme
 Act,1944                                                Court
 
                            0.16*     2004-05            CESTAT
 
                            0.00*     2005-06            Commissioner
                                                         (Appeals)
 
 Service Tax 
 Act, 1994     Service Tax  1.45      2006-08            CESTAT
 
                            0.02      2005-08            Commissioner
                                                         (Appeals)
 
                            0.02      2006-07            Commissioner
                                                         (Appeals)
 
 Income Tax 
 Act, 1961     Income Tax   0.57      2004-05            Commissioner
                                                         (Appeals)
 
 Income Tax 
 Act, 1961     Income Tax   6.84      2007-08            Commissioner
                                                          (Appeals)
 
 Total                      9.06                                           
 
 (*) Net of amount Rs. 1.10 Crores deposited under protest
 
 (x) The Company does not have accumulated losses at the end of the
 financial year. It has not incurred any cash losses in the current
 financial year and in the immediately preceding financial year.
 
 (xi) Based on our audit procedures and accordingly to the information
 and explanations given to us by the management, we are of the opinion
 that the Company has not defaulted in the repayment of dues to
 financial institutions, banks and debenture holders.
 
 (xii) In our opinion and according to the explanations given to us and
 based on the information available, no loans and advances have been
 granted by the Company on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual
 benefit fund/society, hence the provisions of clause (xiii) of
 paragraph 4 of the said Order are not applicable to the Company.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of transactions
 and contracts in respect of dealing in shares and other securities and
 timely entries have been made therein. All shares and other investments
 have been held by the Company in its own name except certain
 investments which are made through portfolio manager and held by them
 in a fiduciary capacity on behalf of the Company.
 
 (xv) The Company has given guarantees and letter of credit in
 connection with the Credit facilities extended by banks to its
 subsidiary Company as mentioned in note 3 (b) (ii) and (iii) of
 Schedule R The Guarantees and letter of credit outstanding as at year
 end are for wholly owned subsidiary Companies, which according to the
 information and explanations given to us by the management, are not
 prime facie prejudicial to the interest of the Company.
 
 (xvi) To the best of our knowledge and belief and according to the
 information and explanations given to us, the term loans raised during
 the year and those, which were outstanding at the beginning of the
 year, were prima facie been applied for the purposes for which they
 were raised.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we are of
 the opinion that there are no funds raised on short term basis that
 have been utilized for long term investment.
 
 (xviii) During the year, the Company has not made any preferential
 allotment of shares to the parties and companies covered in the
 register maintained under section 301 of the Companies Act, 1956.
 
 (xix) Securities/Charges have been created in respect of secured
 debentures issued by the Company.
 
 (xx) The Company has not raised any money by way of Public issue during
 the year
 
 (xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the 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 CHATURVEDI & SHAH
 
 Chartered Accountants
 (Registration No.: I01720W)
 
 R. KORIA
 
 Partner
 
 Membership No. 35629
 
 Place: Mumbai
 Dated: 26th May 2011