1.  We have audited the attached Balance Sheet of Jindal Cotex Ltd. as
 at 31st March 2011 and also the profit & Loss Account and the cash fl
 ow 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. These standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the fi
 nancial statements are free from 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.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 {as
 amended by the Companies (Auditors'' 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 and on the basis of such
 checks as are considered appropriate and according to information and
 explanation given to us, we give in the annexure a statement on the
 matters specifi ed in paragraphs 4 and 5 of the said Order, to the
 extent to which it is applicable to the Company.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3,
 we report as follows :- 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 accounts, as required by law, have
 been kept by the company so far as appears from our examination of the
 books;
 
 c) The Balance sheet and the profit & Loss Account dealt with by this
 report are in agreement with the Books of Account.
 
 d) In our opinion, the Balance Sheet and the profit & Loss Account
 dealt with by this report are in compliance with the Accounting
 Standards referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956 to the extent applicable.
 
 e) On the basis of written representations received from the directors
 as on 31.03.2011 and taken on record by the Board of Directors, we
 report that none of the directors of the company is disqualifi ed as on
 31.03.2011 from being appointed as a Director of the company in terms
 of clause (g) of sub-section (1) of section 274 of the Companies Act,
 1956.
 
 5 In our opinion and to the best of our information and according to
 the explanations given to us, the said Accounts, read together with the
 schedules and Notes thereon, give the information required by the
 Companies Act, 1956 in the manner so required and give a true & fair
 view in conformity with the accounting principles generally accepted in
 India :
 
 I) In case of the Balance Sheet, of the state of Affairs of the Company
 as at 31st March, 2011 and :
 
 II) In case of the profit and Loss Account, of the profit of the
 Company for the year ended on that date :
 
 III) In case of the cash fl ow statement, of the cash flow of the
 Company for the year ended on that date :
 
 ANNEXURE TO THE AUDITORS'' REPORT
 
 (Referred to in paragraph (3) of our Report of even date on the
 Accounts of Jindal Cotex Ltd. for the Year ended as on 31st March,
 2011)
 
 On the basis of such checks as we considered appropriate and according
 to the information and explanations given to us during the course of
 audit, we state that:- 1.  
 
 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 have been physically verifi ed
 by the management at reasonable intervals during the year. We are
 informed that no material discrepancies have been noticed by the
 management on such verifi cation.
 
 c) According to the information and explanations given to us, the
 Company has not disposed off substantial part of its fixed assets
 during the year and the going concern status of the Company is not
 affected.
 
 2.  a) According to the information and explanations given to us the
 Physical verifi cation of fi nished goods, stores & spares parts and
 Raw Materials was conducted by the Management where ever practicable at
 reasonable intervals.
 
 b) In our opinion and according to the information and explanation
 given to us, the procedure of physical verifi cation of inventories
 followed by the management is reasonable and adequate in relation to
 the size of the company and the nature of its business.
 
 c) The company is maintaining proper records of inventory. As explained
 to us, no material discrepancies were noticed on physical verifi cation
 of inventory as compared to the book records.
 
 3.  a) The company has granted unsecured loans to two companies, fi rms
 or other parties listed in the register maintained u/s 301 of the
 Companies Act, 1956. The amount outstanding at the close of the year is
 Rs 1454.21 lac.
 
 b) According to the information and explanation given to us, the terms
 and conditions of loan are prima facie not prejudicial to the interests
 of the company and it has been granted interest free as per the objects
 of the issue and the payment of principal amount is also regular.
 
 c) The company has taken unsecured loans from 06 person covered in the
 register maintained u/s 301 of the companies Act, 1956. The amount
 involved in the transaction is Rs 1314.92 Lacs. The amount payable at
 the close of the year is Rs 1376.06 lacs.
 
 d) According to the information and explanation given to us, the rate
 of interest and other terms and conditions of the loans are prima facie
 not prejudicial to the interests of the company and the payment of
 principal amount and interest are also regular.
 
 4.  In our opinion and according to the information and explanation
 given to us, there are adequate internal control procedures
 commensurate with the size of the company and the nature of its
 business with regard to the purchase of inventory, fixed assets and
 sale of goods. During the course of our audit, we have not observed any
 continuing failure to correct major weaknesses in internal control
 procedures.
 
 5.  In respect of contracts or arrangements entered in the register
 maintained in pursuance of section 301 of the Companies Act, 1956, to
 the best of our knowledge and belief and according to the information
 and explanations given to us :
 
 a.  The particulars of the contracts or arrangements referred to in
 section 301 needed to be entered into the register, maintained under
 the said section have been so entered.
 
 b.  In our opinion and having regard to our comments in paragraph
 above, the transactions exceeding the value of Rs. 5.00 Lacs in respect
 of any parties during the current year have been made at the prices
 which are prima facie reasonable having regard to prevailing market
 prices at the relevant time where such prices are available.
 
 6.  In our opinion and according to the information and explanation
 given to us, the company has not accepted any deposit pursuant to the
 provisions of section 58-A of the Companies Act, 1956.
 
 7.  In our opinion the company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the books of accounts maintained by the
 company pursuant to the order made by the Central Government for the
 maintenance of cost records under section 209(1) (d) of the companies
 act, 1956 as prescribed by the central government and are of the
 opinion that, prima facie, the prescribed accounts and records have
 been made and maintained. However we have not conducted detailed
 examination to check its accuracy and completeness.
 
 9.  In respect of statutory dues:
 
 a.  According to the information and explanations given to us, and as
 per the records of the company, we are of the opinion that the company
 has been regular in depositing undisputed statutory dues including
 Provident Fund, Investor Education and Protection Fund, Employees state
 Insurance, Income Tax, Sale Tax, Wealth Tax, Custom Duty, Cess, Service
 Tax, and any other statutory dues if any applicable with the
 appropriate authorities.
 
 b.  According to the information & explanations given to us, and as per
 the records of the company, the company has not deposited disputed
 statutory dues on account of matters pending before the appellate
 authorities in respect of sales tax demand of Rs 134.14 lacs (previous
 year 104.36 lacs) raised by Sales Tax Authorities under Punjab Vat Act
 2005 and VAT exemption of Rs 1245.52 lacs (utilized Rs 417.29 lac up to
 31.03.11) on the basis of eligibility certificate issued by District
 Industries centre, which is disputed by concerned Sales tax Authority
 under Punjab general Sales tax 1948 & Punjab Vat act 2005.
 
 10.  The company has no accumulated losses and has not incurred any
 cash loss during the current financial year under audit and in the
 immediately preceding financial year.
 
 11.  In our opinion and according to the information and explanations
 given to us, the company has not defaulted in repayment of dues to
 bank, financial institutions, or 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 a manufacturing company and therefore, the
 provisions of Clause 4(xiii) of the Companies (Auditor''s Report) Order,
 2003 are not applicable to the Company.
 
 14.  According to the information and explanations given to us, the
 Company has not dealt or traded in shares, securities, debentures and
 other investments. Therefore, the provisions of Clause 4(xiv) of the
 Companies (Auditor''s Report) Order, 2003 are not applicable to the
 Company.
 
 15.  According to the information and explanations given to us, the
 Company has given Corporate guarantees of Rs 138.00 cr for loans taken
 by its subsidiaries from banks and financial institutions and the
 terms and conditions where of in our opinion are not prima-facie
 prejudicial to the interest of the company.
 
 16.  In our opinion and according to the information and explanations
 given to us, the Term Loans have been applied for the purpose for which
 they were raised.
 
 17.  In our opinion and according to the information and explanations
 given to us and on an overall examination of the balance sheet of the
 company, we report that no funds raised on short-term basis have been
 used for long-term investment.
 
 18.  According to the information and explanations given to us, the
 company has not made any preferential allotment of shares during the
 current year to parties and companies covered in the Register
 maintained under Section 301 of the Companies Act, 1956.
 
 19.  As per information and explanation given to us no debentures have
 been issued by the company.
 
 20.  We have verified that the end use of the money raised by way of
 public issue is as disclosed in the notes to the Financial statements.
 
 21.  According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 period covered by our audit.
 
                                           FOR AGGARWAL GARG & CO.
 
                                            CHARTERED ACCOUNTANTS
 
                                        Firm Regn. No. : 004745N
 
                                              (PAWAN KUMAR GARG) 
 Date : 28.07.2011                                      PARTNER
 
 Place : Ludhiana Membership No. 083139