Jyothy Laboratories

1.  We have audited the attached Balance Sheet of Jyothy Laboratories
 Limited (‘the Company’) as at March 31, 2009 and also the Profit and
 Loss account and the Cash Flow Statement for the nine months period
 (‘the period’) 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 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) 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, profit and loss account and cash flow statement
 dealt with by this report are in agreement with the books of account;
 
 iv. In our opinion, the balance sheet, profit and loss account and 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;
 
 v. On the basis of the written representations received from the
 directors, as on March 31, 2009, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2009 from being appointed as a director in terms of Clause
 (g) of sub-section (1) of Section 274 of the Companies Act, 1956;
 
 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 March 31, 2009;
 
 b) in the case of the profit and loss account, of the profit for the
 period ended on that date; and
 
 c) in the case of cash flow statement, of the cash flows for the period
 ended on that date.
 
 Annexure to the Auditors Report
 
 Annexure referred to in paragraph 3 of our report of even date Re:
 Jyothy Laboratories Limited (the Company)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All fixed assets have not been physically verified by the
 management during the period but there is a regular programme of
 verification which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. As informed, no
 material discrepancies were noticed on such verification.
 
 (c) There was no substantial disposal of fixed assets during the
 period.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the period.
 
 (b) 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) The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 (iii) (a) The Company has granted unsecured loan and advances to a
 subsidiary company covered in the register maintained under Section 301
 of the Companies Act, 1956. The maximum amount involved during the
 period was Rs. 375.00 lacs and the period end balance of loan and
 advances granted to such party was Rs. 210.40 lacs.
 
 (b) In our opinion and according to the information and explanations
 given to us, the rate of interest and other term and conditions for
 such loan are not prima facie prejudicial to the interest of the
 Company.
 
 (c) The loan granted along with interest is repayable on demand.  As
 informed, the Company has not demanded repayment of any such amount
 during the period, thus there has been no such default on the part of
 the party to whom the money has been lent.
 
 (d) There is no overdue amount of loan granted to the subsidiary
 company listed in the register maintained under Section 301 of the
 Companies Act, 1956.
 
 (e) As informed, 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 Companies Act, 1956.
 Accordingly, provisions of paragraphs 4(iii)(f) and (g) of the
 Companies (Auditor’s Report) Order, 2003 (as amended) are not
 applicable to the Company.
 
 (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 and fixed assets and for the sale of goods.
 During the course of our audit, no major weakness has been noticed in
 the internal control system in respect of these areas.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in Section 301 of the Companies Act, 1956,
 that need to be entered into the register maintained under Section 301
 have been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five lakhs have been entered
 into during the financial year at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 (vi) The Company has not accepted any deposits from the public.
 
 (vii) In our opinion, 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 pursuant to the rules made by the Central Government for the
 maintenance of cost records under Section 209(1)(d) of the Companies
 Act, 1956 for the manufacture of soaps and detergent, and are of the
 opinion that prima facie, the prescribed accounts and records have been
 made and maintained.
 
 (ix) (a) The Company is regular in depositing with appropriate
 authorities undisputed statutory dues including provident fund, income
 tax, wealth tax, service tax, customs duty, excise duty, cess and
 generally regular in employees’ state insurance and sales tax
 applicable to it. The provision of investor education and protection
 fund is currently not applicable to the Company.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, employees’
 state insurance, income tax, wealth tax, service tax, sales tax,
 customs duty, excise duty, cess and other undisputed statutory dues
 were outstanding on March 31, 2009, at the period end, for a period of
 more than six months from the date they became payable.
 
 (c) According to the information and explanation given to us, there are
 no dues of income tax, wealth tax, customs duty and cess which have not
 been deposited on account of any dispute. According to the records of
 the Company, the dues outstanding of sales tax, service tax, excise
 duty and cess on account of any dispute, are as follows:
 
                                                     
                                           Period to which
 Name of Statute (Nature of Dues)          the amount
                                           Relates
 
 Sales Tax (Tax/ Penalty/ Interest)        2001-02 to
                                           2004-05
 
                                           2005-06 to
                                           2006-07
                                           2008-09
 
 Sub-total
 
 The Central Excise Act, 1944              1999-2000 to
 (Tax/ Penalty/Interest)                   2001-02
 
                                           2004-05 to
                                           2006-07
 Sub-total
 
 Service Tax Act, 1994                     2007-08
 Provident Fund                            2007-08
 
 Employee State Insurance (Penalty)        2002 to 2007
 Total
 
                                                    Rs. in lacs
                       Forum where dispute is pending
                       Appellate
 Commissionerate       authorities &       High Court     Total Amount
                       Tribunal
 
 15.50                 31.37                  -             46.87
 212.68                  -                  128.02         340.70
  56.15                  -                    -             56.15
 284.33                31.37                128.02         443.72
   -                   11.88                  -             11.88   
   6.94                 8.39                  -             15.33
   6.94                20.27                  -             27.21
   3.09                  -                    -              3.09
   4.62                  -                    -              4.62
   0.63                                                      0.63
 299.61                 51.64                128.02        479.27
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a bank. The Company
 has not taken any loan from the financial institutions. The Company has
 not issued any debentures.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances 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. Therefore, the provisions of Clause
 4(xiii) of the Companies (Auditor’s Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of Clause 4(xiv) of the Companies (Auditor’s Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 (xvi) The Company did not have any term loans outstanding during the
 period.
 
 (xvii) 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.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties or companies covered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 (xix) The Company did not have any outstanding debentures during the
 period.
 
 (xx) The Company has not raised money through public issues during the
 period.
 
 (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 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 S.R. Batliboi & Associates
 Chartered Accountants
 
 per Sudhir Soni
 Partner
 Membership No.: 41870
 
 Place: Mumbai
 Date: June 5, 2009