We have audited the attached Balance Sheet of KOTHARI FERMENTATION AND
 BIOCHEM LIMITED as at 31st March, 2011 and also the Profit & Loss
 Account and the Cash Flow Statement of the company for the year ended
 on that date annexed thereto. These financial statements are the
 responsibilities of company''s management. Our responsibility is to
 express an opinion on these financial statements based on our audit.
 
 We 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 the 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 and further report that:
 
 1.  As required by the Companies (Auditor''s Report) (Amendment) Order
 2004 issued by the Central Government of India in terms of Section 227
 (4A) of the Companies Act.,1956, we enclose in the annexure a statement
 on matters specified in paragraphs 4 and 5 of said order.
 
 2.  Further to our comments in the annexure referred to in paragraph 1
 above, we state 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 of head office, works and branch offices;
 
 c.  The Balance Sheet, Profit & Loss Account and the Cash Flow
 Statement referred to in this report are in agreement with the books of
 account.
 
 d.  The Balance Sheet, Profit and Loss Account and the Cash Flow
 Statement of the Company, comply with the Accounting Standards referred
 to in Sub Section (3C) of Section 211 of the Companies Act, 1956, in so
 far as they are applicable to the company except non-recognition of
 Deferred Tax Assets/Libilities (AS-22) amount of which has not been
 calculated.
 
 e.  On the basis of the written representations received from the
 directors and taken on record by the Board of Directors, we report that
 none of the said directors are disqualified as on 31st March 2011 from
 being appointed as directors in terms of clause (g) of sub-section (1)
 of Section 274 of the Companies Act, 1956.
 
 f.  In our opinion and to the best of our information and according to
 the explanations given to us, the said Balance Sheet, Profit & Loss
 Account and the Cash Flow Statement, read together with the Notes and
 significant accounting policies 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 the Profit & Loss Account of the Profit of the
 Company for the year ended on that date.
 
 III.  In case of the Cash Flow Statement, of the cash flow for the year
 ended on that date.
 
 ANNEXURE REFERRED TO IN PARA-1 OF THE AUDITORS'' REPORT TO THE MEMBERS
 OF KOTHARI FERMENTATION AND BIOCHEM LIMITED ON THE ACCOUNTS FOR THE
 YEAR ENDED 31.03.2011.
 
 On the basis of such checks as we considered appropriate and in terms
 of the information and explanations given to us, we state that:-
 
 01.  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, the fixed assets have been physically verified
 by the management during the year, which in our opinion is reasonable,
 having regard to the size of the company and nature of its assets. No
 material discrepancies were noticed on such physical verification.
 
 c) In our opinion, the company has not disposed of substantial part of
 fixed assets during the year and the going concern status of the
 company is not affected.
 
 02.  In respect of inventories
 
 a) As explained to us inventories have been physically verified by the
 management at regular intervals during the year.
 
 b) In our opinion, 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) In our opinion, the company is maintaining proper records of
 inventory. We have been explained that discrepancies noticed on
 physical verification as compared to book records were not material and
 the same have been properly dealt with in the books of account
 
 03.  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.  During the year, the company has granted unsecured loan to three
 parties covered in the register maintained u/s 301 of the Companies
 Act, 1956 and the same was received back during the year. The amount
 involved was Rs. 529.24 lacs how ever, during the year no interest has
 been charged on such accounts.
 
 b.  During the year, the company has taken unsecured loan from three
 parties covered in the register maintained u/s 301 of the Companies
 Act, 1956 and repaid back the same during the year. The amount involved
 was Rs.126.05 lacs and no interest has been paid during the year on
 such account.
 
 04.  In our opinion and according to the information and explanations
 given to us, there is adequate internal control system commensurate
 with the size of the company and the nature of its business for the
 purchase of inventories and fixed assets and sale of goods. During the
 course of our audit, we have not observed any major weaknesses in
 internal control system.
 
 05.  In respect of transactions covered under Section 301 of the
 Companies Act, 1956:
 
 a.  In our opinion and according to the information and explanations
 given to us, the transactions that need to be entered in the register
 in pursuance to Section 301 of the Companies Act, 1956 have been so
 entered.
 
 b.  In our opinion and according to the information and explanations
 given to us, the transaction, if any, made in pursuance of contract or
 arrangements entered in the registers maintained under Section 301 and
 exceeding the value of rupees five lacs in respect of any party during
 the year have been made at prices which are reasonable having regard to
 prevailing market price at the relevant time.
 
 06.  The company has not accepted any deposits from the public thus the
 directives issued by the Reserve Bank of India and the provisions of
 section 58A, 58AA or any other relevant provisions of the Act and the
 rules framed there under are not applicable.
 
 07.  In our opinion, the internal audit system of the Company is
 commensurate with its size and nature of its business.
 
 08.  According to the information and explanations given to us the
 Central Government has not prescribed the maintenance of cost
 accounting records under section 209(1) (d) of The Companies Act 1956.
 
 09.  In respect of statutory dues:
 
 a. According to the records of the company, the company is generally
 regular in depositing the undisputed statutory dues with appropriate
 authorities; however there were few cases of delays in deposit of
 provident fund, ESI contributions and tax deducted at source.
 
 b. According to the information and explanations given to us and as per
 the books and records examined by us, there are no dues of income tax,
 sales tax, service tax, wealth tax, excise duty, custom duty, cess,
 etc., which have not been deposited on account of any dispute, except
 following:
 
 Statue           Nature            Amount involved  Period  Forum where
 
                                                             dispute is 
                                                             pending
 
 Central Excise 
 Act            Demand of duty 
                due to              Rs. 2.52 Lacs    1994-95 CESTAT, New
                                                             Delhi
 
                non-allowability 
                of expenses
 
 Service Tax    Service Tax 
                Demand &            Rs.10.68 Lacs     March, Commissioner
 
 (Finance Act, 
 1994)          Penalty under
                Sec 76 of                             2006 to(Appeals) 
                                                              Central
                Finance Act                           March,  Excise, 
                                                              Noida
                                                      2008
 
 10.  The company has no accumulated losses as at 31st March, 2011. The
 company has not incurred any cash losses in the financial year under
 report and in the immediately preceding financial year.
 
 11.  According to the records of the company examined by us and the
 information and explanations given to us, the company has not defaulted
 in repayment of dues to the financial institutions or banks. The
 company has no debenture holders.
 
 12.  In our opinion and according to the information and explanation
 given to us, 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.
 
 13.  In our opinion, the Company is not a chit fund or a nidhi / mutual
 benefit fund/society. Accordingly clause (xiii) of para no.  4 of the
 Companies (Auditor''s Report) (amended) Order, 2004 is not applicable.
 
 14.  According to the information & explanation given to us the company
 is not dealing or trading in shares, securities, debentures and other
 investments. Accordingly, clause (xiv) of para no.4 of the Order is not
 applicable.
 
 15.  According to the information & explanation given to us and on our
 overall examination of balance sheet of the company we are of the
 opinion that the company has not given any guarantee for loans taken by
 others from bank or financial institutions.
 
 16.  In our opinion and according to the information and explanations
 given to us, on an overall basis, the term loan have been applied for
 the purposes for which they were raised.
 
 17.  According to the information and explanation given to us and on
 our overall examination of the balance sheet of the company, we are of
 the opinion that no funds raised on short term basis have been used for
 long term purposes or vice versa.
 
 18.  During the year, the Company has not made any preferential
 allotment of shares.
 
 19.  The company has not issued any debentures during the year.
 
 20.  The company has not made any public issue during the year.
 
 21.  During the course of our examination of the books of account
 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.
 
                                          For NAHATA JAIN & ASSOCIATES
 
                                                 Chartered Accountants
 
                                                    Regn. No. 016351-N
 
                                                        (ANIL K. JAIN)
 
                                                 Partner, M. No.93912
 
 Place : New Delhi
 
 Date  : 12th August, 2011