1.  We have audited the attached Balance Sheet of Kothari Products
 Limited as at 31st March, 2011, Profit & Loss Account for the year
 ended on that date and the Cash Flow Statement for the year ended on
 that date annexed hereto, which are in agreement with the books of
 accounts. 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 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 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 (Auditors'' Report) Order, 2003 issued
 by the Central Government of India in terms of subsection (4A) of
 Section 227 of the Companies Act, 1956 and on the basis of such checks
 of the books and records of the Company as we considered appropriate
 and the information and explanations given to us during the course of
 our audit, we report that, in our opinion:-(i) (a) The Company is
 maintaining proper records showing full particulars, including
 quantitative details and situation of fixed assets.
 
 (b) According to the information and explanations given to us, these
 fixed assets have been physically verified by the management during the
 year and no material discrepancies were noticed on such verification.
 
 (c) The disposal of fixed assets has been done in the normal course of
 business and it has not affected the going concern.
 
 (ii) (a) The inventories have been physically verified during the year
 by the management, except for stocks lying with third parties, which
 have , however, been confirmed by them. In our opinion, the frequency
 of verification is reasonable.
 
 (b) The procedures of physical verification of stocks 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 and the
 discrepancies noticed on physical verification, which were not
 material, have been properly dealt with in the books of account.
 
 (iii) (a) The Company has given loans to its six subsidiary companies
 and two associate Companies. In respect of these loans the maximum
 amount outstanding during the year were Rs.20431 Lacs and year end
 balances were 15470 Lacs.
 
 (b) In our opinion and according to the information and explanations
 given to us, the rate of interest (other than interest free loans to
 its five wholly owned subsidiary Companies) and other terms &
 conditions of the loan given by the company, are not prima facie
 prejudicial to the interest of the Company.
 
 (c) The principal amounts are repayable on demand and there is no
 repayment schedule. The interest is payable on demand.
 
 (d) In respect of the said loans, the same are repayable on demand and
 therefore the question of overdue amounts does not arise. In respect of
 interest, wherever applicable, there are no overdue amounts.
 
 (e) The Company has taken interest free unsecured loan from one of its
 directors amounting to Rs.1890 Lacs. Except this 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.
 
 (f) The rate of interest and other terms and conditions of the loan
 taken are prima facie not prejudicial to the interest of the Company.
 
 (g) There is no stipulation as to the repayment of the loan. There has
 been no overdue interest.
 
 (iv) There is an adequate internal control system commensurate with the
 size of the company and the nature of its business, for the purchase of
 stocks and fixed assets, for the sale of goods and services. During the
 course of our audit, we have not observed any continuing failure to
 correct major weaknesses in internal control system.
 
 (v) (a) To the best of our knowledge and according to the information
 and explanations given to us, the contracts or arrangements that need
 to be entered into a register in pursuance of section 301 of the
 Companies Act, 1956 have been so entered;
 
 (b) Each of these transactions has been made 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.
 Therefore, reporting under clause 4(vi) of the Companies (Auditors''
 Report) Order, 2003 is not applicable to the Company.
 
 (vii) The Company has integrated Internal Control cum audit system
 which involves reasonable internal audit which is considered by us to
 be commensurate with size and nature of its business.
 
 (viii) The Company has not done any manufacturing activity during the
 year. Therefore, the maintenance of cost records as prescribed by the
 Central Government under clause (d) of sub-section (1) of section 209
 of the Companies Act, 1956 are not applicable to the Company.
 
 (ix) (a) The Company is regular in depositing undisputed statutory dues
 including Provident Fund, Investor Education and Protection Fund,
 Employees'' State Insurance, Income-tax, Sales tax / Value Added Tax,
 Wealth Tax, Service tax, Custom Duty, Cess and any other statutory dues
 with the appropriate authorities.
 
 (b) According to the information and explanations given to us, there
 are no undisputed amounts payable in respect of Income-tax, Wealth-tax,
 Service-tax, Sales-tax / Value Added Tax, Custom duty and Cess as at
 31st March, 2011 which were outstanding for a period of more than six
 months from the date they became payable.
 
 (c) According to the information & explanations given to us, there is
 no disputed amount payable in respect of Income-tax, Wealth-tax,
 Service-tax, Sales-tax / Value Added Tax, Custom duty and Cess as at
 31st March, 2011
 
 (x) The Company does not have any accumulated losses and it has not
 incurred cash losses during the financial year and immediately
 preceding financial year.
 
 (xi) As per information and explanations given by the management, in
 our opinion the Company has not defaulted in repayment of loan taken
 from financial institution or banks.
 
 (xii) The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 (xiii) The Company is not a Chit Fund or a Nidhi / Mutual Benefit Fund
 / Society. Therefore, the reporting under Clause 4(xiii) of the
 Companies (Auditors'' Report) Order, 2003 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
 reporting under clause 4(xiv) of the Companies (Auditors'' Report)
 Order, 2003 are not applicable to the company.
 
 (xv) The Company has given guarantees for loans taken by other body
 corporate from banks and financial institutions or other wise.
 According to the information and explanations given to us, we are of
 the opinion that the terms and conditions thereof are not prima facie
 prejudicial to the interest of the Company.
 
 (xvi) The Company has not taken any term loans during the year.
 
 (xvii)As per information and explanations given to us, funds raised for
 short term basis have not been used for long term investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 during the year.
 
 (xix) The Company has not issued any debentures during the year.
 
 (xx) The Company has not raised any money by public issues during the
 year.
 
 (xxi) To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the Company
 has been noticed or reported during the year.
 
 4.  Further to above, we report that:-i.  we have obtained all
 information and explanations which to the best of our knowledge and
 belief were necessary for the purpose of our audit.
 
 ii. in our opinion, proper books of accounts have been kept by the
 Company as required by the law, so far as appears from our examination
 of those books.
 
 iii. in our opinion, Balance Sheet; the Profit & 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.
 
 iv. based on 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 from being appointed
 as a director in terms of clause (g) of sub-section (1) of Section 274
 of the Companies Act, 1956.
 
 v.  in our opinion and to the best of our information and explanations
 given to us, the said accounts read with Significant Accounting
 Policies and Notes thereon, give the information required by the
 Companies Act, 1956 in the manner so required and give a true and fair
 view :-(a) in the case of the Balance Sheet, of the state of affairs of
 the Company as at 31st March, 2011.
 
 (b) in the case of Profit & Loss Account, of the Profit of the Company
 for the year ended on that date. and
 
 (c) in the case of Cash Flow Statement, of the Cash Flows for the year
 ended on that date.
 
                                               For MEHROTRA & MEHROTRA
 
                                                CHARTERED ACCOUNTANTS
 
 PLACE :KANPUR                                      (ANURAG TANDON)
 
 DATE :30th May, 2011                                  PARTNER
 
                                                 Membership No. 078862