1.  We have audited the attached Balance Sheet of Mahaan Foods Limited
 as at 31st March 2011, the Profit and Loss Account and also the Cash
 Flow Statement 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 misstatement. An audit
 includes examining, on a test check basis, evidence supporting the
 amount and disclosures in 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 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 the
 matters specified in paragraphs 4 and 5 of the said order.
 
 4.  Further to our comments in the Annexure referred in paragraph
 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 it appears from our examination of
 those books and proper returns adequate for the purpose of our audit
 have been received from the branches not visited by us.
 
 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 in sub section (3C) of section 211 of the Companies
 Act, 1956, subject to note no. 1(o) of Schedule O regarding consignment
 sales taken as net of expenses, which is not in conformity by AS 9.
 
 v. On the basis of written representations received from the Directors
 and taken on record 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.
 
 vi. Attention is invited to note No. 6 stating that some of balance of
 debtors, creditors and loans and advances are subject to confirmation
 from respective parties. We have relied on the representations of the
 management that no significant impact is expected on the working
 results of the Company on this account.
 
 vii. Subject to above, 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 31.03.2011,
 
 b.  in the case of the Profit and Loss Account, of the Profit for the
 year ended on that date and
 
 c.  in the case of the Cash Flow Statement, of the Cash Flows of the
 Company for the year ended on that date.
 
 Annexure to Auditors'' Report dated 01.12.2011 on accounts for the year
 ended on 31.03.2011
 
 1.  a.  The Company has maintained list of fixed assets acquired by it.
 However those are required to be updated substantially with regard to 
 quantitative details/ location, identification etc.
 
 b.  All the assets have not been physically verified by the management
 during the year 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. We are also informed that no material
 discrepancies were noticed on such verification.
 
 c.  In our opinion and according to the information and explanations
 given to us, the Company has not disposed off a substantial part of the
 fixed assets during the year.
 
 2.  a.  The inventories have been physically verified during the year
 by the management. In our opinion, the frequency of verification is 
 reasonable.
 
 b.  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.  The Company is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 3.  a.  The Company had not granted any loan, secured or unsecured to
 companies, firms and other parties covered in the register maintained 
 under section 301 of the Companies Act, 1956. For this purpose, we have
 relied on the representations of the management that Rs.2,45,63,452 due
 from three companies and two parties covered in the register maintained
 under section 301 of the Companies Act, 1956 are advances and not in the
 nature of loans.
 
 b.  In view of above, sub-clause (b), (c), and (d) of clause 4(iii) of
 the order are not applicable.
 
 c.  The Company had taken interest free unsecured loan from one company
 covered in the register maintained under section 301 of the Companies
 Act, 1956. The maximum amount involved during the year was Rs.49,000
 and the year-end balance of loans taken from such parties is Rs.
 49,000. For this purpose, we have relied on the representations of the
 management that Rs. 1,34,26,503 due to a firm and two parties covered
 in the register maintained under section 301 of the Companies Act, 1956
 are advances received and not in the nature of loans
 
 d.  In our opinion, other terms and conditions on which such loan have
 been taken by the company listed in the register maintained under
 section 301 of the Companies Act, 1956 are not, prima facie,
 prejudicial to the interest of the company.
 
 e.  Since the aforesaid loans taken by the company are repayable on
 demand and there is no repayment schedule, the question of repayment
 being regular does not arise.
 
 4.  In our opinion and according to the information and explanations
 given to us, having regard to the explanation that certain items
 purchased are of special nature and/or customized to the requirements
 of the company and as such comparative quotations are not available,
 there are adequate internal control system commensurate with the size
 of the Company and the nature of its business with regard to the
 purchase of inventory, fixed assets and with regard to the sale of
 goods and services. The system of getting independent confirmation of
 balance requires to be given more emphasis. Further, on the basis of
 our examination and according to the information and explanations given
 to us, we have neither come across nor have been informed of any
 instance of major weaknesses in the aforesaid internal control system
 of the company.
 
 5. a.  We were informed that the company has entered the particulars of
 all contracts or arrangements that need to be entered into the register 
 maintained u/s 301 of the Companies Act, 1956.
 
 b. In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements that need to be entered in the register maintained under
 Section 301 of the Companies Act, 1956 and exceeding the value of rupee
 five lacs in respect of each party during the year have been made at
 prices which appear reasonable considering the cost and benefits
 available, payments made/received and other factors. However, it is
 explained that purchase of certain goods are of special and/or
 customized to the requirements of the Company, suitable alternate
 source do not exist for obtaining comparable quotations.
 
 6.  The Company has not accepted any deposits from the public within
 the meaning of Section 58A and 58AA of the Act and the rules framed
 there under.
 
 7 The Company has no Internal Audit system in place commensurate with
 its size and nature of its business during the year under audit.
 
 8 The maintenance of cost records has not been prescribed by the
 Central Government under clause (d) of sub-section (1) of section 209
 of the Companies Act, 1956 for the products of the company.
 
 9 a.  The Company is regular in depositing with appropriate authorities
 Undisputed statutory dues including provident fund, Employees'' State 
 Insurance, Income Tax, Sales Tax, Service Tax, Custom Duty, Excise 
 Duty and other material statutory dues applicable to it barring delays 
 in certain  months.
 
 b. According to the information and explanations given to us, following
 undisputed amounts were in arrears, as at March 31, 2011 for a period
 of more than six months from the date they become payable
 
 Name of Statute          Nature of      Amount        Period to which
                          the            (Rs. In       the amount
                          Dues           Lacs)          relates
 
 Himachal Pradesh Value
 Added Tax Act            Value          48.22 1      01.01.2007 to
 2005                     Added                       30.11.2008
                          Tax
 
 
 Income tax Act 1961      Fringe          3.88        01.04.2008 to
                          Benefit                     31.03.2009
                          Tax
 
 Income tax Act 1961      Fringe          1.04        01.04.2006 to
                          Benefit                     31.03.2007
                          Tax_
 
 The Haryana Murrah
 Buffalo and Milch        Milk            40.17       01.04.2008 to
 Animal Breed
 (Preservation and        Cess                        31.03.2010
 Development of Animal
 Husbandry and
 Dairy Development
 Sector Act 2
 
 c. According to the information and explanations given to us, the
 statutory dues that have not been deposited by the Company on account
 of matters pending before appropriate authorities are as under:
 
 Name of    Nature of the  Amount    Period to    Forum where
 Statute    Dues           (Rs. In   which the    dispute is pending
                            Lacs)    amount
                                     relates  
 
 Delhi
 Sales      Sales Tax      40.0       2003-04      Dy. Commissioner
 Tax Act
 1975       demand                                (Appeals), New
                                                   Delhi 
                                                  (Demand order has
                                                   been 
                                                   stayed by Hon''ble
                                                   Dy.
                                                   Commissioner)
  
 Punjab
 Value       Penalty      2.91        2005-06      Asstt. Excise &
                                                   Taxation
 Added Tax                                         Commissioner cum
 Act 2005                                          Deputy Director
                                                   (Inv.),
                                                   Patiala
 
 Rajasthan   Penalty      8.49        2008-09      Rajasthan Tax
                                                   Board,
 Value Added                                       Ajmer
 Tax Act
 2003
 
 Orissa
 value       Value
             added        0.46      01-04-2005 to  Joint Commissioner
                                                   of
 Added
 Tax         tax                    30-11-2008     Sales tax,
                                                   Bhubaneswar
 Act,
 2004        Penalty      0.91       
 
 Orissa
 entry       Entry tax    1.77      01-04-2005 to  Joint Commissioner
                                                   of
 Tax Act,
 19991       Penalty      3.54      30-11-2008     Sales tax, Bhubaneswar
 
 10 The Company does not have accumulated losses at the end of the
 financial year 31 March, 2011. Further, the Company has not incurred
 any cash losses during the financial year covered by our audit and 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 any Financial Institution or Bank or to
 debenture holders.
 
 12 As the Company has not granted any loans and advances on the basis
 of security by way of pledge of shares, debentures and other
 securities, paragraph 4(xii) of the order is not applicable.
 
 13 As the Company is not a chit fund / nidhi / mutual benefit funds /
 society to which the provisions of special statute relating to chit
 fund are applicable, paragraph 4 (xiii) of the order is not applicable.
 
 14 As the Company is not dealing or trading in shares, securities,
 debentures and other investments, paragraph 4(xiv) of the order is not
 applicable.
 
 15 As the Company has not given any guarantee for loans taken by others
 from banks or financial institutions, paragraph 4(xv) of the order is
 not applicable.
 
 16 In our opinion and according to the information and explanations
 given to us, the term loans taken during the year have been applied for
 the purposes for which they were obtained.
 
 17 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 fund raised on short-term basis have been used for long-term
 investments.
 
 18 The Company has not made any preferential allotment of shares during
 the year under audit.
 
 19 The Company has not issued any debentures during the year under
 audit.
 
 20 The Company has not raised any money by public Issue during the
 year.
 
 21 According to the information and explanations given to us, no fraud
 on or by the company has been noticed or reported during the course of
 our audit.
 
                                    For DD NAGPAL & COMPANY
  
                                   Chartered Accountants 
 
                               (Firm Registration No. 006413N)
 
                                                    Sd/-
 
                                                (D D NAGPAL)
 
                                                 Partner
 
                                       Membership No. 085366
 Place: New Delhi
 
 Dated : 1stDecember, 2011