We have audited the attached Balance Sheet of MALU PAPER MILLS LIMITED
 as at 31st March 2012 and also the Statement of Profit & Loss 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.
 
 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.
 
 As required by the Companies (Auditors) Report Order, 2003 read with
 the Amendment Order, 2004 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 & 5 of the said order.
 
 Further to our comments in the Annexure referred above, we report that:
 
 1) 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;
 
 2) In our opinion, proper books of accounts as required by law have
 been kept by the company so far as it appears from our examination of
 the books;
 
 3) The Balance Sheet and the Profit & Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the Books of
 Accounts;
 
 4) In our opinion, the Balance sheet and the Statement of Profit 8s
 Loss 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.
 
 5) On the basis of written representations received from the Directors,
 as on 31st March, 2012 taken on record by the Board of Directors we
 report that none of the Directors are disqualified as on 31st March,
 2012 from being appointed as a Director in terms of Clause (g) of
 subsection (1) of section 274 of the Companies Act, 1956.
 
 6) 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;
 
 i) In the case of the Balance Sheet of the State of affairs of the
 Company as at 31st March, 2012 and
 
 ii) In the case of the Statement of Profit 8s Loss of the Loss of the
 Company for the year ended on that date.
 
 iii) In the case of Cash Flow Statement of the Cash Flow for the year
 ended on that date.
 
 ANNEXURE OF THE AUDITIOR''S REPORT (As referred to in Paragraph 3 of
 our report of Even-date)
 
 (i) a) The Company has generally maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 b) The management has physically verified all its fixed assets at
 reasonable intervals and no material discrepancies were noticed on such
 physical verification.
 
 c) The Company has not disposed off any substantial part of its fixed
 assets so as to affect its going concern status.
 
 (ii) a) As per the information furnished, the inventories have been
 physically verified by the management at reasonable intervals during
 the year.
 
 b) In our opinion and according to the information and explanations
 given to us 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) In our opinion, the company is maintaining proper records of
 inventory. The discrepancies noticed on physical verification of
 inventory as compared to book records were not material and have been
 properly dealt with in the books of account.
 
 (iii) a) In our opinion and according to the information and
 explanations given to us, the company has not granted any secured or
 unsecured loans to companies, firms or other parties covered in the
 register maintained u/s 301 of Companies Act, 1956. Hence the clause
 iii (a), (b), (c) and (d) of the order are not applicable.
 
 e) The company has taken demand loans from companies, firms or other
 parties covered in the register maintained u/s 301 of Companies Act,
 1956. The maximum amount involved during the year was Rs.2735.05 lacs
 and yearend balance of loans taken from such parties was Rs.  2735.05
 lacs.
 
 f) In our opinion, the rate of interest and other terms and conditions
 on which loans have been taken from companies, firms and other parties
 listed in the register maintained under section 301 of the Companies
 Act, 1956 are not prima facie, prejudicial to the interest of the
 company.
 
 g) In our opinion and as per the information and explanations given to
 us, the company is regular in repaying the principal amounts as
 stipulated and has been regular in the payment of interest.
 
 (iv) In our opinion and according to the information and explanation
 given to us, there is generally an adequate internal control system
 commensurate with the size of the company and the nature of its
 business for purchase of inventory and fixed assets and for the sale of
 goods and services. During the course of our audit no major weakness
 has been noticed in the internal control system.
 
 (v) In respect of contracts or arrangements to be 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, there were no particulars of
 contracts or arrangements referred to in section 301 of the Act have
 been entered in the register required to be maintained under that
 section
 
 (vi) According to the information and explanations given to us, the
 Company has not accepted deposits in terms of provisions of Sections
 58A and 58AA or any other relevant provisions of the Companies Act,
 1956.
 
 (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 books of accounts maintained by the
 company pursuant to the order made by the Central Government for
 maintenance of cost records under section 209(l)(d) of the Companies
 Act, 1956 and are of the opinion that prima facie, the prescribed
 accounts and records have been maintained.
 
 (ix) a) According to the information and explanations given to us and
 the
 
 records examined by us, the company is regular in depositing undisputed
 statutory dues including Provident Fund, Income Tax, Sales Tax, Service
 tax, Customs duty, Excise duty, Cess and any other statutory dues
 wherever applicable with the appropriate authorities.  According to the
 information and explanations given to us, no undisputed arrears of
 statutory dues were outstanding as at 31st March, 2012 for a period of
 more than six months from the date they became payable.
 
 b) According to the records of the company there are statutory dues,
 which are outstanding on account of certain disputes at the end of the
 year.
  
                                          Amount 
                          Nature of      (Rs.in    Assessment Forum Where 
 Name of Statute                                              dispute is
                          the Dues        Lacs)    Years      pending
 
 Central Excise           Excise Duty     14.49    2002-03    Tribunal 
                                                              Act.
 
                                                              Asstt.
 
 Central Excise                                               Commissi
                                                              oner of
                          Excise Duty     2.63    2003-04   
 Act.                                                         CEST
                                                             (Appeal)
 
                                                              Asstt.
 Central Excise                                               Commiss
                                                              ioner of
                          Excise Duty     4.33    2004-05
 Act.                                                         CEST
                                                             (Appeal)
 
                                                              Asstt.
 Central Excise                                               Commiss
                                                              ioner of
                          Excise Duty    3.79    2004-05
 Act.                                                         CEST
                                                             (Appeal)
 
 
 
 (x) The company has registered for a period of not less than five years
 and it has accumulated losses at the end of the financial year not more
 than fifty percent of its net worth. The company has also incurred cash
 loss of Rs.2315.00 Lacs in the financial year however the company has
 not incurred any cash loss in the immediate preceding financial year.
 
 (xi) During the financial year all the credit facilities utilized from
 banks are restructured under the Corporate Debts Restructure (CDR)
 mechanism and 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 institutions or banks.
 The company does not have any borrowings by way of debentures.
 
 (xii) The company has not granted any loans and advances on the basis
 of security by way of pledge of shares, debentures and other
 securities.
 
 (xiii) The provisions of any special statute applicable to chit funds/
 nidhi / mutual benefits funds/ society do not apply to the company.
 
 (xiv) In our opinion, the company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 (xv) According to the information and explanations given to us, the
 company has not given any guarantee for loans taken by its subsidiaries
 and associates from banks/ financial institutions.
 
 (xvi) In our opinion, term loans have been applied for the purpose for
 which they have been raised.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet to 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 has not issued any debentures.
 
 (xx) The Company has not raised any money through a public issue during
 the year.
 
 (xxi) During the course of our examination of the books and records of
 the company, 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 DEMBLE RAMANI & CO.
 
                                              Chartered Accountants
 
                                                      (ASHOK RAMANI)
 
 Place : NAGPUR                                             Partner
 
 Date : 03.09.2012                             Membership No. 30537
 
                                      Firm Registration No. 102259W