1.  We have audited the attached Balance Sheet of MANGALAM DRUGS &
 ORGANICS LIMITED as at 31st March, 2011, the Profit and Loss Account
 and the Cash Flow Statement of the Company 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 standard
 generally accepted in India. These Standard require that we plan and
 perform the audit to obtain reasonable assurance 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.  The Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement comply with the Accounting Standards referred to in Section
 211(3C) of the Companies Act, 1956.
 
 4.  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.
 
 5.  In our opinion, proper books of accounts as required by law have
 been kept by the company so far as appears from our examination of
 books and records.
 
 6.  The Company has received written representation from the directors
 as on 31st March, 2011 and on the basis of those representation, we
 report that none of the director is disqualified from being appointed
 as director under Section 274 (1)(g) of the Companies Act, 1956.
 
 7.  The Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement are in agreement with the books of Account.
 
 8.  In our opinion and to the best of our information and according to
 the explanations given to us, the Balance Sheet, the Profit and Loss
 Account and the Cash Flow Statement read together with notes thereon
 give the information required by the Companies Act, 1956 in the manner
 so required and give true and fair views :
 
 a) In so far as it relates to the Balance Sheet, of the state of
 affairs of the Company as at 31st March, 2011
 
 b) In so far as it relates to the Profit and Loss Account, of the
 Profit of the Company for the year ended on that date.
 
 c) In so far as it relates to the cash flow statement, of the cash
 flows of the company for the year ended on that date.
 
 Annexure to the Auditors report of the even date to the Members
 
 i) (a) The company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The fixed assets have been physically verified by the management
 during the year. In our opinion, the frequency of verification of the
 fixed assets by the management is reasonable having regard to the size
 of the company and the nature of its asset. The discrepancies noticed
 have been properly dealt with in the books of accounts.
 
 (c) The asset disposed off during the year are not significant and
 therefore do not affect the going concern assumptions.
 
 ii) (a) The physical verification of inventory has been conducted at
 reasonable intervals by management.
 
 (b) In our opinion and according to the information and explanations
 given to us, 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) In our opinion the company has maintained proper records of
 inventory. The discrepancies between physical stock and the book stock
 were not material and have been properly dealt with in the books of
 accounts.
 
 iii) As informed to us, during the year the company has not granted or
 taken any loans, secured or unsecured to or from companies, firms or
 other parties covered in the register maintained under section 301 of
 the Act.
 
 iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control system commensurate
 with the size of the company and the nature of its business with regard
 to purchase of inventory, fixed assets and for sale of goods and
 services. During the course of our audit, no major weakness has been
 noticed in the internal control.
 
 v) (a) Based on the audit procedures applied by us and according to the
 information and explanation provided by the management, we are of the
 opinion that the transaction that need to be entered into the register
 maintained under section 301 of the Act have been properly entered in
 the said register.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions entered in the registers maintained under
 section 301 and exceeding during the year by Rupees five lakh in
 respect of each party have 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.
 
 vii) The internal audit function carried out during the year by a firm
 of chartered accountant appointed by the company and the same is in our
 opinion, is commensurate with its size and nature of its business.
 
 viii) The Company is maintaining cost records as prescribed by Central
 Government under section 209(1)(d) of the Companies Act 1956 for the
 Company.
 
 ix) a) According to the information and explanation given to us the
 company is generally regular in depositing undisputed statutory dues
 including Provident Funds, Investor Education and Protection Fund,
 Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service
 Tax, Custom Duty, Excise Duty, cess and any other statutory dues
 wherever applicable with appropriate authorities. There is no
 outstanding dues for a period of more than six months from the date
 they become payable.
 
 b) The following are the disputed dues which have not been deposited :
 
 Nature of Dues         Amount           Forum where dispute is Pending
                       (Rs. In Lacs)
 
 1) Excise Duty & 
    Service Tax
 
 a) 2004 – 05             5.00            CESTAT, Ahmedabad
 
 b) 2005 – 06            30.17            Commissioner (Appeals)
 
 c) 2006 – 07            47.78            Commissioner (Appeals)
 
 d) 2007 – 08            39.79            Commissioner (Appeals)
 
 e) 2008 – 09            17.72            Commissioner (Appeals)
 
 f) 2009 – 10             8.09            Commissioner (Appeals)
 
 g) 2010 – 11             5.78            Commissioner (Appeals)
 
    TOTAL               154.33
 
 2) Income Tax
 
 a) 2000 – 01            22.68            Income Tax Appellant Tribunal
 
 b) 2001 – 02            57.94            Income Tax Appellant Tribunal
 
 c) 2002 – 03            00.86            Income Tax Appellant Tribunal
 
 d) 2003 – 04            00.88            Income Tax Appellant Tribunal
 
 e) 2004 – 05            22.09            Income Tax Appellant Tribunal
 
 f) 2005 – 06             1.36            Commissioner of Income
                                          Tax Appeals
 
    TOTAL               105.81
 
 x) The company neither has accumulated losses at the end of the
 financial year nor has incurred cash losses during the year and in the
 immediately year preceding.
 
 xi) Based on our audit procedures and on the information and
 explanation given by the management, the company has not defaulted in
 repayment of dues to any financial institution or bank or debenture
 holder.
 
 xii) Based on our examination and according to the information and
 explanations given 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) The company is not a chit/nidhi/mutual benefit fund/society and
 therefore clause xiii of the order is not applicable.
 
 xiv) The company is not dealing or trading in shares, securities,
 debentures and other investment.
 
 xv) On the basis of the information and explanation given to us the
 company has given corporate guarantee for loans taken by others from
 banks, the terms and conditions thereof are not prima-facie prejudicial
 to the interest of the Company.
 
 xvi) In our opinion, the term loans were applied for the purpose for
 which they were raised.
 
 xvii) On the basis of our examination of the books of accounts and the
 information and explanation given to us, in our opinion, the funds
 raised on short-term basis have not been used for long term investment.
 
 xviii) During the year, the company has not made any preferential
 allotment of shares to parties and companies covered in the Register
 maintained under section 301 of the Act.
 
 xix) The company did not have any outstanding debentures during the
 year.
 
 xx) Based on the audit procedures performed and information and
 explanation given to us by the management, we report that no fraud on
 or by the Company has been noticed or reported during the course of our
 audit.
 
                                                ( RAKESH K. MILWANI )
 
                                     PROPRIETOR: MILWANI ASSOCIATES
                                                Membership No.36099
                                      Firm Registration No. 106405W 
 Place: Mumbai 
 
 Date : 30.05.2011