Mcleod Russel (India)

1.  We have audited the attached Balance Sheet of McLeod Russel India
 Limited, as at 31st March, 2009, and the related Profit and Loss
 Account and Cash Flow Statement for the year ended on that date annexed
 thereto, which we have signed under reference to this report. The
 aforesaid financial statements incorporate the transactions relating to
 the Companys Marketing and Representative Office, United Kingdom. We
 have audited these transactions on the basis of returns, records,
 information and explanations received from this office which we have
 not visited. These financial statements are the responsibility of the
 Companys management. Our responsibility is to express an opinion on
 these financial statements based on our audit.
 
 2.  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 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, as
 amended by the Companies (Auditors Report) (Amendment) Order, 2004
 issued by the Central Government of India in terms of sub-section (4A)
 of Section 227 of The Companies Act, 1956 of India (the Act) and on
 the basis of such checks of the books and records of the Company as we
 considered appropriate and according to the information and
 explanations given to us, we further report that :-
 
 3.1 (a) The Company has maintained proper records to show full
 particulars including quantitative details and
 situation of its fixed assets.
 
 (b) The fixed assets of the Company are physically verified by the
 management according to a phased programme designed to cover all the
 items over a period of three years, which in our opinion, is reasonable
 having regard to the size of the Company and the nature of its assets.
 Pursuant to the programme, a portion of the fixed assets has been
 physically verified by the management during the year and no material
 discrepancies between the book records and the physical inventory have
 been noticed.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 off by the Company during the year.
 
 3.2 (a) The inventory (excluding stocks with third parties) has been
 physically verified by the management during the year. In respect of
 inventory lying with third parties, these have substantially been
 confirmed by third parties and/or were verified with reference to
 subsequent sale. In our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion, 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) On the basis of our examination of the inventory records, in our
 opinion, the Company has maintained proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 3.3 (a) The Company has granted unsecured demand loan to a company
 covered in the register maintained under Section 301 of the Act. Both
 the maximum amount involved during the year and the year- end balance
 of such loan amounts to Rs. 460.00 lakhs.
 
 (b) In our opinion, the rate of interest and other terms and conditions
 of such loans are not prima facie prejudicial to the interest of the
 Company.
 
 (c) In respect of the aforesaid loan, repayment of the principal amount
 and the payment of interest were not due at the year end.
 
 (d) 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 Act.
 
 3.4 In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business for the
 purchase of inventory, fixed assets and for the sale of goods. There is
 no sale of services during the year. Further, on the basis of our
 examination of the books and records of the Company and according to
 the information and explanations given to us, we have neither come
 across nor have been informed of any continuing failure to correct
 major weaknesses in the aforesaid internal control system.
 
 3.5 (a) In our opinion and according to the information and
 explanations given to us, the 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.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements and exceeding the value of Rupees Five Lakhs in respect of
 any party during the year have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 
 3.6 The Company has not accepted any deposits from the public within
 the meaning of Sections 58A and 58AA of the Act and the rules framed
 there under.
 
 3.7 In our opinion, the Companys has an internal audit system
 commensurate with its size and nature of its business.
 
 3.8 We have broadly reviewed the books of account maintained by the
 Company in respect of product where.  pursuant to the Rules made by the
 Central Government of India, the maintenance of cost records has been
 prescribed under clause (d) of sub-section (1) of Section 209 of the
 Act and are of the opinion that prima facie, the prescribed accounts
 and records have been made and maintained. We have not, however, made a
 detailed examination of the records with a view to determine whether
 they are accurate or complete.
 
 3.9 (a) According to the information and explanations given to us and
 the records of the Company examined by us, in our opinion, the Company
 has generally been regular in depositing during the year the undisputed
 statutory dues including provident fund, investor education and
 protection fund, income tax, sales tax, wealth tax, service tax,
 customs duty, excise duty, cess and other material statutory dues as
 applicable with the appropriate authorities. As explained by the
 management, Employees State Insurance Scheme is not applicable to the
 Company.
 
 (b) According to the information and explanations given to us and the records 
 of the Company examined byus, the particulars of dues of income tax,
  sales tax, wealth tax, service tax, customs duty, excise dutyand 
 cess as at 31st March, 2009 which have not been deposited on 
 account of a dispute, are asfollows :-
 
 Name of                      Nature of                        Amount
 the statute                   dues                          (Rs. lakhs)
 
 Central Sales                Sales Tax                         0.82
 Tax Act
                              Sales Tax                         2.23
 Assam General                Sales Tax                        23.32
 Sales Tax Act
 West Bengal                  Sales Tax                         1.16
 Sales Tax Act
 Finance Act                 Service Tax                        0.52
 Income Tax Act               Income Tax                        6.63 
                              Income Tax                       18.11
                           Fringe Benefit Tax                 121.94
 
 Period to which                Forum where
 the amount relates             the dispute is pending
 2001-02                        Deputy Commissioner
                                of Taxes (Appeals)
 2005-06                        Deputy Commissioner
                                of Taxes
 1999-00                        Gauhati High Court
 1994-95                        Sales Tax Appellate
                                Tribunal
 2004-05 and                    Superintendent of
 2005-06                        Central Excise
 2004-05, and                   Deputy Commissioner
 2005-06.                       of Taxes
 2006-07                        CIT Appeals
 2006-07                        CIT Appeals
 
 3.10 The Company has no accumulated losses as at 31st March, 2009 and
 it has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 3.11 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 bank at the Balance Sheet date. The Company
 has neither any outstanding dues to any debenture holders or financial
 institutions at the beginning of the year nor it obtained any such
 loans during the year.
 
 3.12 The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 3.13 The provisions of any special statute applicable to chit fund /
 nidhi / mutual benefit fund/societies are not applicable to the
 Company.
 
 3.14 In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 3.15 In our opinion and according to the information and explanations
 given to us, the Company has not given any guarantee for loans taken by
 others from banks or financial institutions during the year.
 
 3.16 In our opinion, and according to the information and explanations
 given to us, on an overall basis, the term loans have been applied for
 the purposes for which they were obtained.
 
 3.1,7 On the basis of an overall examination of the Balance Sheet of
 the Company, in our opinion and according to the information and
 explanations given to us, funds raised on a short term basis have, to
 the extent of Rs.12054.16 lakhs, been utilised for long term
 investments (mainly fixed assets).
 
 3.18 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 during the year.
 
 3.19 The Company has not issued any debentures and accordingly the
 question of creation of securities in this regard does not arise.
 
 3.20 The Company has not raised any money by public issues during the
 year.
 
 3.21 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.
 
 4.  Further to our comments in paragraph 3 above, we report that:
 
 (a) 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;
 
 (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;
 
 (c) The Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (d) In our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report comply with the
 applicable accounting standards referred to in sub-section (3C) of
 Section 211 of the Act;
 
 (e) On the basis of written representations received from the directors
 and taken on record by the Board of Directors, none of the directors is
 disqualified as on 31st March, 2009 from being appointed as a director
 in terms of clause (g) of sub-section (1) of Section 274 of the Act;
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial
 
 statements together with the notes thereon and attached thereto give,
 subject to Note 20(b) on Schedule 17 to the Accounts regarding non
 ascertainment of value of green leaf consumed, in the prescribed manner
 the information required by the Act and also 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, 2009;
 
 (ii) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 
 
                                                (P.Law)
                                                 Partner
                                                 Membership No. 51790
                                                 For and on behalf of
                                                 PRICE WATERHOUSE
 Place: Kolkata                                  Chartered Accountants
 Date : 3rd June, 2009