1.  We have audited the attached Balance Sheet of McLeod Russel India
 Limited (the Company), as at 31st March, 2011, 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
 and balances relating to the Companys Marketing and Representative
 Office, United Kingdom, which we have audited on the basis of returns,
 records, information and explanations received from the said Marketing
 and Representative Office of the Company not visited by us during the
 year.  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
 (together the Order), issued by the Central Government of India in
 terms of sub- section (4A) of Section 227 ofthe 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 showing full
 particulars, including quantitative details and situation, of fixed
 assets.
 
 (b)The fixed assets 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
 of 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 them and/ or have been 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. The
 maximum amount involved during the year and the year- end balance of
 such loan amounts to Rs 360.00 lakhs and Rs 360.00 lakhs respectively.
 
 (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 and services.
 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 contacts 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 5SA and 58AA of the Act and the rules framed
 there under.
 
 3.7 In our opinion, the Company 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 by us, the particulars of dues of
 income tax, sales tax, wealth tax, service tax, customs duty, excise
 duty and cess, as applicable, as at 31st March, 2011 which have not
 been deposited on account of a dispute, are as follows :
 
 Name of the   Nature of dues    Amount   Period to which   Forum where
 statute                     (Rs. Lakhs)  the amount      the dispute is
                                          relates         pending
 
 Central        Sales Tax        0.82      2001-02        Deputy
 
 Sales Tax                                                Commissioner
 
 Act                                                      of Taxes
 
                                                          (Appeals) 
 
               Sales Tax         2.23      2005-06        Deputy
 
                                                          Commissioner
 
                                                          of Taxes 
 
 Assam         Sales lax        23.32      1999 00        Gauhati High
 General                                                  Court
 
 Sales Tax
 Act 
 
 Income Tax    Tax Deducted   5273.00      2005-06        CIT (Appeals)
 
 Act 1961      at source and
 
               Interest (Refer
 
               Note 14 on
 
               Schedule 17
 
               to Accounts) 
 
               Fringe Benefi    37.93      2007-08       CIT (Appeals)
 
               Tax 
 
 Finance Act,  Service Tax      75.48      2004-05 to    Commissioner
 
 1994                                      2007-08       Central Excise
 
 3.10 The Company has no accumulated losses as at 31* March, 2011 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
 did not have any dues outstanding to any debenture holders or financial
 institutions as at the beginning of the year nor did it obtain 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 other than Rs.
 1408 Lakhs being a part of such loans which is pending utilisation.
 
 3.17.  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, there are no funds raised on a short term
 basis which have been utilised for long term investments.
 
 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.
 
 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 and proper returns adequate for the purposes of our audit
 have been received from the Marketing and Representative Office not
 visited by us;
 
 (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
 accounts and with the returns received from the Marketing and
 Representative Office not visited by us;
 
 (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
 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 31s1 March, 2011 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 in the prescribed
 manner, except for non ascertainment and non disclosure of the value of
 green leaf consumed as indicated in Note 20(b) on Schdule 17 to the
 financial statements, the information required by the Act, 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 31 March, 2011;
 
 (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.
 
                                              For Price Waterhouse
 
                                  Firm Registration Number 301112E
 
                                             Chartered Accountants
 
 Place : Kolkata
 
 Date : 30Th May, 2011                        (P.Law) 
 
                                              Partner 
 
                                          Membership Number. 51790