We have audited the attached Balance Sheet of MEGHMANI ORGANICS
 LIMITED, as at 31st March, 2011 and also the Profit and LossAccount of
 the Company for the year ended on that date annexed thereto and Cash
 Flow statement for the year ended on that date. These financial
 statements are the responsibility of the Company''smanagement. Our
 responsibility is to express an opinion on these financial statements
 based on our audit.
   
 We have conducted our audit in accordance with the auditing standards
 generally accepted in India.Those standards require that we plan and
 perform our 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 the 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 (Auditor''s Report) Order, 2003 and
 (Amendment) Order 2004 issued by the Central Government in terms of
 Section 227 (4A) of the Companies Act, 1956, a statement on the matters
 specified in paragraphs 4 and 5 of the said order is annexed thereto.
 
 Further to our comments in the Annexure referred to 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 purpose
 of our audit; 
 
 b)  In our opinion proper books of accounts as required by
 the law have been kept by the Company so far as appears from our
 examination of the books of the Company: 
 
 c) The Balance Sheet and
 Profit and Loss Account dealt with by this report are in agreement with
 the books of account: 
 
 d) In our opinion, the Balance Sheet and Profit
 and Loss Account dealt with by this report comply with the Accounting
 Standard referred to in Section 211 (3C) of the Companies Act, 1956 
 
 e)On the basis of the written representations received from the directors
 as on 31st March, 2011 and taken on record by the Board of Directors,
 we report that none of the director 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.
   
 f) In our opinion and to the best of our information and according to the
 explanations given to us, the account read in 
 conjunction with the notes and schedules attached thereto, 
 give the information required under the Companies Act, 
 1956 in the manner so required and present a true and fair view :- 
 
 i. In the case of the Balance Sheet of the state of affairs of the 
 Company as at 31st March, 2011 
 
 ii. In the case of the Profit and Loss Account, of the profit 
 of the Company for the year ended on that date AND 
 
 iii. In case of Cash Flow statement, of the cash flows for the 
 year ended on that date.
  
                     
                                           
 ANNEXURE TO AUDITORS'' REPORT
 
 i.  (a) The Company has maintained division wise records of fixed
 assets under SAP to show full particulars including quantitative
 details and situation of fixed assets.
 
 (b) All the fixed assets have been physically verified by the
 Management during the year. As explained to us no material
 discrepancies were noticed on such verification.
 
 (c) The Company has not disposed of substantial part of the fixed
 assets during the year.
 
 ii.  (a) The inventories have been physically verified during the year
 by the management. Inventory with third parties at
 year end have been verified by the management with reference to
 confirmations or statement of accounts or correspondence of third
 parties or subsequent receipt of the goods.
 
 (b) According to the information and explanations given to us and in
 our opinion the procedure of physical verification of inventory
 followed by the management are reasonable and adequate in relation to
 the size of the Company and nature of its business.
 
 (c) The Company is maintaining proper records of the inventories and no
 serious discrepancies have been noticed on physical verification of
 inventories as compared to the book record.
 
 iii.  In respect of the loans, secured or unsecured, granted or taken
 by the Company to/from companies, firm or other parties
 covered in the register maintained under Section 301 of the Companies
 Act, 1956.
 
 (a) The Company has given loan to Four Subsidiaries. In respect of the
 said loans, the maximum amount outstanding at any time during the year
 is Rs. 4009.58 lacs and year-end balance is Rs. 3678.59 lacs.
 
 (b) In our opinion and according to the information and explanations
 given to us, the Company has charged interest on Loan given to PT
 Meghmani Organics Indonesia, Meghmani Europe BVBA and Meghmani Energy
 Limited.  The other Loans are interest free and other terms and
 conditions are not prima facie prejudicial to the interest of the
 Company.
 
 (c) The said interest free loan given to the Subsidiaries of the
 Company is repayable on demand.
 
 (d) In respect of the loan given by the Company, the same is repayable
 on demand and therefore the question of overdue amount does not arise.
 
 (e) The Company has not taken unsecured loans from the companies/firms
 or other parties covered in the register maintained under Section 301
 of the Companies Act, 1956. Therefore Sub-clause (f) and (g) are not
 applicable.
 
 iv.  In our opinion and according to the information and explanations
 given to us during the course of our audit, there are
 adequate internal control procedures commensurate with the size of the
 Company and the nature of its business for the purchase of inventory,
 fixed assets and for sale of goods. We have not observed any major
 weaknesses in internal control system established by the Company.
 
 v.  (a) According to the information and explanations given to us, we
 are of the opinion that the particulars of contracts or
 arrangements referred to in Section 301 of the Companies Act, 1956 have
 been entered in the register maintained under that section.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance
 of contracts or arrangements entered in the register maintained under
 Section 301 of the Companies Act, 1956 and exceeding the value of Rs.
 5,00,000/- in respect of any party during the period have been made at
 prices which are reasonable having regard to the prevailing market
 prices at the relevant time except for items stated to be of
 specialized nature, where no comparison is possible.
 
 vi.  The Company has not accepted deposits from the public and
 therefore the directives issued by the Reserve Bank of
 India and provisions of Section 58-A and Section 58 AA or any other
 relevant provisions of the Companies Act 1956 and rules framed there
 under do not apply to the Company.
 
 vii.  The Company has appointed a firm of Chartered Accountants as
 Internal Auditors. In our opinion the system of internal
 audit is commensurate with size and nature of the business of the
 Company.
 
 viii.  The Central Government has prescribed maintenance of Cost
 records under section 209(1)(d) of the Companies Act
 1956, in respect of insecticides product of the Company. We have
 broadly reviewed the books of accounts maintained by the Company, in
 this connection and are of the opinion that prima facie records have
 been maintained. We have not however made a detailed examination of the
 records with a view to determine whether they are accurate or complete.
 
 ix.  (a) According to the records of the Company, the Company is
 generally regular in depositing undisputed statutory
 dues including, Provident Fund, Investor Education Protection Fund,
 Employees'' State Insurance, Income Tax, Sales Tax, VAT, Wealth Tax,
 Service Tax, Custom Duty, Excise Duty, Cess, and any other statutory
 dues as applicable to it with the appropriate authorities.
 
 Though there has been delay in some cases of Provident Fund and
 Professional Tax payments, which were not in arrears at the end of the
 year. According to the information and explanations given to us, no
 undisputed amount payable in respect of Income Tax, Sales Tax, VAT,
 Wealth tax, Custom Duty, Service Tax and Excise Duty, were outstanding
 at the period end for a period of more than six months from the date
 they become payable.
 
 (b) According to the information and explanations given to us, the
 statutory dues which have not been deposited on account of disputes
 are given below
 
 Name of Statute       Nature of Dues     Rs. in Lacs    Forum where 
                                                         Dispute is
                                                         pending
  
 Income Tax Act.       Income Tax /         877.78       Commissioner 
                       Penalty for                       ofIncome Tax 
                       Various Fina                      (Appeal) /
                       ncial years                       Income tax 
                       1999-2000                         Appellate
                       to                                Tribunal / 
                       2006-2007                         High Court
 
 Central Excise        Excise Duty          659.93       Commissioner 
 Tariff Act            (Financial                        of Central
                       Year 2007                         Excise /
                       to2010-2011                       Director 
                                                         General of 
                                                         Central
                                                         Excise /
                                                         Audit team 
                                                         of Central 
                                                         Excise /
                                                         Central 
                                                         Excise 
                                                         Service tax
                                                         Appellate
                                                         Tribunal
 
 Labour Laws          Compensation          105.79       Labour Court
                      Claims
         
 Value Added Tax      Input Tax Credit       45.83       The Joint 
                      Credit                             Commercial 
                                                         Tax Commiss
                                                         ioner Appeal 
                                                         1
 
 Professional Tax     Employees               0.40       Disputed 
                      Professional                       betweenLocal
                                                         Authority
                                                         & Sales Tax 
                                                         Department
 
 x. In our opinion, the Company has no accumulated losses at the end of
 the financial year. The Company has not incurred
 any cash losses in the immediately preceding financial year.
 
 xi. In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in
 repayment of dues to a financial institution or bank or Debenture
 holders.
 
 xii. According to information and explanations given to us, 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. In our opinion the Company is not a chit fund or a nidhi /mutual
 benefit fund/society. The provisions of nidhi / mutual
 benefit fund/societies are not applicable to the Company.
 
 xiv. In our opinion the Company is not dealing in or trading in
 shares, securities debentures and other investments hence the
 provisions of clause 4 (xiv) are not applicable.
 
 xv. According to information and explanation given to us, the Company
 has given guarantee for loans taken by Subsidiary
 Company from Bank, The terms and conditions whereof in our opinion are
 not prima facie prejudicial to the interest of the Company.
 
 xvi. The Company has obtained fresh term loan which is used for the
 purpose for which it is obtained.
 
 xvii. The Company has not utilized any funds raised on short term
 basis for long term investments.
 
 xviii. According to information and explanations given to us, the
 Company has not made any preferential allotment of any
 shares to parties and companies covered in the Register maintained
 under Section 301 of the Companies Act, 1956.
 
 xix. According to information and explanations given to us, the
 Company has issued debentures during the year ended on
 31st March, 2011. The Company has created necessary security for the
 same.
 
 xx.  The Company has not raised any money by public issues during the
 year.
 
 xxi. According to information and explanations given to us, no fraud
 on or by the Company has been noticed or reported
 
                                            For M/S PATEL& KHANDWALA
                                            CHARTERED ACCOUNTANTS
                                                   FRN - 107647W 
                                                 (M. M. KHANDWALA)
                                                          PARTNER 
                                                Membership No.32472
 Place: Ahmedabad       
 Date: 27.05.2011