We have audited the annexed Balance Sheet of M/S. NALIN CHEMICALS
 LIMITED, as at 31st March 2002 also Profit & Loss Account for the year
 ended on that date annexed thereto. 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.
 
 1. We conducted our audit in accordance with auditing standards
 genereally 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.
 
 2.  As required by manufacturing and other companies (Auditors Report)
 order 1988 issued by the Central Govt. of India in terms of section 227
 (4A) of the Companies Act, 1956. We enclose in the annexure a statement
 on the matters specified in paragraphs 4 & 5 of the said order.
 
 3.  Further to put our comments in annexure referred to in paragraph 2
 above we state 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 accounts, as required by Law, have
 been kept by the Company so far as appears from our examination of
 those books.
 
 (c) The Balance Sheet and Profit & Loss Account dealt with by this
 report are in agreement with the books of accounts.
 
 (d) In our opinion the Balance Sheet and Profit & Loss A/c dealt with
 by this report wherever applicable comply with the accounting standards
 wherever applicable, referred to in Sub Section 3(c) of Section 211 of
 the Companies Act, 1956.
 
 (e) On the basis of written representation received from the Director
 as on 31st March, 2002 and taken on record by the Board of Directors,
 we reports that none of the directors is disqualified as on 31st March,
 2002 from being appointed as a director in terms of Section 274(1) (g)
 of the Companies Act, 1956.
 
 (f) i) Subjected note No. 1 of the schedule `O regarding going concern
 concept.
 
 ii) Note No. 8 of the schedule `O providing interest on NPA account
 and earlier year expenses in our option and to the best of our
 information and according to the explanation given to us, the said
 accounts read together with the notes on accounts there on 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 affair of the
 company as at 31st March, 2002.
 
 ii) In the case of the profit and loss account of the Loss of the
 Company for the year ending on 31st March, 2002.
 
 As required by the manufacturing and other companies (Auditors Report)
 order, issued by the Company Law Board in term of section 227 (4A) of
 the Companies Act, 1956, we further report that:
 
 1.  The Company has maintained proper records but not updated during
 the year showing full particulars including quantitative details and
 situation of remaining fixed assets. All the year and no material
 discrepancies were noticed on such verification. However insurance of
 Fixed Assets have not got renewed.
 
 2.  None of the fixed Assets have been revalued during the year.
 
 3.  There is no production activities in the Company during the year
 under reference due to which notes on point no. 4 A (iii), (iv), (v),
 (vi), (x), (iv) and (xvi) are not applicable. The Stock of other Raw
 Material laying since earlier year in physically semi finished by the
 management & valued at realizable calue due to lost of its basic in tri
 use quality.
 
 4.  In our opinion the terms and conditions on which loans have been
 taken from & out standing to companies, firms or other parties listed
 in the register maintained under Section 301 of the Companies Act, 1956
 wherever applicable are not prima-facie prejudicial to the interest of
 the company. As informed to us the company has not taken any Loans from
 the companies under the same management with in the, meaning of Section
 370 (B) of the Companies Act. 1956 (Not applicable w.e.f. 31.10.1998).
 
 5.  No loans have been granted to companies, firm or other parties
 listed in the register maintained under section 301 of the Companies
 Act, 1956.
 
 6.  The Company has not given any advance in the nature of loan hence
 point no. 4 A(ix) not been given.
 
 7.  According to the information and explanations given to us, no
 transaction of purchase of goods and material and sale of goods,
 material and services made in pursuance of contract or arrangement
 entered in the register maintained under Section 301 of the Companies
 Act, 1956 and aggregating during the period Rs. 50,000/- or more in
 respect to each party have been made.
 
 8.  In our opinion and according to the information and explanation
 given to us the company has not accepted any deposits as defined under
 section 58A the Companies Act, 1956 and the Companies (Acceptance of
 deposits) Rule 1975.
 
 9.  The company has internal audit system commensurate with the size
 and nature of its business. However no formal internal auditor has been
 appointed.
 
 10. As informed by the management, the employees provident fund Act,
 and the Employees State Insurance Act. are not applicable during the
 year.
 
 11. According to information and explanations given to as no undisputed
 amount payable in respect of Income Tax, Wealth Tax, Sales Tax, Custom
 Duty and Excise Duty were outstanding as at 31.3.2002 for a period of
 more than six months from the date they become payable.
 
 12.  According to the information and explanation given to us, no
 personal expenses have been charged to the revenue accounts other than
 those payable under Contractual obligation or in accordance with
 generally accepted business practices.
 
 13.  The company is a sick industrial Company within the meeting of
 clause (D) of sub section (I) of section (3) of the sick Industrial
 companies (Special Provisions) Act, 1985 in previous year. But
 intimation to BIFR is pending.
 
                                                   For S. SINGHAL & CO.
                                                   Chartered Accountants
 
 PLACE: BHIWADI                                    (S. K. SINGHAL)
 DATE: 20.6.2002                                             Partner