1.  I have audited the attached Balance Sheet of NCL Industries
 Limited, as at 31st March 2012, and the related Profit and Loss Account
 and Cash Flow Statement for the year ended on that date annexed
 thereto. These financial statements are the responsibility of the
 Company''s management. My responsibility is to express an opinion on
 these financial statements based on my audit.
 
 2.  I conducted the audit in accordance with the auditing standards
 generally accepted in India. Those Standards require that I 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. I believe that the audit provides a reasonable basis for
 my opinion.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 as
 amended by the Companies (Auditor''s Report) (Amendment) Order, 2004
 (the ''Order'') issued by Government of India in terms of sub-section
 (4A) of Section 227 of the Companies Act, 1956, I give in the Annexure
 a statement on the matters specified in paragraphs 4 and 5 of the said
 Order.
 
 4.  Further to my comments in the Annexure referred to in paragraph 3
 above, I report that:
 
 (a) I have obtained all the information and explanations, which to the
 best of my knowledge and belief necessary for the purposes of my audit;
 
 (b) In my opinion, proper books of account as required by law have been
 kept by the Company so far as it appears from my examination of those
 books;
 
 (c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 (d) In my opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with the accounting
 standards referred to in sub-section (3C) of Section 211 of the
 Companies Act 1956.
 
 (e) On the basis of written representations received from the
 directors, as on March 31, 2012 and taken on record by the Board of
 Directors, none of the directors is disqualified as on that date 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 my opinion and to the best of my information and according to
 the explanations given to me, they said financial statements together
 with the notes thereon and attached thereto, give in the prescribed
 manner the information required by the Act and give a true and fair
 view in conformity with the accounting principles generally accepted in
 India:
 
 - in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March 2012;
 
 - in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 - in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO AUDITOR''S REPORT:
 
 [Referred to in paragraph 3 of the Auditor''s Report to the members of
 NCL Industries Limited on the financial statements for the year ended
 31st March, 2012]
 
 1.  (a) The Company has maintained adequate records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) A substantial portion of the fixed assets of the Company 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. In my opinion, the frequency of verification is
 reasonable.
 
 (c) In my opinion and according to the information and explanations
 given to me, fixed assets disposed off by the Company during the year
 were not substantial and therefore do not affect the going concern
 assumption.
 
 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. In my opinion, the frequency of verification is
 reasonable.
 
 (b) In my 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 my examination of the inventory records, in my
 opinion, the Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 3.  According to the information and explanations given to
 
 (a) the company has not granted any loans, secured or unsecured , to
 companies, firms or other parties covered under the section 301 of the
 Act.
 
 (b) the company has taken Inter Corporate Deposits aggregating to
 Rs.1450 lakhs and repaid Rs. 825 lakhs during the year. The rate of
 interest and other terms and conditions are prima facie not prejudicial
 to the interest of the company. The repayments are regular.
 
 4.  In my opinion and according to the information and explanations
 given to me, having regard to the explanation that certain items
 purchased are of special nature for which suitable alternative sources
 do not exist for obtaining comparative quotations, there are adequate
 internal control procedures commensurate with the size of the Company
 and the nature of its business for purchase of inventory, fixed assets
 and for sale of goods.  Further, on the basis of my examination of the
 books and records of the Company, and according to the information and
 explanations given to me, I have neither come across nor have been
 informed of any continuing failure to correct major weaknesses in the
 aforesaid internal control procedures.
 
 5.  In my opinion and according to the information and explanations
 given to me-
 
 (a) the particulars of contracts or arrangement referred in section 301
 of Companies Act, 1956 have been entered in the register required to be
 maintained under that section; and
 
 (b) the transactions made in pursuance of such contracts or arrangement
 have been made at prices which are reasonable having regard to the
 prevailing market prices at the relevant time.
 
 6.  The Company has accepted deposits from public and directives issued
 by the Reserve Bank of India and the provisions of Section 58A, 58AA,
 and other relevant provisions of the Companies Act, 1956 and the rules
 framed there under, where applicable, have been generally complied
 with. Balances maintained in bank accounts, free from charge or lien,
 prima facie sufficient, according to the information and explanations
 given to me, for payment of interest and refund of deposits falling
 due.  There is no default in repayment of matured deposits or payment
 of interest due. No order has been passed by Company Law Board or
 National Company Law Tribunal or Reserve Bank of India or any Court or
 any Tribunal regarding the Deposits.
 
 7.  In my opinion, the Company has adequate internal audit system
 commensurate to the size and operations of the company.
 
 8.  I have broadly reviewed the books of account maintained by the
 Company in respect of products, 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.
 
 I have not, however, made a detailed examination of the records with a
 view to determine whether they are accurate or complete.
 
 9.  [a] According to the information and explanations given
 
 to me and the records of the Company examined by me, in my opinion, the
 Company is generally regular in depositing the undisputed statutory
 dues including provident fund, investor education and protection fund,
 employees'' state insurance, income-tax, sales- tax, wealth tax,
 service tax, customs duty, excise duty, cess and other material
 statutory dues as applicable with the appropriate authorities.
 
 [b] The disputed statutory dues not deposited on account of matters
 pending before appropriate authorities are as under:
 
 SI.   Name of the       Nature of           Forum          Amount
 No.   statute           Dues                where         (Rs.ln
                                             Pending        Lakhs)
 
 1.    Sales Tax Act     Sales Tax          Tribunal          9.81 
       (APGST & VAT)
 
                                            Appellate 
                                               Deputy 
                                          Commissioner       14.91 
 
                                            High Court       21.14
 
 2.    Central Excise   Disputed Excise       Tribunal      744.50
 
                        Dues                High Court       29.22
 
                                                   CEC      156.58
 
 3.  Nala Tax           Non-Agriculture     High Court
 
                        Tax on Mining 
                        Area                       A.P.      43.56
 
 4.  Service Tax        Disputed Ser
                        vice Tax                   CEC        2.17
 
 5.  Permit Fee         Disputed permit      High Court     105.39 
     to Forest          permit fee
     Department
 
 10.  The Company has no accumulated losses as at March 31, 2012 and it
 has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 11.  The Company has not defaulted in repayment of dues to any
 financial institution or bank as at the balance sheet date.  There are
 no debenture holders as at the balance sheet date
 
 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.
 
 13.  The provisions of any special statute applicable to chit fund /
 nidhi / mutual benefit fund/ societies are not applicable to the
 Company as it is not in such business.
 
 14.  The Company is not a dealer or trader in shares, securities,
 debentures and other investments. Therefore, the provisions of clause 4
 (xiv) of the Order are not applicable.
 
 15.  According to the information and explanations given to me, no
 guarantee is given by the Company, for loans taken by others from banks
 or financial institutions during the year.
 
 16.  According to the information and explanations given to me, on an
 overall basis, the term loans have been applied for the purposes for
 which they were obtained.
 
 17.  According to the information and explanations given to me, there
 are no funds raised on a short-term basis, which have been used for
 long-term investment, and vice versa.
 
 18.  The Company has not made any preferential allotment of equity
 shares during the year.
 
 19.  The Company has not issued any debentures during the year.
 
 20.  The company has not made any public issue during the year.
 
 21.  During the course of my 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 me,
 
 I have neither come across any instance of fraud on or by the Company,
 nor have I been informed of such case by the management, during the
 year.
 
                                                           P V RATNAM
 
 Hyderabad                                       Chartered Accountant
 
 Dated: 30.05.2012                                Membership No. 9281