1.  We have audited the attached Balance Sheet of ORIENT PAPER &
 INDUSTRIES LIMITED, as at 31st March, 2011 and also the Profit & Loss
 Account and Cash Flow Statement 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.
 
 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 the 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) issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose
 in the Annexure a statement on the matters specified in paragraphs 4
 and 5 of the said Order.
 
 4.  As stated in to Note No.9 on Schedule - 22, no provision has been
 made for Water Tax demand amounting to Rs.17076.58 lacs (including
 interest and penalty) since the Companys application for waiver
 thereof is under consideration by the Government of Madhya Pradesh.
 Had the above liability been considered, profit for the year would have
 been Rs. 2906.28 lacs (after considering tax impact) as against the
 reported profit of Rs. 14310.45 lacs and reserves & surplus as at the
 balance sheet date would have been Rs.75111.80 lacs as against the
 reported figure of Rs.86515.97 lacs.
 
 5.  Further to our comments in the Annexure referred to above :–
 
 (i) 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;
 
 (ii) 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;
 
 (iii) The Balance Sheet, Profit & Loss Account and Cash Flow statement
 dealt with by this report are in agreement with the books of account;
 
 (iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash
 Flow Statement comply with the Accounting Standards referred to in
 sub-section (3C) of Section 211 of the Companies Act, 1956;
 
 (v) On the basis of 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 directors is disqualified as on March 31,
 2011 from being appointed as Director in terms of Clause (g) of
 sub-section (1) of section 274 of the Companies Act, 1956;
 
 (vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said statements of account, subject
 to our comments in para (4) above, 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 Balance Sheet, of the state of affairs of
 the Company as at 31st March, 2011;
 
 (ii) in the case of Profit & Loss Account, of the profit of the Company
 for the year ended on that date; and
 
 (iii) in the case of Cash Flow statement, of the cash flows for the
 year ended on that date.
 
 Annexure to the Auditors Report
 (Referred to in our report of even date to the Members of Orient Paper
 & Industries Limited as at and for the year ended 31st march, 2011)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All fixed assets have not been physically verified by the
 management during the year but there is a regular programme of
 verification (except for the written down value of Rs. 1725.81 lacs at
 Brajrajnagar unit, due to suspension of production activities) which,
 in our opinion, is reasonable having regard to the size of the Company
 and the nature of its assets. As informed, no material discrepancies
 were noticed on such verification.  However, discrepancies, if any, at
 Brajrajnagar unit are unascertainable due to non verification of fixed
 assets for the reasons mentioned above.
 
 (c) There was no substantial disposal of fixed assets during the year.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year except for the value
 of Rs.32.90 lacs at Brajrajnagar unit, due to suspension of production
 activities.
 
 (b) 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) The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on such physical verification.
 However, discrepancies, if any, at Brajrajnagar unit are
 unascertainable due to non verification of inventories for the reasons
 mentioned in (a) above.
 
 (iii) (a) As informed, the Company has not granted any loans, secured
 or unsecured to companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956.
 Hence, clauses iii (b) to (d) of the Order are not applicable.
 
 (b) As informed, 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 Companies Act, 1956.
 Hence, clauses iii (f) & (g) of the Order are not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, and having regard to the explanation that some of the
 items purchased are of a proprietory nature and alternate sources do
 not exist for obtaining quotations thereof, it appears that 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
 and fixed assets and for the sale of goods and services. During the
 course of our audit, no major weakness has been noticed in the internal
 control system in respect of these areas and we have not observed any
 continuing failure to correct major weakness in internal control system
 of the company.
 
 (v) (a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in section 301 of the Companies Act, 1956 that
 need to be entered into the register maintained under the above
 section, have been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding the value of Rupees five lakhs entered into
 during the financial year, are at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 (vi) The Company has not accepted any deposit from the public.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) We have broadly reviewed the books of accounts maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under section 209 (1) (d) of the Companies
 Act, 1956 in respect of paper, cement, electrical consumer durables and
 chemicals and are of the opinion that prima facie, the prescribed
 accounts and records have been made and maintained.
 
 (ix) (a) The Company has been regular in depositing undisputed
 statutory dues including provident fund, investor education and
 protection fund, employees state insurance, income-tax, sales-tax,
 wealth-tax, service tax, custom duty, excise duty and other statutory
 dues with appropriate authorities though there had been slight delays
 in certain cases and also certain payments are not yet made as
 indicated in (b) below.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under section 441 A of the Companies Act,1956,
 we are not in a position to comment upon the regularity or otherwise of
 the Company in depositing the same.
 
 (b) According to the information and explanations given to us,
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees state insurance, income-tax,
 sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and
 other statutory dues outstanding at the year end for a period of more
 than six months from the date they became payable, are as follows :
 
 Name of the  Nature of the dues   Amount  Period to  Due Date  Date of
 statute                           (Rs in 
                                    lacs)  which the            Payment
                                           amount 
                                           relates
 
 Orissa 
 Municipal 
 Act          Industrial Licence 
              Fees                  19.69   1996-97 to Beginning
                                                       of the    Not yet
                                            2009-10    respective 
                                                       years     Paid
 
 Electricity 
 Duty Act     Interest on duty 
              payable               74.43   1998-99 to Subsequent 
                                                       month     Not yet
 (Orissa)     on own generation 
              of power                      2009-10    after 
                                                       accrual   Paid
 
 (c) According to the records of the Company, the dues outstanding in
 respect of sales tax, income tax, custom duty, wealth tax, service tax,
 excise duty & cess on account of any dispute, are as follows :-
 
 Name of the     Nature of dues    Period to 
                                   which       Amount   Forum where
 statute                           the amount 
                                   relates    (Rs. in 
                                                lacs)   dispute is 
                                                        pending
 
 Central Excise 
 and             Disallowance of 
                 Cenvat credit      1979-83, 
                                    1986-98,    929.34  Deputy/Assistant
 Customs Act, 
 1944            on inputs and 
                 capital goods      2000-2010           Commissioner/
                                                        Commissioner/
                                                        High Court/ 
                                                        CESTAT
 
                 Inclusion of 
                 interest in        1994-96      10.99  Dy. Commissioner/
                 Assessable value                       Commissioner
 
                 Disallowance of 
                 refund on post     1976-77 to 
                                    1983-84     149.06  Deputy
                                                        Commissioner
                 manufacturing 
                 expenses of paper
 
                 Differential duty 
                 on manufacture     1975 to 
                                    1977,        44.98  Asst Commissioner
                                                        /Deputy
                 of paper/ duty on 
                 various inputs     1978 to 
                                    1985,               Commissioner/
                                                        Commissioner
                 due to difference 
                 in classification/ 1993-97, 
                                    2000-01,            Appeals/Addl.
                                                        Commissioner/
                 Duty on shortage /
                 excess etc.        2002-03 & 
                                    2005-07             Jt. Commissioner
 
 A. P. Sales 
 Tax/AP          Demand on second 
                 sales and          1983-85, 
                                    1990-91,    285.96  Asst. Commissi
                                                        -oner/ Appellate
 Vat Act/ Central freight charges 
                 realized separately 1993-94 to 
                                     2005-06            Dy. Commissioner
                                                        / Sales Tax
 Sales Tax Act,  by raising debit 
                 invoices and other                     Appellate 
                                                        Tribunal/High 
                                                        Court.
 1956            matters
 
 MP Sales Tax 
 Act,            Demand with 
                 respect to          1998-99,    59.27  Deputy
                                                        Commissioner
 1961/Central 
 Sales           disallowance of 
                 cash discount,      2000-02 & 
                                     2005-06            Appeals/
                                                        Appellate Board/
 Tax Act 1956    levy of higher rate 
                 of purchase                            High Court
                 tax, difference in 
                 classification of 
                 goods etc.
 
 Other State/    Sales tax on stock 
                 transfer/export       Various  138.37  Asst.
                                                        Commissioner/ 
                                                        Deputy
 Central Sales 
 Tax             sales, non submission 
                 of forms,                              Commissioner/
                                                        Sales Tax
 Acts            penalty etc.                           officer / Sales
                                                        Tax Appellate
                                                        Tribunal/ High
                                                        court/ Supreme
                                                        Court
 
 Income Tax Act, Tax deducted at 
                 source &             2006-07 to 
                                      2008-09   2748.39 Commissioner 
                                                       (Appeals)*
 1961            interest thereon
 
 M.P. Upkar      Energy development 
                 cess on              2001-
                                      2002 to   2332.76  Supreme Court
 Adhinium, 2004  consumption of 
                 Captive power        2010-11
                 including surcharge
 
 * The Company proposes to file appeal
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current year and in the
 immediately preceding financial year.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to financial
 institutions, banks or debenture holders.
 
 (xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted 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 and therefore, the provisions of clause
 4(xiii) of the Order are not applicable.
 
 (xiv) In our opinion, the Company is not dealing or trading in shares,
 securities, debentures and other investments.  Accordingly, the
 provisions of clause 4(xiv) of the Order are not applicable.
 
 (xv) According to the information and explanations provided to us, the
 Company has not given guarantee for loans taken by others from banks or
 financial institutions.
 
 (xvi) Based on the information and explanations given to us by the
 management, term loans were applied for the purpose for which these
 were obtained.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we report
 that at the close of the year, no funds raised on short-term basis have
 been used for long-term investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 during the year to parties or companies covered in the register
 maintained under section 301 of the Companies Act, 1956.
 
 (xix) According to the information and explanations given to us, during
 the period covered by our audit report, the Company has issued 95
 debentures of Rs.100 lacs each.  The Company has created security/
 charge in respect of the debentures issued.
 
 (xx) The Company has not raised any money through a public issue during
 the year.
 
 (xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations given by the management, we report
 that no fraud on or by the Company has been noticed or reported during
 the course of our audit.
 
 
                                                For S.R. Batliboi & Co.
 
                                    Firm Registration Number : 301003E
 
                                                 Chartered Accountants
 
                                                       per Raj Agrawal
 
 Place : New Delhi                                             Partner
 
 Date : 27th April, 2011                          Membership No. 82028