Phillips Carbon Black

1.  We have audited the attached Balance Sheet of Phillips Carbon Black
 Limited, as at 31st March 2009, 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. 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 of The 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 have 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 our opinion, the
 frequency of verification is reasonable.
 
 (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 been
 confirmed by them.  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 the book records were not material.
 
 3.3 (a) 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 Act. Accordingly, the
 paragraphs 4(iii) (b), 4(iii) (c) and 4(iii) (d) of the Order are not
 applicable.
 
 (b) 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. Accordingly, the paragraphs 4(iii) (f)
 and 4(iii) (g) of the Order are not applicable.
 
 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. The
 Company has not provided any service during the year.  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 According to the information and explanations given to us, there
 have been no contracts or arrangements referred to in Section 301 of
 the Act during the year to be entered in the register required to be
 maintained under that Section. Accordingly, commenting on transactions
 made in pursuance of such contracts or arrangements does not arise.
 
 3.6 The Company has not accepted during the year any deposits from the
 public within the meaning of Sections 58A 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 products where, pursuant to the Rules made by the
 Central Government of India 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
 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) According to the information and explanations given to us and the
 records of the Company examined by us, there are no dues of income-tax,
 sales tax, wealth tax, service tax, customs duty, excise duty and cess
 as at 31st March, 2009 which have not been deposited on account of a
 dispute.
 
 3.10 The Company has no accumulated losses as at 31st March, 2009 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 information and explanations given and the
 records of the Company examined by us, the Company has not defaulted in
 repayment of dues to any financial institution or bank or debenture
 holders, as applicable, as at the Balance Sheet date.
 
 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.
 
 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 used for long term investment.
 
 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 no debentures outstanding at the year-end.
 
 3.20 The Company has not recently raised any money by public issue.
 
 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;
 
 (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 our 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 Act;
 
 (e) On the basis of written representations received from the
 directors, as on 31st March, 2009 and taken on record by the Board of
 Directors, none of the directors is disqualified as on 31st March, 2009
 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 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 31st March, 2009;
 
 (ii) in the case of the Profit and Loss Account, of the loss 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.
 
                                                    P. LAW
                                                   Partner
                                     (Membership no. 51790)
                                        for and on behalf of
                                            PRICE WATERHOUSE,
 Kolkata, 28th April, 2009             Chartered Accountants.