1.  We have audited the attached Balance Sheet of POLYCHEM LIMITED as
 at 31st March, 2012, the Statement of Profit and Loss and also the Cash
 Flow Statement for the year ended on that date annexed thereto. These
 financial statements are the responsibility of the Company''s
 management. Our responsibility is to express an opinion on these
 financial statements based on our audit.
 
 2.  We conducted our audit in accordance with 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 preparation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003, 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.  Further to our comments in the Annexure referred to above, we
 report that:
 
 i.  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;
 
 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, Statement of Profit & Loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 iv.  In our opinion, the Balance Sheet, Statement of Profit & Loss 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;
 
 v.  On the basis of written representations received from the
 directors, as on 31st March, 2012 and taken on record by the Board of
 Directors, we report that none of the directors of the Company POLYCHEM
 LIMITED are disqualified as on 31st March, 2012 from being appointed as
 a 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, they said accounts read together with
 notes thereon, give the information required by the Companies Act, 1956
 in the manner so required and also give a true and fair view in
 conformity with the accounting principles generally accepted in India:
 -
 
 a.  In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March 2012, and
 
 b.  In the case of the Statement of Profit & Loss, of the loss of the
 Company for the year ended on that date.
 
 c.  In the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITOR''S REPORT
 
 (Referred to in paragraph 3 of our report of even date)
 
 (i) (a) The Company is maintaining proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 The fixed assets have been physically verified by the management during
 the year according to a phased programme as designed by the management.
 This, in our opinion, is reasonable having regard to the size of the
 Company and the nature of its assets. We have been further informed
 that there is no material discrepancies between the book records and
 the physical verification have been noticed.
 
 (b) In our opinion, and according to the information & explanations
 given to us, the Company has not disposed off substantial part of fixed
 assets during the year.
 
 (ii) (a) The inventory has been physically verified by the management
 during the year. In our opinion, and according to the information and
 explanation given to us, the frequency of verification is reasonable.
 
 (b) The procedures of physical verification, in our opinion, 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 inventory. No
 discrepancies were noticed on verification between the physical stocks
 and the book records.
 
 (iii) The Company has neither granted nor taken any loans, secured or
 unsecured to and from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 Accordingly, the sub-clauses (a) to (g) of the clause 4 (iii) of the
 Order are not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems 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, we have not observed any
 continuing failure to correct major weakness in internal control
 system.
 
 (v) (a) According to the information and explanations given to us, we
 are of the opinion that the transactions for the year that need to be
 entered into the register maintained under section 301 of the Companies
 Act, 1956 have been so entered.
 
 (b) In our opinion and according to the information and explanation
 given to us, during the year, there is no transaction 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
 rupees five lakh in respect of any party.
 
 (vi) In our opinion and according to the information and explanation
 given to us, the Company has not accepted deposits from the public and
 therefore, the provisions contained in sections 58A, 58AA or any other
 relevant provisions of the Act and Rules framed there under are not
 applicable to the Company. As informed to us, the Company has refunded
 principal amount of deposit in case of matured deposits.
 
 (vii) The Company does not have an internal audit system.
 
 (viii) 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, 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. We have not, however, made a
 detailed examination of the records with a view to determine whether
 they are accurate or complete.
 
 (ix) (a) Based on the records produced before us, the Company is
 generally regular in depositing with appropriate authorities undisputed
 statutory dues such as 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
 material statutory dues wherever applicable and there are no amounts in
 arrears as at March 31, 2012 for a period of more than six months from
 the date they became payable.
 
 (b) According to the information and explanations given to us, there
 are no dues of income-tax, sales-tax, wealth tax, service tax, customs
 duty, excise duty, cess which have not been deposited on account of any
 dispute except disputed dues as under:
 
 Name of the    Nature of    Assessment   Amount    Authority with whom
 Statue         dues         Year         In Rs 
                                         (000''s)    Appeal Pending
 
 Income Tax 
 Act, 1961     Income Tax    2005-06        85      Income Tax
                                                    Appellate Tribunal
 
 The E.S.I. 
 Act, 1948     ESIC          2001-02        94      Assistant Director
 
 (Maharashtra)
 
 (x) In our opinion, the accumulated losses of the Company are not more
 than fifty percent of its net worth as at 31st March 2012.  The Company
 has incurred cash losses during the financial year covered by our
 audit. The Company had incurred cash losses during the immediately
 preceding financial year.
 
 (xi) The Company has neither raised any loans from banks and financial
 Institutions nor issued any debentures, therefore the provisions of
 clause 4 (xi) of the Companies (Auditor''s Report) Order regarding
 default in repayment of dues to banks and debenture holders are not
 applicable to the Company.
 
 (xii) 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 nidhi / mutual fund /
 society. Therefore the provisions of clause 4(xiii) of the order are
 not applicable to the Company.
 
 (xiv) According to the information and explanations given to us the
 Company is not dealing or trading in shares, securities, debentures and
 other investments. The investments by way of bonds, mutual funds and
 shares are held by the Company in its own name.
 
 (xv) 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.
 
 (xvi) The Company has not availed term loans during the year and hence
 provisions of sub clause (xvi) of clause 4 of the Order are not
 applicable to the Company.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of balance sheet of the Company, we report that
 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
 to parties and companies covered in the Register maintained under
 Section 301 of the Companies Act, 1956 during the year, hence the
 question of whether the price at which shares have been issued is
 prejudicial to the interest of the company does not arise.
 
 (xix) The Company has not issued any debentures, hence the question of
 whether securities or charge have been created does not arise.
 
 (xx) The Company has not raised any money by public issues during the
 year covered by our report.
 
 (xxi) 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, no fraud (i.e. intentional material
 misstatements resulting from fraudulent financial reporting and
 misappropriation of assets) on or by the company has been noticed or
 reported during the year by the Company.
 
                                               For G. M. KAPADIA & CO.
 
                                                Chartered Accountants
 
                                       Firm Registration No. 104767 W
 
                                                        (Rajen Ashar)
 
 Mumbai                                                       Partner
 
 Dated: 27th July 2012                         (Membership No. 48243)