1. We have audited the attached Balance Sheet of Pondy Oxides and
 Chemicals Limited as at 31st March 2012, the relative Statement of
 Profit and Loss and the Cash Flow Statement for the year ended on that
 date and signed by us under reference to this report. 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 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 (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 matters specified in paragraphs 4 and 5 of the said order.
 
 4. Further to our comments in the Annexure referred to in paragraph 3
 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 and 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 and Loss
 and Cash Flow Statement dealt with by this report comply in all
 material respects with the applicable Accounting Standards issued by
 the Institute of Chartered Accountants of India 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, and taken on record by the Board of Directors, we report
 that none of the Director is prima facie disqualified as on March 31,
 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, '' the aforesaid financial statements read
 with the statement on significant accounting policies and notes on
 financial statements 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:
 
 a) in the case of the Balance Sheet, of the state of the affairs of the
 Company as at March 31, 2012;
 
 b) in the case of the Statement of Profit and Loss, of the profit for
 the year ended on that date; and
 
 c) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR AUDIT REPORT OF EVEN DATE TO
 THE MEMBERS OF PONDY OXIDES AND CHEMICALS LIMITED ON THE FINANCIAL
 STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2012.
 
 1) (i) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (ii) The fixed assets are being physically verified under a phased
 programme of verification by the management, which in our opinion is
 reasonable having regard to the size of the Company and the nature of
 its assets. According to the information and explanations given to us,
 no material discrepancies were noticed on such verification.
 
 (iii) According to the information and explanations given to us, no
 substantial part of fixed assets has been disposed off during the year.
 
 2) (i) The inventories have been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 (ii) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the management are reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 (iii) The Company has maintained proper records of inventory. As
 explained to us, there were no materials discrepancies noticed on
 physical verification of inventories as compared to the book records.
 
 3) (a) In respect of the loans, secured or unsecured, granted by the
 company to companies, firms or other parties covered in the Register
 maintained under Section 301 of the Companies Act, 1956, according to
 the information and explanations given to us:
 
 (i) The Company has granted unsecured loans to its subsidiary. The
 maximum amount involved during the year was Rs. 2.11 Cr and the
 year-end balance of the loan granted to such Company is Rs.0.90 Cr.
 
 (ii) The rate of interest and other terms and conditions of such loans
 are, in our opinion, prima facie not prejudicial to the interests of
 the Company.
 
 (iii) The principal amount is repayable on demand.
 
 (iv) The loan and the interest due thereon are not due for repayment as
 per the terms of the agreement. 
 
 (v) There are no overdue amounts outstanding as at the Balance Sheet
 date.
 
 (b) The Company has taken the unsecured loans from 21 parties covered
 in the register maintained under Section 301 of the Companies Act, 1956,
 the maximum amount outstanding during the year was Rs.12.71 Cr and the
 year- end balance of loan taken from such parties was Rs. 7.34 Cr.
 
 (i) In our opinion, the rate of interest and other terms and conditions
 of the said loans are not prima facie, prejudicial to the interest of
 the Company.
 
 (ii) The interest payments, wherever applicable, have been regularly
 paid by the Company.
 
 4) In our opinion and according to the information and explanations
 given to us, there is adequate internal control system commensurate
 with the size of the Company and the nature of its business with regard
 to purchase of inventory and fixed assets and for the sale of goods and
 services. Further, on the basis of our examination of the books and
 records of the Company, we have neither come across nor have been
 informed of any continuing failure to correct major weaknesses in the
 aforesaid internal control system.
 
 5) In respect of the contract or arrangement referred to in Section 301
 of the Companies Act, 1956:
 
 (i) In cur opinion and according to the information and explanations
 given to us, we are of the opinion that the particulars of the
 contracts or arrangements that need to be entered in the register
 maintained under Section 301 of the Companies Act, 1956 have been so
 entered.
 
 (ii) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts and
 arrangements entered in the register maintained under sec 301 of the
 Companies Act 1956 exceeding the value of Rs.5,00,000 in respect of
 each party during the year, have been made at prices, which are prima
 facie reasonable, having regard to prevailing market prices at the
 relevant time.
 
 6) In our opinion and according to information and explanations given
 to us, all the directives issued by the Reserve Bank of India and
 provisions of Section 58A and 58AA or any other relevant provisions of
 the Companies Act 1956, and rules framed there under where applicable
 were complied with.  Further, we are informed by the management that no
 order has been passed by the Company Law Board or National Company'' Law
 Tribunal or Reserve Bank of India or any Court or any other Tribunal for
 non-compliance with the provisions of Section 58Aand 58AAofthe
 Companies Act, 1956.
 
 7) In our opinion, the company has an internal audit system
 commensurate with its size and nature of its business.
 
 8) On the basis of the records produced, we are of the opinion that
 prima facie, the cost records and accounts prescribed by the Government
 of India under Section 209(1) (d) of the Companies Act, 1956 have been
 made and maintained by the Company.
 
 9) (i) According to the information and explanation given to us and
 records of the Company examined by us, in our opinion, the Company 
 is generally 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, 
 Customs Duty, Excise Duty, Cess and other material statutory dues as 
 applicable with the appropriate authorities.
 
 (ii) According to the information and explanations given to us, there
 were no undisputed amounts payable in respect of Provident Fund,
 Investor Education and Protection Fund, Employees'' State Insurance,
 Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and
 other material statutory dues outstanding as at 31st March, 2012 for a
 period of more than six months from the date they became payable.
 
 (iii) According to the information and explanations given to us and the
 records of the Company examined by us, the particulars of Income Tax as
 at 31st March 2012 which have not been deposited on account of dispute
 is as under:
 
 S.No  Name of the
       Statute       Nature of    Amount   Period to  Forum where dispute
                                                      is pending
                     disputed     Rs. in   which the
                     dues         Lakhs    amount
                                           relates
 
 1    The Income 
      Tax Act,       Direct Tax    7.01    AY 2009-
                                           2010       Commissioner of 
                                                      Income Tax(Appeals)
      1961
 
 10) The company has no accumulated losses as at March 31, 2012 and has
 not incurred cash losses during the financial year covered by our audit
 or in the immediately preceding financial year.
 
 11) According to the records of the Company examined by us and the
 information and explanations given to us, the Company has not defaulted
 in repayment of dues to financial institution and bank. The Company
 does not have any borrowings by way of debentures.
 
 12) According to the information and explanations given to us and based
 on the documents and records produced before us, the Company has not
 granted 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.
 
 14) According to the information furnished to us, the Company is not
 dealing in or trading in shares, securities, debentures and other
 investments. Accordingly, the requirements of clause (xiv) of paragraph
 4 of the Order are not applicable.
 
 15) In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given by the
 Company for loans taken from banks by its subsidiary from banks and
 financial institutions are not prima-facie prejudicial to the interest
 of the Company.
 
 16) In our opinion and according to the information and explanations
 given to us, the term loans availed by the Company were, prima facie,
 applied by the Company during the year for which the loans were
 obtained.
 
 17) According to the information and explanations given to us and on an
 overall examination of the Balance Sheet of the Company funds raised on
 short-term basis have prima facie, not been used for long term
 investments or other investments during the year under report.
 
 18) The Company has not made any preferential allotment of shares to
 parties or companies covered in the register maintained under section
 301 of the Companies Act, 1956 during the year.
 
 19) The Company has not issued any debentures during the year. Hence
 the clause (xix) of paragraph 4 of the Order is not applicable.
 
 20) The Company has not raised any money by public issue during the
 year. Accordingly the provisions of clause (xx) of paragraph 4.of the
 Order are not applicable to the Company during the year under report.
 
 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 instances of
 material fraud on or by the Company, noticed or reported during the
 year, nor have we been informed of such case by management.
 
                                           For Jeeravla & Co., 
 
                                         Chartered Accountants
                                          Firm Reg No. 001323S
 
                                              Sohan C.J.Parmar
 
 Place : Chennai                                    Proprietor
 
 Date : 27th July 2012                     Membership No:22321