We have audited the attached Balance sheet of PRIME SOLVENT EXTRACTIONS
 LIMITED as at March 31, 2005 and also the Profit & Loss Account of the
 company lor the year ended March 31, 2005 annexed thereto these
 financial statement are the responsibility of the management of the
 company. Our responsibility is to express an opinion on these financial
 statements based on our audit.
 
 1. We conducted our audit in accordance with the auditing standards
 generally accepted in India. These Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free from any material misstatement. An audit
 examination 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
 presentation of the financial statements. We believe that our audit
 provides a reasonable basis lor our opinion:
 
 2. As required by the Companies (Auditors Report) Order 2003 issued by
 the Central Government of India in terms of sub. section (4 A ) of
 section 227 of the Companies Act 1956 and subsequently amended we
 enclose in the annexure hereto a statement on the matters specified in
 paragraph 4 and 5 of the said Order.
 
 3. Further to our comments in the Annexure referred to 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 purpose of our
 audit;
 
 b. In our opinion, proper books account as required by law have been
 kept by the company, so far as appears from our examination of the
 books of the Company;
 
 e. The Balance Sheet and the Profit and Loss Account dealt with by this
 report are in agreement with the books of account of the Company:
 
 d. In our opinion the Balance Sheet & Profit & Loss Account comply with
 the Accounting Standards referred to in sub-section (3C ) of section
 211 of the Companies Act 1956, to the extent applicable.
 
 e. The Company has not ascertained from its Directors, whether any of
 them is disqualified from being appointed as a directors u/s
 274(1)(g)of the Companies Act 1956.
 
 f. In our opinion the Accounts give the information required by
 Companies Act 1956 in the manner so required subject to Note to the
 Accounts:
 
 In the very nature of things and looking to the circumstances in which
 the company was acting the Balance Sheet cannot be said to give a true
 and fair view of the state of the company due to the observations made
 in Notes to account but the Profit and Loss Account for the year gives
 a true and fair view of the affairs of the company during the period
 for which it has been made.
 
                                                           For NGS & Co.
                                                   Chartered Accountants
                                                         Sajay Toshniwal
                                                                 Partner
                                                   Membership No. 104172
 PLACE : MUMBAI
 DATE : 31st August, 2005
 
 ANNEXURE REFERRED TO IN PARAGRAPH (3) OF OUR REPORT OF EVEN DATE ON THE
 ACCCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2005 OF PRIME SOLVENT
 EXTRACTIONS LIMITED
 
 On the basis of the information and explanations furnished to us and
 books and records examined by us in the normal, course of audit and to
 the best of our knowledge and belief, we report that:
 
 1. (a) The Company has not maintained any records to show quantitative
 details and situation of its Fixed Assets
 
 (b) According to the information and explanations given to us, the
 Fixed Assets have been physically verified by the management during the
 year, and no material discrepancies were noticed on such verification
 with book records.
 
 (c) During the year, the company has not disposed off any major part of
 the Fixed Assets, so as to affect its going concern.
 
 2. (a) As explained to us, the inventories have been physically
 verified by the management at reasonable intervals during the year.
 
 (b) The procedure followed by the management for physical verification
 of stock is 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 and the
 discrepancies, not material, between the physical verification as
 compared to book stock have been properly dealt with in books of
 account
 
 3. The Company has not granted/taken any loans, secured or unsecured
 to/from companies, firms or other parties covered in the register
 maintained under section 301 of the Companies Act 1956. Consequently
 requirement of sub clauses (b), (c), (d), (e), (f) and (g) of paragraph
 4 of the order are not applicable.
 
 4. In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business with regard to the purchase of Taw material, stores, spare
 parts, plant and machinery, equipment, other assets and for sale of
 goods. During the course of our audit, we have not observed any
 continuing failure to correct major weaknesses in internal control
 procedures.
 
 5. According to the information and explanations given to us, during
 the year no transactions have been entered by the Company with the
 parties mentioned in the register maintained pursuant to section 301 of
 the Companies Act, 1956.
 
 6. The Company has not accepted any deposits from the public
 
 7. The Company has an internal audit system commensurate with its size
 and nature of its business.
 
 8. The Central Government has not prescribed maintenance of cost
 records under section 209 (1) (d) of the companies act, 1956 for any of
 the products of the company.
 
 9. (a) According to the records of the Company, undisputed statutory
 dues including, Investor Education and Protection Fund, Sales Tax,
 Income Tax, Wealth Tax, Customs Duty, cess and other statutory dues
 have not been regularly deposited with appropriate authorities.
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of the aforesaid dues were
 outstanding as at 31st March, 2005 for a period of more than six months
 from the date of becoming payable.
 
 (b) There are no disputed statutory dues as at 31st March 2005.
 
 10. The accumulated losses of the company arc more than fifty percent
 of its net worth and have incurred cash losses in the financial year
 ended 3 1st March 2005. However, the company has not incurred cash
 losses in the immediate preceding financial year.
 
 11. According to the information and explanation given to us, the
 Company has defaulted in repayments of Term Loans from Financial
 Institution & Bank and Bank Over Draft of Rs.22,03,86,418/- as at 31
 March 2005 The said default is continuing since April 1999.
 
 12. According to the information and explanations given to us, 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. In our opinion, the Company is not Chit Fund or Nidhi Mutual
 Benefit Fund/Society. Therefore, the provisions of clause 4(xiii) of
 the Companies (Auditors Report) Order 2003 are not applicable to the
 Company
 
 14. The Company has maintained proper records of transactions and
 contracts in respect of trading in securities, debentures and other
 investments and timely entries have been made therein. All shares,
 debentures and other investments have been held by the Company in its
 own name except to the extent of exemption granted under section 49 of
 the Act.
 
 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 financial institutions/banks
 
 16. The Company has not raised any term loan during the year, therefore
 the provisions of clause 4 (xvi) of the Companies (Auditors Report)
 Order, 2003 are not applicable to the company.
 
 17. According to the cash flow statement and other records examined by
 us and according to the information and explanations given to us and on
 an overall basis, funds raised on short term basis have not,
 prima-facie been used during the year for long term investments.
 
 18. During the year, the Company has not made any preferential
 allotment of shares to parties covered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 19. According to the information and explanations given to us, the
 Company had not issued any secured debentures during the year.
 
 20. The Company has not raised any money by public issue during the
 year Therefore, the provisions of clause 4 (xx) of the Companies
 (Auditors Report) Order, 2003 are not applicable to the company.
 
 21. In our opinion and according to the information and explanations
 given to us, no fraud by/against the company has been noticed or
 reported during the year.
 
                                                           For NGS & Co.
                                                   Chartered Accountants
                                      For Prime Solvent Extractions Ltd.
                                                       Sanjay Toshiniwal
                                                       Managing Director
                                                                 Partner
                                                   Membership No. 104172
 PLACE : MUMBAI
 DATE : 31st August, 2005