1.  We have audited the attached Balance Sheet of RADICO KHAITAN
 LIMITED as at 31st March, 2012 and also the Statement of Profit and
 Loss and Cash Flow Statement of the Company 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 the 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 presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 3.  We report that
 
 (a) We have obtained all the information and explanations, which to the
 best of our knowledge and belief, were necessary 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, Statement of Profit and Loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 Account;
 
 (d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
 Cash Flow Statement dealt with by this report comply with the
 accounting standards referred to in section 211 (3C) of the Companies
 Act, 1956 to the extent applicable;
 
 (e) 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 directors are prima facie, disqualified as on 31.03.2012 from being
 appointed as directors of the Company in terms of section 274(1 )(g) of
 the Companies Act, 1956.
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts and read with the
 significant accounting policies and notes thereon, 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 the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2012;
 
 ii in the case of the Statement of Profit and Loss, of the profit 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.
 
 4. As required by the Companies (Auditors Report) Order, 2003 (as
 amended) issued by the Department of Company Affairs, Govt, of India in
 terms of Section 227 (4A) of the Companies Act, 1956, and on the basis
 of such checks as we considered appropriate and according to the
 information and explanations given to us, we further report on the
 matters specified in the paragraphs 4 and 5 of the said Order as under
 :
 
 a) The Company is maintaining proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 b) The management has physically verified major part of the fixed
 assets at the distillery at Rampur and other locations once during the
 year. The assets physically verified are under reconciliation with the
 book records and discrepancies, if any, can be ascertained only after
 the reconciliation is complete.
 
 c) Since there is no substantial disposal of fixed assets during the
 year, the preparation of financial statements on a going concern basis
 is not affected on this account.
 
 ii a) On the basis of information and explanations obtained, stocks of
 finished goods and raw materials of the distillery / bottling units
 have been under physical check by the excise department in coordination
 with the Company''s supervisory staff at frequent intervals. Other
 stocks, stores and spares, at various locations have been physically
 verified by the management during the year. 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) In our opinion, the Company is maintaining proper records of
 inventory and no material discrepancies were noticed on physical
 verification.
 
 iii a) The Company has granted Rs. 1963.03 lacs as interest free
 unsecured working capital advance under a specific manufacturing and
 selling arrangement and Rs.1000 lacs as interest bearing unsecured
 advance to a joint venture company.  The maximum amounts outstanding
 during the year aggregated to Rs.3028.86 lacs and year end outstanding
 balance aggregated to Rs.3028.86 lacs respectively.
 
 b) Keeping in view similar arrangement with other parties, the working
 capital arrangement financed by the Company is free of interest under a
 specific manufacturing and selling arrangement. In relation to both
 advances, there are no other terms and conditions that are prejudicial
 to the interest of the Company.
 
 c) There is no stipulation regarding repayment of principal as the
 amount has been financed under a specific manufacturing and selling
 arrangement with the party. As mentioned above, the loan has been
 financed interest free.  In the case of interest bearing advance also,
 there are no stipulations regarding repayment of principal and interest
 of Rs.56.38 lacs has accrued but not due as at the year end.
 
 d) As mentioned above, there are no stipulations regarding repayment of
 principal. Accordingly, there is no overdue amount of more than rupees
 one lac in respect of amount financed to the Company listed in the
 register maintained under section 301 of the Companies Act, 1956.
 
 e) The Company has not taken any loans, secured or unsecured from
 companies, firms or other parties required to be covered in the
 register maintained under section 301 of the Companies Act, 1956 except
 interest free working capital advance taken from a joint venture
 company (ceased to be a joint venture w.e.f.: 3rd February, 2012) under
 a specific manufacturing and selling arrangement. The maximum amount
 outstanding during the year was Rs,384.08 lacs and year-end outstanding
 balance was Rs.360.42 lacs.
 
 f) In our opinion and according to the information and explanations
 given to us, other terms and conditions for such advances are not prima
 facie prejudicial to the interest of the Company.
 
 g) In respect of the advances taken, there is no repayment schedule and
 is interest free. Thus question of principal amount due for repayment
 and payment of interest do not arise.
 
 iv In our opinion and according to the information and explanations
 given to us, there are 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 with regard to the sale of
 goods. During the course of our audit, we have neither come across nor
 have been informed of any continuing failure to correct major
 weaknesses in the internal control system.
 
 v a) According to the information given to us, the particulars of
 contracts or arrangements during the year that need to be entered into
 a register in pursuance of section 301 of the Companies Act, 1956 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 lacs, are of specific
 requirements of the Company for which alternative sources are not
 available for comparison of prevailing market prices.
 
 vi The Company has not accepted deposits from the public within the
 meaning of sections 58A and 58AA or any other relevant provisions of
 the Companies Act, 1956 and the Rules framed there under.
 
 vii An outside agency has carried out internal audit during the year.
 In our opinion, the internal audit system of the Company is
 commensurate with the size of the Company and the nature of its
 business.
 
 viii We have broadly reviewed the books of accounts maintained by the
 Company, pursuant to rules made by the Central Government for the
 maintenance of cost records under clause (d) of sub-section (1) of
 section 209 of the Companies Act, 1956 and are of the opinion that
 prima facie, the prescribed accounts and records have been maintained
 and the required statements are in the process of compilation. We have
 not, however, made a detailed examination of the records with a view to
 determine whether they are accurate or complete.
 
 ix a) According to the records of the Company, the Company has been
 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, Custom
 Duty, Excise Duty, Cess and any other statutory dues with the
 appropriate authorities. According to the information and explanations
 given to us, there were no arrears of undisputed statutory dues as at
 31st March, 2012, which were outstanding for a period of more than six
 months from the date they became payable.
 
 b) According to the records of the Company and the information and
 explanation given to us, there are no dues of income-tax, wealth tax,
 custom duty and cess, which have not been deposited on account of any
 dispute. Details of disputed dues in respect of sales tax, excise duty
 and service tax of different years, which have remained unpaid as on
 31st March, 2012, for which appeals are pending are as under:
 
 Nature of          Year              Amount            Forum where
 dues                               (Rs. in lacs)       pending
 
 Sales Tax / 
 Entry Tax         1998-99             3.02            Revision before
                   & 1999-00                           Allahabad
                                                       High Court
 
                   1999-00             6.86            Trade Tax 
                                                       Tribunal,
                                                       Moradabad
 
 Excise Duty       1981               17.37            Allahabad 
                                                       High Court -
                                                       Lucknow Bench
 
                   1995 to 2005       92.38            Allahabad High
                                                       Court -
 
                                                       Lucknow Bench
                                                      (Bank
                                                       Guarantee issued)
 
                   2005-06 to 
                   2008-09            56.03            Allahabad High
                                                       Court -
                                                       Lucknow Bench
 
 Service Tax       July 2003 to     8259.47            CESTAT. Delhi
                   March 2009
                  (including 
                   Interest
                   and Penalty)
 
 x The Company has no accumulated losses as at the end of the year and
 has not incurred cash losses during the financial year covered by our
 audit or in the immediately preceding financial year.
 
 xi On the basis of the verification of records and information and
 explanations given to us, the Company has not defaulted in repayment of
 dues to financial institutions or banks. There are no debentures (other
 than unsecured FCCBs which were repaid during the year) outstanding in
 the books of accounts at any time during the year.
 
 xii The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 xiii The Company is not a chit fund / nidhi / mutual benefit fund /
 society. Therefore, the provisions of clause 4(xiii) of the Companies
 (Auditors Report) Order are not applicable to the Company.
 
 xiv As regards dealing or trading in shares, securities, debentures and
 other investments, proper records have been maintained of the
 transaction of the contracts and timely entries made therein. The
 shares, securities, debentures and other investments have been held by
 the Company in its own name except to the extent of exemption, if any,
 granted under Section 49 of the Companies Act, 1956.
 
 xv The Company has given a guarantee of Rs.5640 lacs for loans taken by
 Radico NV Distilleries Maharashtra, (a joint venture company, in which
 the Company holds 36% of the paid-up Capital) from a bank. On the basis
 of information and explanations given to us, the terms and conditions
 whereof are not, prima facie, prejudicial to the interest of the
 Company.
 
 xvi On the basis of verification and information and explanations
 obtained, on an overall basis, the term loans taken have been applied
 for the purpose for which they were obtained.
 
 xvii According to the information and explanations given to us, the
 cash flow statements examined by us and on an overall examination of
 the financial statements of the Company, we report that funds raised on
 short term basis have been not been used for long term investments.
 
 xviii During the year, 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.
 
 xix As the Company has no outstanding debentures during the year (other
 than unsecured FCCBs, which were repaid during the year), the question
 of creating securities or charge does not arise.
 
 xx The Company has not raised any money through public issue of
 securities during the year and therefore verification of the end use of
 money does not arise.
 
 xxi Based on the audit procedure performed and the representation
 obtained from the management, we report that no case of fraud on or by
 the Company has been noticed or reported during the year under audit.
 
                                        For V. Sankar Aiyar & Co.
 
                                         Chartered Accountants
 
                                       ICAI Firm Regn. No. 109208W
 
                                                 Sd/-
 
 Place: New Delhi                           (M.S. Balachandran)
 
 Date : 30.05.2012                                Partner
 
                                              M.No. 024282