1.  We have audited the attached Balance Sheet of Rain Calcining
 Limited, as at March 31, 2007, and the related Profit and Loss Account
 and the 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,
 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 give 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 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, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (d) In our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report comply with the
 accounting standards referred to in sub-section (3O of Section 211 of
 the Act;
 
 (e) On the basis of written representations received from the
 directors, as on March 31, 2007 and taken on record by the Board of
 Directors, none of the directors is disqualified as on March 31, 2007
 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 giyen 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 March 31, 2007;
 
 (ii) in the case of the Profit and Loss Account,, of the profit 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.
 
 
 Annexure to the Auditors Report
 
 [Referred to in paragraph 3 of the Auditors Report of even date to the
 members of Rain Calcining Limited on the financial statements for the
 year ended March 31, 2007]
 
 1.  (a) The Company is maintaining proper
 
 records showing full particulars including quantitative details and
 situation of fixed , assets.
 
 (b) The fixed assets are physically verified by the management
 according to a phased programme designed to cover all the items over a
 period of three years, which in our opinion, is reasonable having
 regard to the size of the Company and the nature of its assets.
 Pursuant to the programme, a portion of the fixed assets has been
 physically verified by the management during the year and no material
 discrepancies between the book records and the physical inventory have
 been noticed.
 
 (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.
 
 2.  (a) The inventory has been physically verified
 
 by the management during the year/ at the year end according to a
 phased programme normally so designed that each material item is
 physically verified at least once in a year and more often in
 appropriate cases. 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 is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records were not material.
 
 3.  The Company has neither granted nor taken any loans, secured or
 unsecured, to/from companies, firms or other parties covered in the
 register maintained under Section 301 of the Act.
 
 4 In our opinion and according to the information and explanations
 given to us, having regard to the explanation that certain items
 purchased are of special nature for which suitable alternative sources
 do not exist for obtaining comparative quotations, 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 operations of the Company did , not
 involve any sale of services. 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.
 
 5.  (a) In our opinion and according to the
 
 information and explanations given to us, the particulars of contracts
 or arrangements that need to be entered into the register in pursuance
 of Section 301 of the Act, 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 and exceeding the value of Rupees Five Lakhs in respect of
 any party during the year have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 
 6.  The Company has not accepted any deposits from the public within
 the meaning of Section 58A and Section 58AA of the Act and the rules
 framed there under.
 
 7. In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 8. We have broadly reviewed the books of account maintained by the
 Company in respect of generation of power 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. The Central Government
 of India has not prescribed the maintenance of cost records by the
 Company under clause (d) of sub - section (1) of Section 209 of the Act
 for the manufacture of Calcined Petroleum Coke.
 
 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, 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. According to the information and explanations given to us,
 investor education and protection fund is not applicable to the Company
 during the year.
 
 (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
 which have not been deposited on account of any dispute.
 
 10. The Company has no accumulated losses as at March 31, 2007 and it
 has not incurred any cash losses in the financial year ended on that
 date 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 any financial institution or bank as at the
 balance sheet date.
 
 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.
 
 13.  The provisions of any special statute applicable to chit fund /
 nidhi / mutual benefit fund / societies are not applicable to the
 Company.
 
 14.  In our opinion, the Company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 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.
 
 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.
 
 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.
 
 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.
 
 19.  The Company has not issued any debentures
 during the year.
 
 20.  The Company has not raised any money by public issues during the
 year.
 
 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.
 
 22.  The other clauses, (iii)(b), (iiic), (iiid), (iii)(f) and (iii)(g)
 of paragraph 4 of the Companies (Auditors Report) Order 2003, as
 amended by the Companies (Auditors Report) (Amendment) Order, 2004,
 are not applicable in the case of the Company for the current year,
 since in our opinion there is no matter which arises to be reported
 upon under the aforesaid order.
 
                                                  P. Rama Krishna
                                                          Partner
                                             Membership No: 22795 
 
                                             For and on behalf of
 Date : Hyderabad                                Price Waterhouse
 Place : May 30, 2007                       Chartered Accountants