1.  We have audited the attached Balance Sheet of M/s Rajshree Sugars &
 Chemicals Limited as at 31st March 2012, the Statement of Profit and
 Loss and 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 misstatements. 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.  As required by the Companies (Auditor''s Report) Order, 2003 as
 amended, issued by the 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 to the extent applicable.
 
 4.  Further to our comments in the annexure referred to 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 Statement of Profit and Loss 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 Statement of Profit and Loss
 and the Cash Flow Statement dealt with by this report are in compliance
 with the Accounting Standards referred to in sub-section (3C) of
 section 211 of the Companies Act, 1956;
 
 e) On the basis of written representation received from the Directors
 as on 31st March 2012, and taken on record by the Board of Directors,
 in our opinion none of the Directors is disqualified as on that date,
 from being appointed as a Director in terms of clause (g) of
 sub-section (1) of section 274 of the Companies Act, 1956, and
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts 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 Loss 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 our report of even date)
 
 i) a. The Company has maintained proper records showing full
 particulars including quantitative details and situation of its fixed
 assets.
 
 b.  As explained to us, all the fixed assets have been physically
 verified in a phased periodical manner, by the management, which in our
 opinion is reasonable having regard to the size of the company and
 nature of its assets.  No material discrepancies have been noticed on
 such physical verification.
 
 c.  The company has not disposed off substantial part of its fixed
 assets during the year.
 
 ii) a. The physical verification of inventory has been conducted by the
 management at reasonable intervals.
 
 b.  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.
 
 c.  On the basis of our examination of records of inventory, in our
 opinion, the Company has maintained proper record of inventory and no
 material discrepancies were noticed on the physical verification of
 inventories as compared to the book records.
 
 iii) a. The Company has not taken any loans, secured or unsecured from
 Companies, firms or other parties covered in the register maintained
 under section 301 of the Act.
 
 b.  The Company has granted unsecured loan to its wholly owned
 subsidiary company. The maximum amount involved in the above
 transaction net of periodical repayments is Rs 3,076.13 lakhs and the
 year end balance is Rs 1,505.61 lakhs. In our opinion and according to
 the information and explanations given to us, the rate of interest and
 other terms & conditions of the loan are not prima facie prejudicial to
 the interests of the company.
 
 c.  In respect of said loan, the said principal and interest are
 payable on demand and therefore the question of overdue amounts does
 not arise.
 
 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, with
 regard to purchase of inventory and fixed assets and for the sale of
 goods and services. During the course of our audit, no major weaknesses
 have been noticed in the internal control systems.
 
 v) a. To the best of our knowledge and belief, and according to the
 information and explanations given to us, we are of the opinion that
 the transactions that need to be entered into the 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,
 such transactions have been made at prices, which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 vi) In our opinion, the Company has complied with the provisions of
 Section 58A of the Companies Act, 1956 and the Companies (Acceptance of
 Deposits) Rules, 1975 with regard to the deposits accepted from the
 public.
 
 vii) In our opinion, the Company has an adequate internal audit system
 commensurate with the size and the nature of its business;
 
 viii) The Central Government has prescribed maintenance of cost records
 under section 209 (1) (d) of the Companies Act, 1956 in respect of
 certain products manufactured by the company. We have broadly reviewed
 the accounts and records of the Company in this connection and are of
 the opinion that prima facie, the prescribed accounts and records have
 been made and maintained. We have not, however carried out a detailed
 examination of the same.
 
 ix) a. The Company is regular in depositing undisputed statutory dues
 including Provident Fund, Investor Education and Protection Fund,
 Employees'' State Insurance, Income tax, Sales tax, Wealth tax, Customs
 duty, Excise duty, Service tax, Cess and any other statutory dues with
 the appropriate authorities. According to the information and
 explanation given to us no undisputed arrears of statutory dues were
 outstanding as at 31.03.2012 for a period of more than six months from
 the date they became payable.
 
 b. According to the information and explanations given to us, the
 details of disputed statutory dues which have not been deposited is as
 given below:
 
 Name of the 
 statute         Period to 
                 which           Nature of 
                                 demand           Amount  
                                                  disputed   Forum where
                                                             dispute
                 amount relates                  (Rs in 
                                                  lakhs)     is pending
 
 TNGST           1995-96 to
                 1997-98         Interest on 
                                 sales tax         42.50     High Court,
                                                             Chennai
 
 Service Tax     2006 -2007      Penalty           21.00     Commissioner
                                                            (Appeals)
 
 TNGST           2000-01 to 
                 2004-05         Sales tax        256.82     1st 
                                                             Appellate
                                                             Authority
 
 x) There are no accumulated losses at the end of the financial year
 31.03.2012.The Company has not incurred cash loss during the financial
 year covered by our audit and has incurred cash loss in the immediately
 preceding financial year.
 
 xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 financial institutions or banks. The company has not issued any
 debentures till date.
 
 xii) During the year, 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) The provisions of special statute applicable to Chit fund,
 nidhi/mutual benefit fund / societies are not applicable to the
 Company.
 
 xiv) The Company is not dealing or trading in shares, securities,
 debentures and other investments.
 
 xv) The Company has given corporate guarantee for loans taken from bank
 by its wholly owned subsidiary Company.  According to the information
 and explanations given to us, the terms & conditions of the guarantee
 given are not prejudicial to the interests of the company.
 
 xvi) The Company has applied term loans for the purpose for which the
 loans were obtained during the year.
 
 xvii) According to the information and explanations given to us and on
 an overall examination of the source and application of funds of the
 Company, we report that out of the funds raised on short term basis
 during the year, an amount of Rs 1871.84 lakhs has been used for long
 term investments by way of part financing the acquisition of fixed
 assets.
 
 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 .
 
 xix) The Company has not issued any secured debentures during the year.
 
 xx) The Company has not raised any money by way of public issues during
 the year.
 
 xxi) To the best of our knowledge and belief and according to the
 information and explanations given to us, no frauds on or by the
 Company has been noticed or reported during the year.
 
 
                                                For SRIKISHEN & CO.
 
                                             Chartered Accountants
 
                                                  Reg No. 004009 S
 
                                                    K.Murali Mohan
 
 Place: Coimbatore                             Membership No.14328
 
 Date: 19th May 2012                          Auditors, Proprietor