1.  We have audited the attached Balance Sheet of Rashtriya Chemicals &
 Fertilizers Limited (''the Company'') as at March 31, 2011 and also the
 Profit and Loss Account 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 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 (as
 amended) issued by the Central Government of India irr terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956 (''the Act''),
 we enclose in the Annexure a statement on the matters specified in
 paragraphs 4 and 5 of the said Order.  .
 
 4.  Without qualifying our report, we draw attention to:
 
 a.  Note No. 8 of Schedule XVI to the accounts regarding the claim of
 subsidy accounted on estimated basis, pending final settlement of such
 claims.
 
 b.  Note No. 19 of Schedule XVI to the accounts regarding the
 classification of Fertilizer Bonds with the carrying amount of Rs.
 305.94 Crores as current assets instead of Investments as per schedule
 VI of the Companies Act, 1956.
 
 c.  Note No. 6 of Schedule XVI to the accounts which states that some
 of the Sundry Debtors, Sundry Creditors, Other Current Liabilities and
 Loans and Advances are subject to confirmation, reconciliation and
 consequential adjustments, if any.
 
 5. Further to our comments in the Annexure referred'' to above, we
 report that:
 
 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;
 
 In our opinion, proper books of account as required by law have been
 kept by the Company so far as it appears from our examination of those
 books;
 
 a.  The Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 b.  In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with the accounting
 standards referred to in sub-section (3C) of Section 211 of the Act;
 
 c.  Central government has directed vide notification number G.S.R.
 829(E) dated 21st October, 2003 of clause (g) of sub- section (1) of
 Section 274 of the Act is not applicable to a government company;
 
 d.  In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with the
 significant accounting policies and the notes forming part of accounts
 give the information required by the Act, 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 March 31, 2011;
 
 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 Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Annexure to the Auditors'' Report
 
 Annexure referred to in paragraph 3 of our report of even date RE:
 Rashtriya Chemicals and Fertilizers Limited (The Company'')
 
 (i) (a) The Company has maintained proper records showing particulars
 including quantitative details and situation of fixed assets with
 original cost and depreciation written off in respect of identifiable
 units of assets and where such information for identifiable units of
 assets is not available, the records show the cost and depreciation
 written off in respect thereof as a group or class.  The items of
 assets in respect of which quantitative details are not linked with the
 cost or book value are of small value acquired prior to April 1978 and
 are fully depreciated particularly in respect of movable items acquired
 from Fertilizers Corporation of India Limited.
 
 (b) As informed to us, the fixed assets have been physically verified
 by the management with the help of an independent outside agency at
 reasonable intervals.  We have been informed that discrepancies noticed
 On physical verification of fixed assets as compared to the book
 records were not material.
 
 (c) During the year, the Company has not disposed of a substantial part
 of its fixed assets.
 
 (ii) (a) Physical verification of finished goods, packing materials and
 raw materials inside factory premises has been carried out by the
 management at reasonable intervals and the stocks of stores and spare
 parts has been conducted by them with the help of an independent
 outside agency in a phased programme so as to complete the verification
 of all items over a period.  Finished goods and other inventory stored
 outside the factory premises are taken as per warehousing certificates
 and third party confirmation respectively.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures for the 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) The Company is maintaining proper records of inventory. In our
 opinion, discrepancies noticed on physical verification of stocks were
 not material in relation to the operations of the Company and the same
 have been properly dealt with in the books of account.
 
 (iii) As per the information furnished, the Company has not granted or
 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. Hence reporting under clause iii (a) to (f) of
 the Order is not applicable to the Company.
 
 (iv) 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 purchase of inventories arid fixed assets and
 for the sale of goods. In our opinion and according to the information
 and explanations given to us during the course of our audit, no major
 weakness has been noticed in the internal control system in respect of
 these areas.
 
 (v) According to the information and explanations given to us, we are
 of the opinion that there are no transactions that need to be entered
 into register in pursuance of Section 301 of the Companies Act, 1956.
 
 (vi) According to the information and explanations given to us, the
 Company has not accepted any deposit during the year from public within
 the meaning of the provisions of Section 58A and Section 58AA of the
 Companies Act, 1956 and the rules framed thereunder.  Hence, clause
 4(vi) of the Order is not applicable.
 
 (vii) The Company has its own internal audit department which conducts
 the internal audit and in our opinion, the present internal audit
 system is commensurate with the size and the nature of its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company in respect of its product i.e. Methanol, Sulphuric Acid and
 Fertilizers pursuant to the order of Central Government for maintenance
 of cost records prescribed under Section 209 (1) (d) of the Companies
 Act, 1956 and are of the opinion that prima facie the prescribed
 accounts and records have been made and maintained. To the best of our
 knowledge and according to the information and explanations given to
 us, the Central Government has not prescribed maintenance of cost
 records under Section 209(1) (d) of the Companies Act, 1956 for other
 products of the Company.
 
 (ix) (a) In our opinion, the procedure followed as per Note No 24 of
 Schedule XVI to the accounts in respect of deduction and payment of
 income tax results into delays in some cases. The exact delays are not
 ascertained.  Delays have also been observed in depositing the tax with
 local authorities in case of Thai unit. Except this, the 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
 undisputed statutory dues have generally been regularly deposited with
 the appropriate authorities.
 
 Further, since the Central Government has till date not prescribed the
 amount of cess payable under section 441 A of the Act, we are not in a
 position to comment upon the regularity or otherwise of the Company in
 depositing the same.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees'' state insurance, income-tax,
 wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and
 other undisputed statutory dues were outstanding, at the year end, 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 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
 and the forum where the dispute is pending are as follows:
 
 Name of the  Nature of dues      Amount  Years to   Forum where
 Statute                          (Rs in  which the  dispute is
                                   lacs)  amount     pending
                                          relates
 
 Customs Act  Demand of         1,635.00  2004-05    Central Excise,
 1962         Custpms duty and                       Service Tax
              penalty                                Appellate Tribunal
             (Trombay Unit)
 
 Income Tax   Disallowance of      49.05  A.Y. 
                                          2008-09    Commissioner
 Act, 1961    certain 
              expenditure                            of Income Tax
              & certain 
              additions                             (Appeals)
              at the time of
              assessment
 
 Income Tax   Tax Deducted at      77.94  A.Y.
                                          2006-07    Commissioner
 
 Act, 1961    Source on 
              Salaries              0.44  A.Y. 
                                          2008-09    of Income Tax
 
                                   10.96  A.Y.
                                          2009-10    (Appeals)
 
 Central      Demand of 
              Central           1,298.36  November   Central Excise,
 
 Excise Act,  Excise duty in              1996 to 
                                          March      Service Tax
 1944         respect of 
              Naphtha                     2001 and   Appellate Tribunal
              procured at                 March 
                                          2005 to
              concessional
              rates                       October 
                                          2005
              used for 
              products            998.72  April 
                                          2001 to    Appeal to Central
              which are not               February 
                                          2005       Excise, Service Tax
              exempted Thai                          Appellate Tribunal
              Unit     
                                                     is being filed
 
                                1,788.55  July
                                          2007 to    Disputed by the
                                          August 
                                          2009       company before
                                                     Commissioner of
                                                     Central Excise
 
 Central     Demand of 
             Central            1,744.66  Prior to
                                          1997 to    Central Excise,
 Excise Act, Excise duty in               March 2006 Service Tax
 1944        respect of Low                          Appellate Tribunal
             Sulphur High
             Stock/Furnace
             Oil procured at
             concessional 
             rates used for
             other than
             fertilizer
             products
            (Trombay Unit)
 
             Demand of 
             Central              290.34  August
                                          1986 to    Commissioner of
             Excise duty in               February 
                                          2000       Central Excise
             respect of Low                         (Appeals)
             Sulphur High
             Stock/Furnace
             Oil procured at
             concessional 
             rates used 
             for other than
             fertilizer
             products
            (Trombay Unit)
 
 Uttarakhand Additional           32.16  2006-07     Asst Commissioner
 Value Added duty imposed                            Commercial Tax-
 Tax, 2005   due to wrong                            Uttarakhand
             identification of
             product ingredient
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and as p,er the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a bank. The company
 has not issued any debentures and has not obtained any loan from
 Financial Institution.
 
 (xii) Based on our examination of documents and records and as per
 fnformation and explanations given, 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 or a nidhi / mutual benefit fund
 / society. Therefore, the provisions of clause 4(xiii) of the Companies
 (Auditor''s Report) Order, 2003 (as amended) are not applicable to the
 Company.
 
 (xiv) According to the information and explanations given to us, the
 company is not dealing or trading in shares, securities, debentures and
 other investments.  Therefore, the provisions of clause 4(xiv) of the
 Companies (Auditor''s Report) Order, 2003 (as amended) are not
 applicable to the Company.
 
 (xv) According to the information and explanations given to us, the
 Company has given a corporate guarantee for loan from bank taken by its
 joint venture company ''viz. FACT RCF Building Products Ltd., the terms
 and conditions whereof in our opinion, are not prima-facie prejudicial
 to the interests of the Company.
 
 (xvi) To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, term loans
 availed by the Company were, applied by the Company during the year for
 the purposes for which the loans were obtained other than funds
 temporarily invested pending utilization for the intended use.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of trie Company .we report
 that no funds raised on short-term basis have been used for long-term
 investment.
 
 (xviii) The Company has not made any allotment of shares during the
 year.
 
 (xix) The Company has not issued any debentures.
 
 (xx) The Company has not raised any money by public issue during the
 year.
 
 (xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations given by the management, we report
 that no fraud on or by the Company has been noticed or reported during
 the course of our audit.
 
 For JCR & Co.                         For G. D. Apte & Co.
 
 Firm Registration Number 105 270W     Firm Registration Number 100 515W
 
 Chartered Accountants                 Chartered Accountants
 
 Saiprabha. R                          U. S. Abhyankar
 
 Partner                               Partner
 
 Membership No. 34716                  Membership No. 113053
 
 Mumbai                                Mumbai
 
 Date : May 10, 2011                   Date : May 10, 2011