1.  We have audited the balance sheet of RAVILEELA DAIRY PRODUCTS
 LIMITED as at March 31, 2011 the Profit and Loss Account and also the
 related 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. These standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free from material misstatement. An audit
 includes an examination on test basis evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates and
 judgments made by the management in the preparation of financial
 statements and evaluating the overall financial statement presentation.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 as
 amended by the Companies (Auditor''s Report) order, (Amendment) 2004
 issued by the Central Government in terms of Sub Section (4A) of
 Section 227 of the Companies Act, 1956, we enclose in the Annexure a
 statement on the matter specified in Paragraphs 4 and 5 of the said
 order.
 
 4.  Further to the comments in the Annexure referred to in paragraph 3
 above:
 
 (i) 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;
 
 (ii) 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;
 
 (iii) The Balance Sheet, Profit and Loss Accounts and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (iv) In our opinion, the Balance Sheet, Profit and Loss Accounts 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.
 
 (v) On the basis of written representations received from the
 directors, as on March 31, 2011 and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 31st March 2011 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Act.
 
 (vi) In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts together with the notes
 thereon 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:
 
 (a) In the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2011;
 
 (b) In the case of Profit and Loss Account, of the loss for the year
 ended on that date; and
 
 (c) In the case of the Cash Flow Statement, the cash flows for the year
 ended on that date;
 
 ANNEXURE TO AUDITORS'' REPORT
 
 Referred to in Paragraph 3 of our report of even date
 
 1.  In respect of its fixed assets
 
 a) The Company has maintained proper records to show full particulars
 including quantitative details and situation of its Fixed Assets on the
 basis of available information wherein the fixed asset register is in
 the process of being updated. .
 
 b) The Fixed Assets of the Company were physically verified by the
 management at reasonable intervals and no material discrepancies
 between the books/records and the physical inventory were noticed on
 such verification.
 
 c) In our opinion, the Company has not disposed off a substantial part
 of its fixed assets during the year and the going concern status of the
 Company is not affected.
 
 2.  In respect of its inventories:
 
 a) The Inventory of the Company have been physically verified during
 the year by the management. In our opinion, the frequency of
 verification is reasonable.
 
 b) In our opinion and according to the information and explanations
 given to us, 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) The Company has maintained proper record of inventories. As
 explained to us, there were no material discrepancies notices on
 physical verification of inventories as compared to the book records.
 
 3.  In respect of loans, secured or unsecured, granted or taken by the
 Company to/ from Companies, firms or other parties covered in the
 register maintained under Section 301 of the Company''s Act, 1956.
 
 a) The Company has not granted any loans during the year to Companies,
 firms or other parties covered in the Register maintained under Section
 301 of the Companies Act, 1956. Consequently, the requirements of
 clauses (iii) (b),(c),(d) of paragraph 4 of the order are not
 applicable.
 
 b) As informed, the Company has taken loans from parties covered in the
 register maintained under Section 301 of the Act1956. In our opinion,
 the terms and conditions on which deposits have been taken from
 companies, firms or other parties listed in the register maintained
 under section 301 of the Companies Act, 1956 are not, prima facie,
 prejudicial to the interest of the company.
 
 4.  In our opinion and according to the information and explanation
 given to us, the Company has an adequate internal control procedure
 commensurate with the size and nature of business of the company for
 the purchase of inventory, fixed assets and the sale of goods and
 services. During the course of our audit, we have not observed any
 continuing failure to correct major weaknesses in internal control
 system.
 
 5.  In respect of the contracts or arrangements referred to in Section
 301 of the Companies Act, 1956, in our opinion and according to the
 information and explanations given to us, there are no transactions
 made in pursuance of contracts or arrangements , that need to be
 entered in the Register maintained under Section 301 of the Companies
 Act, 1956 . Consequently, clause 4(v) of the order is not applicable.
 
 6.  According to the information and explanation given to us, the
 Company has not accepted any deposits contemplated under Sec. 58A of
 the Companies Act, 1956 from the public. Therefore the provisions of
 clause 4(vi) of the order are not applicable.
 
 7.  In our opinion, the Company has an internal audit system which
 needs to be strengthened.
 
 8.  We have been informed that the Central Government has not
 prescribed maintenance of cost records U/s 209 (I)(d) of the Companies
 Act, 1956 (1 of 1956) for the Company''s services.
 
 9.  In respect of statutory dues:
 
 (a) According to the records of the company, the company is regular in
 depositing undisputed statutory dues including provident fund,
 employees'' state insurance, Income Tax, Wealth Tax, Customs Duty,
 Excise duty, cess and other material statutory dues applicable at the
 end of the year for a period of more than six months from the date they
 became payable.
 
 (b) According to the information and explanation given to 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.  There were no dues on account of cess under 441A of the
 Companies Act 1956, since the date from which the aforesaid section
 comes into force has not yet been notified by the Central Government.
 
 10.  The Company having the accumulated losses of Rs.13,78,26,810/- at
 the end of the financial year. The Company has not incurred cash losses
 during the financial year covered by the audit and in the immediately
 preceding financial year.
 
 11.  Based on the audit procedures, and according to the information
 and explanation given to us, we are of the opinion that, the Company
 has during the year delayed on few occasions in repaying term loan
 instilments due to the banks and financial institutions.
 
 12.  In our opinion and according to the explanation given to us and
 based on the information available, the Company has not granted any
 loans or advances on the basis of security by way of pledge of shares,
 debentures or other securities.
 
 13.  In our opinion, the Company is not a Chit Fund, Nidhi or Mutual
 Benefit fund / Societies. Therefore the provisions clause (xiii) of
 paragraph 4 of the order are not applicable to the Company.
 
 14.  The Company is not dealing or trading in shares, securities,
 debentures.
 
 15.  According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks and financial institutions.
 
 16.  The company has not availed any term loans and working capital
 loans from the banks/institutions. Hence the purpose of utilization
 will not arise.
 
 17.  According to the information and explanations given to us and on
 an overall examination of the Balance Sheet and Cash Flow statement,
 the funds raised on short term basis have not been used for long term
 purposes.
 
 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 Companies Act, 1956 during the year.
 
 19.  The Company has not issued any debentures.
 
 20.  The Company has not raised any money by way of public issues
 during the year.
 
 21.  In our opinion and according to the explanation given to us, no
 fraud, on or by the Company, has been noticed or reported during the
 year.
 
 
 
                                              For M M REDDY & CO.,
 
                                             Chartered Accountants
 
                                              Firm Reg. No.010371S
 
                                                      Sd/-
 
 Place : Shameerpet Mondal                  (M. Madhusudhana Reddy)
 
 Date  : 02.09.2011                                 Partner
 
                                              Membership No.213077