1 We have audited the attached Balance Sheet of RENCAL CHEMICALS
 (INDIA) LIMITED as at 31s1 March 2005 and also the annexed Profit and
 Loss Account of the company for the year ended on that date and reports
 that:
 
 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 rnisRtatemente 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 teasonable basis
 for our opinion.
 
 3. Information required to be furnished under the Companies (Auditors
 report) ordered 2003 issued by the Central Government of India in terms
 of section 227 (4) (A) of the Company Act, 1956, we enclose in the
 annexure the statement on the matter specified in paragraphs 4 and 5 of
 the said order to the extent applicable to the company.
 
 4. Further to our Comments in the Annexure referred in Paragraph 3
 above.
 
 (a) We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purpose of our
 audit.
 
 (b) In our opinion proper books of accounts as required by law have
 been kept by the company so far as appears from our examination of
 those books.
 
 (c) The Balance Sheet and Profit and Loss Account referred to in this
 report are in agreement with the books of accounts submitted to us.
 
 (d) In our opinion and according to the information and explanation
 given, the Balance Sheet and Profit and Loss Account comply with the
 mandatory accounting standard referred to in Sub-Section 3(C) of
 Section 211 of the Companies Act, 1956 read together witli notes and
 significant accounting policies and to the extent such starjdards have
 been made applicable to the company,
 
 (e) Based on the representation made by the directors of the company
 and the information and explanation as made available, none of the
 director of the company do not prima- facie, have any disqualification
 as referred to in clause (g) in Sub-section (1) of Section 274 of the
 companies Act, 1956,
 
 (f) In oui opinion and lo the beat of our infuimation and according io
 the explanation given to us, the said accounts read together with
 schedules, Significant accounting policies and notes 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 so far as it
 relates to Balance Sheet, of the State of Affairs of the Company as at
 31st March 2005.
 
 AND
 
 ii.  In the case of Profit and Loss account, neither profit nor loss of
 the company for the year ended on that date .
 
 ANNEXURE TO THE AUDITOR S REPORT REFERRED TO TI\ PARAGRAPH (3) OF OUR
 REPORT OF EVEN DATE.
 
 1.   
 
 (a) The Company has maintained proper records showing full particulars
 including Quantitative details and situation of fixed assets on the
 basis of information available.
 
 (b) As explained to us the management has verified most of the fixed
 assets during the year, and as informed to us no material discrepancies
 were noticed on such verifications.
 
 (c) As informed to us, there is no disposal of substantial part of
 fixed assets during the year.
 
 a.  As explained to us, the physical verification has been conducted by
 the management at the year-end in respect of inventory including stock
 lying with third parties.
 
 b.  In our opinion and according to the information and explanation
 given to us, the procedure of physical verification of inventory
 followed by the management is reasonable and adequate in relation to
 the size of the Company and nature of its business
 
 c.  The company has maintained proper records of principal items of
 inventories and as explained to us there were no material discrepancies
 noticed on such verifications.
 
 3. According to the information and explanation given to us, the
 Company has not taken or granted secured or unsecured loans from
 Companies, firms or other narties lister! in the renister maintained
 under Section 301 nf the Companies Act, 195G
 
 4.  in our opinion and according to the information and explanations
 given to us during the course of the audit, there are in general,
 adequate internal control procedures commensurate with the size of the
 Company and nature ot its business with regard to purchases ot
 inventory plant and machinery, equipment and other assets, and with
 regards to the sale of goods during the course of audit we have not
 come across any major weakness in internal control
 
 5.  According to the information and explanation given to us, we are of
 the opinion that there are no transactions that need to be entered into
 the register under section 301 of the Companies Act 1956.
 
 6.  The Company has not invited deposit from the public within the
 meaning of section 58A and 58 AA of the Companies Act 1956 and the
 rules made there under. Therefore the provisions of clause (vl) of
 paragraph 4 of the companies (Auditors Report) order, 2003 is not
 applicable to the company.
 
 7 According to the information and explanation given to us; there is no
 internal audit system in existence.
 
 8 As explained to us, the Central Government has not prescribed
 maintenance of cost records under section 209 (1) (d) of the Companies
 Act, 1956.
 
 9
 
 a.  According to the records of the Company apart from certain
 instances of delays the company is regular in depositing with
 appropriate authorities undisputed statutory dues including Provident
 Fund, Investor education fund, Employees State Insurance, Income Tax,
 Sales Tax, Customs Duty, Excise duty cess and material statutory dues
 applicable to it.
 
 b.  According to information and explanation given to us, no undisputed
 amount payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs
 Duty, Excise duty and Cess were in arrears as at 31-03-2005, for a
 period of more than 6 months from the date they became payable.
 
 c.  There are no disputed statutory dues.
 
 10.  The company does not have any accumulated losses at the end of the
 financial year and hence clause(x) of paragraph 4 of the order is not
 applicable.
 
 11.  As per the information and explanation given to us, the company
 has not defaulted in respect of repayment of dues to financial
 institutions, bank or debenture holders except wherever and to the
 extent moratorium granted by them.
 
 12.  As informed to us, the company has not granted loans and advances
 on the basis of security by way of pledge of shares, debentures and
 other securities.
 
 13.  According to the information and explanation given to us, the
 company has not given any guarantee during the year for the loan taken
 by others from banks and financial institutions.
 
 14.  The company has not availed any term loan during the year.
 
 15.  According to the information and explanation given to us, and on
 an overall examination of the balance sheet of the company, the report
 that no funds raised on short term basis have been used for long term
 investment.  No long term funds have been used to finance short term
 assets
 
 16.  According to the information and explanation given to us, the
 company has not made preferential allotment of shares to parties and
 companies covered in the register maintained under section 301 of the
 Companies Act 1956.
 
 17.  During the year, the company has not issued any debentures.
 
 18.  During.the year, the company has not raised money by public issue
 
 19.  No fraud on or by the company has been noticed or reported during
 the year
 
 20.  Keeping in view of the nature of activities carried by the company
 clauses (xii) and (xiv) of paragraph 4 of Companies (Auditors Report)
 order, 2003 are not applicable.
 
 PLACE: THANE                        FOR KRISHNAKUMAR THAKKAR & CO
 DATE: 30/08/2005                        CHARTERED ACCOUNTANTS
 
                                             PROPRIETOR
                                            (K.V.THAKKAR)