1.  We have audited the attached Balance Sheet of Riverdale Foods
 Limited (the Company) as at March 31, 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 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 the management, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 3.  Without qualifying our opinion, we draw attention to:
 
 Note No. 2(a) to the financial statement. For reasons mentioned
 therein, these financial statements have been prepared on a going
 concern basis, inspite of the accumulated losses at the year end
 equating the shareholders'' funds as in accordance with the
 Rehabilitation Scheme, sanctioned by the Hon''ble BIFR on July 02,
 2010, the Strategic Investor being the Holding Company is committed to
 financially support the operations and the fund requirements of the
 Company for refurbishment of existing Plant and Machinery.
 
 4.  As required by the Companies (Auditor''s Report) Order, 2003, as
 amended by the Companies (Auditors'' Report) (Amendment) Order, 2004,
 [Order], issued by the Central 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.
 
 5.  Further to our comments in 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, Statement of Profit and Loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account maintained by the Company;
 
 (d) In our opinion, the Balance Sheet, Statement of Profit and Loss 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 Companies Act, 1956;
 
 (e) None of the Directors of the Company who held such office as on
 November 30,2007, are qualified to be appointed as Director of the
 Company of any other public company, in terms of clause (g) of sub-
 section (1) of section 274 of the Companies Act, 1956 as the Company had
 failed to file its Annual Accounts and Annual Returns for the financial
 years 2004-05, 2005-06 and 2006-07 till November 30, 2007, being the
 due date upto which the Annual Accounts and Annual Return for the year
 ended March 31,2007 was required to be filed. The aforesaid Annual
 Accounts and Annual Returns were filed by the Company on February
 28,2008.
 
 The Company has thereafter failed to file its Annual Accounts and
 Annual Returns for the financial years 2007-08,2008-09 and 2009-10 and
 in terms of the provisions of clause (g) of sub-section (1) of section
 274 of the Companies Act, 1956, all the persons who held office as
 directors of the Company, in addition to the directors referred to in
 the above para, are not qualified from being appointed as director of
 any other public company, w.e.f. November 30, 2010, being the due date
 upto which Annual Accounts and Annual Return for the year ended March
 31,2010 was required to be filed.
 
 During the year, the Company filed the Annual Accounts for the financial
 years 2007-08, 2008-09, 2009-10 and 2010-11 with the Registrar of
 Companies. However the Annual Returns for these years could not be filed
 due to non existence of Director Identification Number (DIN) of two of
 its Directors, Mr. Raja Karnam and Mr. Keshav Rao.
 
 The disqualification is continuing on the date of our Report.
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements read
 together with significant accounting policies and notes thereon and
 attached thereto give in the prescribed manner the information required
 by the Companies Act, 1956, 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 31,2012;
 
 b.  in the case of the Statement of Profit and Loss, of the loss
 incurred by the Company for the year ended on that date; and
 
 c.  in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 [Referred to in paragraph 4 of the Auditors'' Report of even date to the
 members of Riverdale Foods Limited on the financial statements for the
 year ended March 31,2012]
 
 i) In respect of fixed assets:
 
 a) The Company has not maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 b) None of the fixed assets were physically verified by the management
 during the year. In the absence of any physical verification of fixed
 assets, we are unable to comment whether there existed any material
 discrepancies as compared to book records. Discrepancies arising, if
 any, which may have a material impact, have not been considered in the
 accounts for the year.  Further certain parcels of land on which
 factory building and structures are constructed, and payments whereof
 were made by the Company, are presently held in the name of some of the
 former and present Directors of the Company. Necessary legal formalities
 have to be complied for transfer of the said parcels of land in favor
 of the Company.
 
 c) As informed and explained to us, the Company has not disposed off a
 substantial part of its fixed assets during the year.
 
 ii) The Company is not maintaining any inventory, as the Company is out
 of operations since last six years, hence sub-clause (a), (b) and (c)
 of clause (ii) of the said Order is not attracted.
 
 iii) a) The Company has not given any trade advance to Companies, firms
 or other parties covered in the register maintained under section 301
 of the Companies Act, 1956, hence sub-clauses (a),(b),(c) and (d) of
 clause (iii) of the said Order are not applicable.
 
 b) 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 Companies Act, 1956, hence sub clauses
 (e),(f)and (g) of clause (iii) of the said Order are not applicable.
 
 iv) The Company does not have an internal control system commensurate
 with its size and the nature of its business for the purchase of
 inventory, fixed assets and also for the sale of goods.
 
 v) As the Company has not entered into any contracts or arrangements
 referred to in section 301 of the Companies Act, 1956, hence sub clause
 (a) and (b) of clause (v) of the said Order are not attracted.
 
 vi) The Company has not accepted any deposits from the public within
 the meaning of sections 58A, 58AAorany other relevant provisions of the
 Companies Act, 1956and the rules framed there under.
 
 vii) The Company does not have an internal audit system.
 
 viii) According to the information and explanations given to us, the
 Central Government has prescribed the maintenance of cost records under
 clause (d) of sub-section (1) of section 209 of the Companies Act, 1956.
 However the Company has not carried out any prescribed activities during
 the year and its operation is closed, the Company has not made and
 maintained any cost accounts/records.
 
 ix) a) The Company has undisputed dues outstanding and payable on
 account of Provident Fund, Gram Panchayat, Sales tax Deferral dues
 aggregating to Rs. 99.93 Lac as detailed hereunder.  The same were
 outstanding at the year end. for a period of more than six months from
 the date they became payable.
 
 Amounts payable to                    Amount
                                      (Rs., lacs)
 
 Provident Fund                         16.00
 
 Gram Panchayat                          4.00
 
 Sales Tax Deferral                     79.93
 
 Total                                  99.93
 
 b) According to the information and explanations given to us, there are
 no dues of income tax, wealth tax, custom duty, excise duty, service
 tax and cess that have not been deposited with appropriate authorities
 on account of any dispute.
 
 x) The accumulated losses of the Company are more than 50% of its net
 worth as at March 31,2012.  The Company has incurred cash loss in the
 financial year ended on that date and also in the immediately preceding
 financial year.
 
 xi) According to the records of the Company examined by us and the
 information and explanation given to us, the Company has no loan
 outstanding towards financial institutions and banks.
 
 xii) According to the information and explanations given to us, 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 any 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) 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.
 
 xvi) In our opinion and according to the information and explanations
 given to us, the Company has not obtained any term loans during the
 year.
 
 xvii) On the basis of an overall examination of the Balance Sheet of
 the Company, in our opinion and according to the information,
 explanations and representation given to us by the management, we
 report that no short term funds have been used for long term
 applications.
 
 xviii) The Company has not made any preferential allotment of shares
 during the year to parties and companies covered in the register
 maintained under section 301 of the Companies Act, 1956.
 
 xix) The Company has not issued any debentures during the year.
 
 xx) The Company has not raised any money by way of public issue during
 the year.
 
 xxi) Based upon the audit procedure performed and according to the
 information and explanations given to us, no material fraud on or by
 the Company has been noticed or reported during the course of our
 audit, that causes the financial statement to be materially misstated.
 
 117, New Delhi House,                    B. Bhushan & Co.
 
 27, Barakhamba Road,                     Chartered Accountants
 
 New Delhi-110001                         Firm Regn. No.-001596N
 
                                          By the hand of
 
                                          Sd/-
 
                                          Vishwanand Keshri
 
                                          Partner
 
 May 30,2012                              Membership no. 505508