We have audited the attached Balance Sheet of, SAND PLAST INDIA LTD. as
 at 31st March, 2011 and the Profit and Loss Account for the year ended
 on that date annexed thereto for the period ended on that date and Cash
 Flow Statement for the year ended on that date. 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.
 
 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 management, as well as evaluating the overall financial statement
 presentation.  We believe that our audit provides a reasonable basis
 for our opinion.
 
 As required by the Companies (Auditor''s Report) Order, 2003 as amend by
 CARO (Amendment) 2004 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 hereto a statement on the matters specified in
 paragraphs 4 and 5 of the said order.  Further to our comments in the
 Annexure referred to above we report that:
 
 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, the Company has kept proper books of accounts as
 required by law so far as appears from our examination of those books;
 
 iii) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 iv) In our opinion, the Balance Sheet and Profit & Loss Account dealt
 with by this report comply with the Accounting Standards referred to in
 sub-section (3C) of section 211 of the Companies Act, 1956;
 
 v) On the basis of written representations received from the directors,
 as on 31st March, 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 (i) of section 274 of the Companies Act, 1956;
 
 vi) In our opinion and to the best of our information and according to
 the explanation given to us, we further report that the said account
 subject to matters mentioned herein below, read with significant
 accounting policies and other notes thereon 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:-
 
 a) Attention is invited to Note. No. 3(c) & (d) of Schedule –L on Notes
 to accounts of the company for the year, which state that the company
 has filed Modified Draft Rehabilitation Scheme to Hon''ble BIFR dated
 27th April, 2011 and Secured Creditors i.e. PNB and HUDCO. As proposed
 In this MDRS, Company has not provided interest on PNB dues amounting
 to Rs. 270.77 Lacs and Rs. 2673.64 Lacs in respect of HUDCO in
 totality, as a result of the same Secured liabilities and accumulated
 losses of the company are understated by Rs. 2944.41 Lacs (Including
 Current year Interest Rs. 362.58). Approval of Modified Draft
 Rehabilitation Scheme is still pending.
 
 * in the case of Balance Sheet, of the State of affairs of the company
 as at 31st March, 2011
 
 * in the case of Profit and Loss account, of the Loss of the year ended
 on that date and
 
 * in the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 ANNEXURE TO THE AUDITORS
 
 REFFERED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE
 
 (i) (a) The Company has generally maintained proper records showing
 full particulars including quantitative details and situation of fixed
 assets.
 
 (b) The Company has phased programme of physical verification of its
 fixed assets at reasonable intervals, which, in our opinion, is
 reasonable having regard to the size of the Company and nature of its
 assets. During the year, the management has physically verified fixed
 assets and no material discrepancies were noticed on such physical
 verification.
 
 (c) The Company has not disposed off a substantial part of the fixed
 assets during the year and therefore the going concern status of the
 company is not affected.
 
 (ii) (a) We are informed that the physical verification of inventory
 has been conducted during the year by the management at reasonable
 intervals.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of 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 has maintained proper records of inventory. As
 explained to us, no material discrepancies noticed on physical
 verification of inventory as compared to book records.
 
 (iii) (a) According to the information and explanation given to us, the
 company has not granted any loan, secured or unsecured, to companies,
 firms or other parties covered in the register maintained under section
 301 of the companies Act, 1956.
 
 (b) According to the information and explanations given to us, the
 details of secured or unsecured loan taken from individual covered in
 the register maintained under section 301 of the Companies Act, 1956
 are as under:
 
 Name Amount            (Rs. In lacs)
 
 Rajesh Gupta 
 (Managing Director)        170.50
 
 (c) In our opinion the terms of these loans are, prima facie, not
 prejudicial to the interest of the company;
 
 (d) The rate of interest being prima facie prejudicial to the interest
 of the company does not arise.
 
 (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 inventory, fixed assets and also
 for the sale of goods. During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses in internal
 control.
 
 (v) (a) 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 maintained under Section 301 of the Companies Act, 1956
 for the year have been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered into the register maintained under Section 301 of
 the Companies Act, 1956 in excess of Rs.  5,00,000/- in respect of each
 party during the year have been made at prices which are reasonable
 having regard to prevailing market price at the relevant time.
 
 (vi) The Company has not accepted any deposits from the public within
 the meaning or provisions of Section 58A and 58AA of the Companies Act,
 1956 and rules made there under.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size of the Company and nature of its business.
 
 (viii) We have been informed that the Central Government has not
 prescribed maintenance of cost records under section 209(1) (d) of the
 Companies Act, 1956, for the products manufactured by the Company.
 
 (ix) (a) According to the information and explanations given to us and
 on the basis of records produced before us, the Company is generally
 regular in depositing with appropriate authorities undisputed statutory
 dues including provident fund, investor education protection fund,
 employees'' state insurance, income tax, sales tax, wealth tax, custom
 duty, excise duty, cess and other material statutory dues applicable to
 it.
 
 (b) As per Information and explanations furnished to us and on
 verification of records produced, there are disputed statutory dues
 outstanding aggregating to Rs. 22,03,994.63 as at 31st March, 2011,
 which have not been deposited with the respect of Sales Tax which are
 as follows:
 
 NAME OF STATUTE         NATURE OF THE DUES     AMOUNT (RS.)
 
 CST Rajasthan             Sales Tax             4819.73
 
 Rajasthan 
 Sales Tax                 Sales Tax          2199174.90
 
 As informed by the present management, they above liability belong to
 the period pertaining to the previous management and records are not
 available hence disputed.
 
 (x) The Company has accumulated losses of Rs. 8, 37, 98,150 after
 adjusting current year loss.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the dues of the financial institutions/banks were
 rescheduled under rehabilitation package pending in the honorable BIFR
 so in this reference as per point no. (vi) (a)latest MDRS filed in BIFR
 however there are defaults in repayment there against.
 
 (xii) In our opinion and according to the information and explanations
 given to us, the Company has not granted any loans or advances on the
 basis of security by way of pledge of shares, debentures and other
 securities.
 
 (xiii) In our opinion, the Company is not a chit fund, nidhi, mutual
 benefit fund or a Society. Therefore, clause 4(xiii) of the Companies
 (Auditor''s Report) Order 2003 is 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. Accordingly clause 4(xiv) of the Companies
 (Auditor''s Report) Order 2003 is not applicable.
 
 (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. Therefore clause 4(xv) of the
 Companies (Auditor''s Report) Order 2003 is not applicable to the
 Company.
 
 (xvi) The company has not obtained any fresh term loan during the
 financial year.
 
 (xvii) According to the cash flow statement and other records examined
 by us and the information and explanations given to us, on an overall
 basis, fund raised on short term basis have, prima facie, not been used
 during the year for long term investments and vice versa.
 
 (xviii) The company has neither issued any fresh share capital nor made
 any preferential allotment during the year.
 
 (xix) The Company has not issued debentures during the financial year
 and hence, the question of creating securities in respect thereof does
 not arise.
 
 (xx) The Company has not raised any money by public issue.
 
 (xxi) As informed by the company, no case of any fraud on or by the
 company has been noticed or reported during the year
 
 (xxii) The Company is a sick industrial Company, as per BIFR Reg. No.
 388/2001 within the meaning of clauses (O) of Section 3(1) of the sick
 Industrial Companies (Special Provision) Act, 1985.
 
 
                                           For D. Khanna & Associates
 
                                           Firm Registration 
 
                                           No.012917N Chartered 
 
                                           Accountants
 
                                                       Sd/- 
 
                                           (Girdhari Lal Rinwa) 
 
                                                Partner 
 
                                            M.No. 411129 
 Place: Mumbai
 
 Date: 30th May, 2011