We have audited the attached balance sheet of SI Group - India Limited
 (the Company) as at 31 March 2010 and the related profit and loss
 account and cash flow statement for the year ended on that date,
 annexed thereto. These financial statements are the responsibility of
 the Companys 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 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.
 
 1.  As required by the Companies (Auditors Report) Order, 2003 (the
 Order), issued by the Central Government of India in 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.
 
 2.  Without qualifying our opinion, we draw attention to Note 3 to
 Schedule 20(B) of the financial statements which more fully explains
 that, until the previous year, the Company had capitalized expenses
 which were not attributable to the direct development of the plant. Our
 audit opinion for the previous year was qualified, since such
 capitalization of expenses was not in accordance with the generally
 accepted accounting principles in India. Accordingly, fixed assets were
 overstated by Rs. 820 lakhs, accumulated depreciation was overstated by
 Rs. 139 lakhs and reserves were overstated by Rs. 681 lakhs as at 31
 March 2009 and depreciation and net loss were overstated by Rs. 43
 lakhs for the year ended 31 March 2009. In the current year, the
 Company has written off the balance unamortized capitalized expenses
 amounting to Rs. 662.65 lakhs to the profit and loss account.
 
 3.  Further to our comments in the 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, profit and loss account and the cash flow
 statement dealt with by this report are in agreement with the books of
 account;
 
 (d) in our opinion, the balance sheet, profit and loss account and the
 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;
 
 (e) on the basis of written representations received from the Directors
 as on 31 March 2010, and taken on record by the Board of Directors, we
 report that none of the Directors is disqualified as on 31 March 2010
 from being appointed as a Director in terms of clause (g) of
 sub-section (1) of Section 274 of the Act; and
 
 (f) in our opinion, and to the best of our information and according to
 the explanations given to us, the said financial statements 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 31 March 2010;
 
 (ii) in the case of the profit and loss account, of the profit of the
 Company for the year ended on that date; and
 
 (iii) in the case of the cash flow statement, of the cash flows of the
 Company for the year ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT
 
 - 31 MARCH 2010
 
 Referred to in our report of even date
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The Company has a regular programme of physical verification of its
 fixed assets by which all fixed assets are verified in a phased manner
 over a period of three years. In our opinion, this periodicity of
 physical verification is reasonable having regard to the size of the
 Company and the nature of its assets. In accordance with this
 programme, certain fixed assets have been physically verified by
 management during the year. No material discrepancies were noted on
 such verification.
 
 (c) Fixed assets disposed off during the year were not substantial, and
 therefore, do not affect the going concern assumption.
 
 (ii) (a) The inventory, except goods-in-transit and stocks lying with
 third parties, has been physically verified by the management during
 the year. In our opinion, the frequency of such verification is
 reasonable. For stocks lying with third parties at the year-end,
 written confirmations have been obtained.
 
 (b) The procedures for the 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 Hs maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 (iii) According to the information and explanations given to us, the
 Company has not granted/taken any loans, secured or unsecured, to/from
 companies, firms or other parties listed in the register maintained
 under Section 301 of the Act. Accordingly, the provisions of paragraph
 4(iii) of the Order are not applicable to the Company.
 
 (iv) In our opinion, and according to the information and explanations
 given to us, and having regard to the explanation that purchases of
 certain items of inventories are for the Companys specialized
 requirements and suitable alternative sources are not available to
 obtain comparable quotations, there is an adequate internal control
 system commensurate with the size of the Company and the nature of its
 business with regard to purchase of fixed assets and inventories and
 with regard to the sale of goods and services. We have not observed any
 major weakness in the internal control system during the course of the
 audit.
 
 (v) In our opinion, and according to the information and explanations
 given to us, there are no contracts and arrangements the particulars of
 which need to be entered into the register maintained under Section 301
 of the Act.
 
 (vi) The Company has not accepted any deposits from the public during
 the year.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with its size and the nature of its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules prescribed by the Central Government for
 maintenance of cost records under Section 209(1 )(d) of the Act in
 respect of manufacture of phenol, acetone, diacetone alcohol and
 performance resins and are of the opinion that prima facie, the
 prescribed accounts and records have been made and maintained. However,
 we have not made a detailed examination of the records.
 
 (ix) (a) According to the information and explanations given to us and
 on the basis of our examination of the records, the Company is
 generally regular in depositing undisputed statutory dues accrued/
 deducted including Provident Fund, Employees State Insurance, Investor
 Education and Protection Fund, Income-tax, Sales tax, Wealth tax,
 Service tax, Customs duty, Excise duty and other material statutory
 dues with the appropriate authorities.
 
 According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Employees
 State Insurance, Investor Education and Protection Fund, Income tax,
 Sales tax, Wealth tax, Service tax, Customs duty, Excise duty and other
 material statutory dues were in arrears as at 31 March 2010 for a
 period of more than six months from the date they became payable.
 
 There were no dues on account of Cess under Section 441A of the Act
 since the date from which the aforesaid section comes into force has
 not yet been notified by the Central Government.
 
 (b) According to the information and explanations given to us, there
 are no dues of Income tax, Wealth tax and Service tax which have not
 been deposited with the authorities on account of any disputes.
 
 According to the information and explanations given to us, the
 following dues of Excise duty, Customs duty, Sales tax, Municipal water
 charges and Electricity duty have not been deposited by the Company on
 account of disputes.
 
 Name of the      Nature of the    Amount     Period to    Forum where
 Statute          Dues             (Rs. 
                                   lakhs)     which the    dispute is
                                              amount       pending
                                              relates
 
 Central Excise   Excise duty       70        2000-2001    CESTAT
 Act
 
 Central Excise   Excise duty      190        2002-2006    CESTAT
 Act
 
 Customs Act      Customs duty      18        2006-07      Commissioner
                                                           of Customs 
                                                           (Appeals)
 
 Customs Act      Customs duty      83        1997-1999    CESTAT
 
 Customs Act      Customs duty      74        1997-1998    Deputy
                                                           Commissioner 
                                                           of Customs
 
 Bombay Sales     Sales tax        183        2000-2001    Maharashtra
 Tax Act                                                   Sales Tax
                                                           Tribunal
 
 Bombay Sales     Sales tax        140        1999-2000    Maharashtra
 Tax Act                                                   Sales Tax
                                                           Tribunal
 
 Bombay Sales     Sales tax         52        2002-2003    Joint
 Tax Act                                                   Commissioner
                                                           of Sales Tax 
                                                           (Appeals)
 
 Bombay Sales     Sales tax          1        2003-2004    Joint
 Tax Act                                                   Commissioner
                                                           of Sales Tax 
                                                           (Appeals)
 
 Bombay Sales     Sales tax          9        2001-2002    Deputy
 Tax Act                                                   Commissioner
                                                           of Sales Tax 
                                                           (Appeals)
 
 Central Sales    Sales tax         39        1999-2000    Maharashtra
 Tax Act                                                   Sales Tax
                                                           Tribunal
 
 Central Sales    Sales tax         30        2000-2001    Maharashtra
 Tax Act                                                   Sales Tax
                                                           Tribunal
 
 Central Sales    Sales tax          5        2001-2002    Deputy
 Tax Act                                                   Commissioner
                                                           of sales tax 
                                                           (Appeals)
 
 Central Sales    Sales tax          1        1984-1985    Calcutta High
 Tax Act                                                   Court
 
                  Water charges     90        2001-2010    Government of
                                                           Maharashtra
 
                  Electricity 
                  duty             463        2000-2010    Government of
                                                           Maharashtra
 
 (x) The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the financial year.
 The Company incurred cash losses in the immediately preceding financial
 year.
 
 (xi) In our opinion, and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 banks. The Company did not have any outstanding dues to any financial
 institution or debenture holders during the year.
 
 (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) In our opinion, and according to the information and
 explanations given to us, the Company is not a chit fund or a
 nidhi/mutual benefit fund/ society.
 
 (xiv) According to the information and explanations given to us, 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) According to the information and explanations given to us, the
 Company has not obtained any term loans during the current year.
 Accordingly, paragraph 4(xvi) of the Order is not applicable to the
 Company during the year under audit.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the Company, we are of
 the opinion that the funds raised on short -term basis have not been
 used for long-term investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 during the year to companies/firms/parties covered in the register
 maintained under Section 301 of the Act.
 
 (xix) The Company did not have any outstanding debentures during the
 year.
 
 (xx) The Company has not raised any money by public issue during the
 year.
 
 (xxi) According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
                                                     For B S R & Co.
 
                                              Chartered Accountants 
                                   Firms Registration No.: 101248W
 
                                                       Vljay Mathur
 
                                                            Partner 
                                             Membership No.: 046476
 
 Mumbai
 
 17 May 2010