1.  We have audited the attached balance sheet of Smruthi Organics
 Limited Solapur as on 31.03.2012 and the Profit and Loss account and
 also the cash flow statement for the year 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 the 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 disclosure 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 statements
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies [Auditor''s Report ] Order, 2003 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 & 5 of the said
 order.
 
 4.  Further to our comments in Annexure referred to above, we report
 that :
 
 I) We have obtained all the information and explanation, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit.
 
 II) 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 (and proper returns adequate for the purposes of our audit
 have been received from the branches not visited by us. The Branch
 Auditors Report(s) have been forwarded to us and have been
 appropriately dealt with- Not Applicable).
 
 III) The balance sheet, profit & loss account and cash flow statement
 dealt with by this report are in agreement with books of accounts.
 
 IV) In our opinion, the balance sheet, profit & loss account 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.
 
 V) On the basis of written representations received from the Directors,
 as on 31st March 2012 and taken on record by Board of Directors, we
 report that none of the Directors is
 \disqualified as on 31st March, 2012 from being appointed as a Director
 in terms of Clause (g) of sub-Section (1) of Section 274 of the
 Companies Act, 1956.
 
 VI) In our opinion and to the best of our information and according to
 the explanations given to us , the said accounts give the information
 required by the Companies Act, 1956, in the manner so required and give
 true and fair view the conformity with accounting principles generally
 accepted in India.
 
 a) in the case of the balance sheet, of the state of affairs of the
 Company as at 31st March, 2012.
 
 b) in the case of the profit & loss account, of the profit for the year
 ended on that date.
 
 c) in the case of cash flow statement, of the cash flows for the year
 ended on that date.
 
 ANNEXURE TO THE AUDITOR''S REPORT
 
 Referred to in Paragraph 3 of our report of even date.
 
 1) a) The Company has maintained proper records showing full particular
 including quantitative details and situation of fixed assets.
 
 b) All fixed assets have not been physically verified by the management
 during the year but there is a regular program of verification which,
 in our opinion, is reasonable having regard to the size of the Company
 and the nature of its assets. No material discrepancies were noticed on
 such verification.
 
 c) There was no disposal of a substantial part of fixed assets during
 the year.
 
 2) a) The management has conducted physical verification of inventory
 at reasonable intervals during the year.
 
 b) 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 is maintaining proper records of inventory.
 Discrepancies noted on verification between the physical stocks and the
 book records were not material and have been properly dealt with in the
 books of accounts.
 
 3) a) According to the information and explanations given to us, the
 Company has not granted any loans, secured or unsecured to companies,
 firms or other parties covered in the register maintained under Section
 301 of the Companies Act, 1956. Accordingly, the provision of Clause 4
 (iii) (a) to (d) of the Order are not applicable to the Company and
 hence not commented upon.
 
 b) The Company had obtained a loan from Directors covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 
 c) In our opinion, the rate of interest and other terms and conditions
 on which loans have been taken from/granted to 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 Company .
 
 d) The Company is regular in repaying the principal amount as
 stipulated and has been regular in the payment of interest. The parties
 have repaid the principal amounts as stipulated and have been regular
 in the payment of interest
 
 e) There is no overdue amount of loans taken from or granted to
 companies, firms or other parties listed in the register maintained
 under Section 301 of the Companies Act, 1956.
 
 4) In our opinion and according to the information and explanation
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business with regard
 to the purchases of inventory, fixed assets and with regard to the sale
 of goods. During the course of our audit, we have not observed any
 major weakness or continuing failure to the correct any major
 weaknesses in the internal control system of the Company in respect of
 these areas.
 
 5) a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in Section 301 of the Companies Act 1956 that
 need to be entered into the register maintained under Section 301 have
 been so entered.
 
 b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements and exceeding the value of Rupees Five Lakhs have been
 entered in to during the Financial Year at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 
 6) The Company has not accepted any deposit from public during the
 year.
 
 7) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8) We have broadly reviewed the books of account maintained by the
 Company pursuant to the Rules made by the Central Government for the
 maintenance of cost records under Section 209(1) (d) of the Companies
 Act, 1956, and are of the opinion that prima facie the prescribed
 accounts and records have been made and maintained.
 
 9) a) The Company is regular in depositing with appropriate authorities
 undisputed statutory dues including provident fund, employees'' state
 insurance, income tax, sales tax, service tax, custom duty, Excise
 duty, Cess and other material statutory dues applicable to it.
 
 b) According to the information and explanation given to us, no
 undisputed amounts payable in respect of provident fund, employees''
 state insurance, income tax, sales tax, service tax, custom duty,
 Excise duty, Cess and other material statutory dues were outstanding,
 at the year end, for a period of more than six months from the date
 they became payable.
 
                                    Period to which 
                                    the amount
 Name of    Nature of    Amount                           Forum where 
                                    relates various 
                                    years covering 
 the 
 Status     the dues    (Rs. in 
                         Lacs)      the  Pending          period 
 
                       -- NIL --
 
 10) The Company has no accumulated losses at the end of the Financial
 year and it has not incurred cash losses in the current and immediately
 preceding Financial year.
 
 11) Based on our audit procedures and as per the information and
 explanation given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a Financial
 institution / bank.
 
 12) According to the information and explanations given to us and based
 on the documents and records produced, the Company has not granted
 loans and advances on the basis of security by way of pledge of shares,
 debentures and other securities.
 
 13) In our opinion, the Company is not a chit fund or a nidhi/ mutual
 benefit fund/society.  Therefore, the provision of Clause 4 (xiii) of
 the Companies (Auditor''s Report) Order, 2003 (as amended) are not
 applicable to the Company .
 
 14) In our opinion, the Company is not dealing in or trading in shares,
 securities, debentures and other investments. Accordingly the
 provisions of Clause 4 (xiv) of the Companies (Auditor''s Report) Order,
 2003 (as amended) are not applicable to the Company .
 
 15) According to the information and explanations given to us, the
 Company has not given any guarantees for loans taken by others from
 banks or Financial institutions.
 
 16) Based on the information and explanations given to us by the
 management, term loan were applied and sanctioned for the purpose for
 which the loans were obtained.
 
 17) According to the information and explanation given to us and on an
 overall examination of the balance sheet of the Company , we report
 that no funds raised on short-term basis have been used for long term
 investment
 
 18) The Company has not made any preferential allotment of shares to
 parties or Companies covered in the register maintained under Section
 301 of the Companies Act, 1956.
 
 19) The Company has not issued any debentures during the year.
 
 20) The Company has not raised any money by public issue during year.
 
 21) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the Financial statements and as per
 the information and explanations given by the management, we report
 that no fraud on or by the Company has been noticed or reported during
 the year.
 
 
 
                                           Ashok Madgundi & Co.
 
                                         Chartered Accountants
 
                                                 Sd/-
 
                                            A. D. Madgundi
 
 Place : Solapur                             Proprietor
 
 Date : 22nd May, 2012                    M.No. 100-36983