We have audited the attached Balance Sheet of M/s SOUTHERN FUEL LIMITED
 as at 31st March 2012 and also the Statement of Profit and Loss Account
 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.
 
 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.
 
 As required by the Companies (Auditor''s Report) Order, 2003, issued
 by the central government of India in terms of section 227(4A) of the
 Companies Act, 1956 and on the basis of such checks as we considered
 appropriate and according to the information and explanation given to
 us, we set out in the annexure a statement on the matters specified in
 paragraph 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, proper books of account as required by law have
 been kept by the Company so far as appears from our examination of
 those books;
 
 iii. The Balance Sheet, statement of Profit and 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, statement of Profit and 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.  Based on the representations made by all the directors of the
 company as on 31st March 2012 and taken on record by the Board of
 Directors, of the company and in accordance with the information and
 explanations as made available, the Directors of the company do not
 prima facie have any disqualification as referred to in clause (g) of
 sub-section (1) of Section 274 of the Companies Act, 1956;
 
 In our opinion and to the best of information and according to the
 explanations given to us, the said accounts, read together with the
 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 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 statement of Profit and loss account, of the LOSS
 for the year ended on that date; and
 
 c) In the case of Cash Flow statement, of the Cash Flows for the year
 ended on that date.
 
 ANNEXURE TO AUDITOR''S REPORT
 
 Referred to in paragraph 2 of our report of even date on the Accounts
 of M/s SOUTHERN FUELS LIMITED, for the ended 31st March 2012
 
 (i). (a) The company has maintained proper records showing full
 particulars, Including quantitative details and situation of Fixed
 Assets.
 
 (b) All the Fixed Assets of the company have been physically verified
 by the Management during the year.  According to the information
 furnished to us, discrepancies noticed between book records and
 physical inventory were not material and have been properly dealt with
 in the books of account.
 
 (c) In our opinion and according to the information and explanations
 given to us, substantial part of fixed assets has not been disposed off
 by the company during the year.
 
 2) a) The Management has conducted physical verification of inventories
 at reasonable intervals.
 
 b) In our opinion, the procedures of the physical verification of stock
 followed by the management are reasonable and adequate in relation to
 size of the company and the nature of its business
 
 c) The company is maintaining proper records of inventories. The
 Discrepancies noticed on verification between physical stock and the
 book records were not material in relation to the operation of the
 company and the same have been properly dealt with in the books of
 account.
 
 3) a) As informed the company has not granted any loans secured or
 unsecured to companies, firms or parties covered in the register
 maintained under section 301 of the companies Act, 1956.
 
 b) The company has not taken loans / deposits from a company covered in
 the register maintained under section 301 of the companies Act, 1956,
 during the year under audit.
 
 4) 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 for the purchase of goods and fixed assets and for the sale of
 goods.
 
 5) In respect of contracts or arrangements entered in the register
 maintained in pursuance of section 301 of the companies Act 1956, to
 the best of our knowledge and belief and according to the information
 and explanations given to us.
 
 a) The particulars of contracts or arrangement referred to section 301
 that needed to be entered in to the register maintained under the said
 section have been so entered.
 
 b) In our opinion and according to the information and explanations
 given to us, the transaction made in pursuance of contracts or
 arrangements entered in the registers maintained under section 301 and
 exceeding the value of five lakh rupees in respect of any party during
 the year have been made at prices which are reasonable having regard to
 prevailing market prices at the relevant time.
 
 6) According to the information and explanations given to us during the
 year the Company has not accepted deposits from public. The company has
 complied with the directives issued by Reserve Bank of India and the
 provisions of 58A, 58AA of the Companies Act 1956 and companies
 (Acceptance of Deposits) Rules, 1975 or any other relevant provisions
 of the act..
 
 7) In our opinion, the company has an internal audit system
 commensurate with its size and nature of its business.
 
 8) We have broadly reviewed the cost records maintained by the Company
 pursuant to the Companies ( Cost Accounting Records) Rules, 2011
 prescribed by the Central Government under section 209(1)(d) of the
 Companies Act, 1956 and are of the opinion that prima facie the
 prescribed cost records have been maintained.  We have, however, not
 made a detailed examination of the cost records with a view to
 determine whether they are accurate or complete.
 
 9) According to the records of the company, and the information and
 explanation given to us:
 
 a) The company was generally regular in depositing undisputed statutory
 dues including Provident Fund and Employees State Insurance, Income
 Tax, Sales Tax, Wealth Tax dues with the appropriate authorities and
 there were no arrears outstanding for a period of more that 6 months as
 at 31st March 2011
 
 b)According to the information and explanations given to us, and the
 records examined by us the following are the particulars of dues of
 income tax, custom duty wealth tax or excise duty, which have not been
 deposited on account of any dispute:-
 
 10) In our opinion, the accumulated losses of the company are more than
 fifty percent of its net worth. Further the company has incurred cash
 losses during the financial year covered by our audit.
 
 11) In our opinion and according to the information and explanations
 given to us company has not defaulted in the payment of dues to
 financial institutions and Banks.
 
 12) According to the information and explanations given to us, and the
 records examined by 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.
 
 13) In our opinion and according to the information and explanations
 given to us, the nature of the activities of the company does not
 attract any special statute applicable to chit / mutual benefit fund /
 societies.
 
 14) In our opinion and According to the information and explanations
 given to us, the company is not a dealer or trader in shares,
 securities, debentures and other investments.
 
 15) According to the information and explanations given to us and the
 records examined by us, the company has not given any guarantee for
 loans taken by others from Bank of Financial Institutions.
 
 16) As informed to us, the company has not obtained any term loan
 during the year and hence this clause is not applicable to the company.
 
 17) On the basis of overall examination of the balance sheet of the
 company and the information and explanation given to us, we report that
 the company funds raised on short term basis have, prima facie, not
 been used during the year for long term investment.
 
 18) During the year the company has not issued or made preferential
 allotment of shares.
 
 19) During the year the company has not issued any debenture.
 
 20) According to the information and explanations given to us and the
 records examined by us, the company has not raised money by public
 issues during the year.
 
 21) During the course of our examination of the books of account
 carried out in accordance with the generally accepted auditing
 practices in India, and according to the information and explanations
 given to us we have neither come across any instance of fraud on or by
 the company, noticed or reported during the year, nor have we been
 informed of such case by the management.
 
 PLACE: COIMBATORE                            For RAJANSANKAR & CO,
 
 DATE : 03/09/2012                            Chartered Accountants
 
                                              -sd- 
 
                                              N. RAVISANKAR 
 
                                              PARTNER 
 
                                              M.No.023548 
 
                                              FR No:003430S