We have audited the attached Balance Sheet of SPECIALITY PAPERS LIMITED
 as at 31st March, 2009 and also the Profit and Loss account 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 the 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 (as
 amended) issued by the Central Government of India in terms of section
 227(4A) of the Companies act ,1956, we enclose in the Annexure a
 statement on the matters specified therein.
 
 2.  Further to our comments in the annexure referred to in paragraph 1
 above, we state that:
 
 a) The balances of Debtors, Creditors and Loans and Advances are
 subject to confirmation and reconciliation.
 
 b) We are informed that die records of inventory of stores and spares
 is under compilation and that the closing stock of stores has been
 taken and valued as per physical verification on the year end date.
 Impact of variation, if any on the profit is not quantifiable.
 
 c) The Company has not provided for Interest on all unpaid statutory
 dues.
 
 d) Cheques to the tune of Rs. 992554/- have been issued but they have
 remained uncleared till the report date.
 
 e) 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.
 
 f) Subject to what is stated in paragraph (a) (b) (c) and (d) above, in
 our opinion, proper books of accounts as required by law, have been
 kept by the Company so far as it appears from our examination of the
 books;
 
 g) Balance Sheet and Profit and Loss Account and Cash flow statement
 dealt with by this report are in agreement with the books of accounts;
 
 h) In our opinion , the Profit & Loss account, Balance Sheet and the
 Cash flow statement dealt with by this report, comply with the
 mandatory accounting standards referred in to Sub-section (3C) of
 section 211 of the companies Act 1956.
 
 i) On the basis of written representations received from the Directors,
 as on 31s March, 2009 and taken on record by the Board of Di rectors,
 we report that none of the Directors is disqualified as on 31stMarch,
 2009 from being appointed as a Director in terms of clause (g) of
 sub-section (1) of section 274 of the Act;
 
 j) Subject to our comments in paragraph (a) and (b) above, in our
 opinion and to the best of our information and according to the
 explanations given to us, the said accounts read in conjunction with
 Schedules A to O; 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:
 
 a) In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March 2009,
 
 b) In the case of the Profit and Loss ace ount, of the Profit 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 THE AUDITORS REPORT
 
 ANNEXURE REFERRED TO IN PARAGRAPH 1. OF AUDITORS REPORT TO THE MEMBERS
 OF SPECIALITY PAPERS LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED 31st
 MARCH 2009.
 
 1.(a) In our opinion, the records relating to fixed assets of the
 company need to be updated and modified to display full particulars
 including qua ntitative details and situation of fixed assets.  We are
 informed that the company is in the process of updating these records.
 
 (b) As per the information and explanations given to us the company
 will be able to physically verify the fixed assets only after the
 records relating to fixed assets are updated.
 
 (c) The Company has not disposed off a substantial part of fixed assets
 during the year.
 
 2.(a) The inventory of the Company except for waste paper and Stores
 has been physically verified by the management during the year. In
 respect of inventory lying with third parties, these have been
 substantially confirmed by them. In our opinion, the frequency of
 verification is reasonable however verification of inventory of stores
 and waste paper needs to be streamlined.
 
 (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 except for waste paper and stores, were
 found reasonable and adequate in relation to the size of the Company
 and the nature of its business.
 
 (c) On the basis of our examination of records of inventory, in our
 opinion, except for waste paper and stores, the Company has maintained
 proper records of inventory and discrepancies noticed on physical
 verification between the physical stocks and the book records were not
 material in relation to the operations of the company.
 
 3.(a) The company has granted unsecured loan to two companies/ firm /
 persons covered in the register maintain under section 301 of the
 companies act 1956, The maximum amount involved during the year was
 Rs.5.43 Lacs (PY Rs.307.22) and the maximum amount outstanding at any
 time during the year for the loan granted to such companies/ firm was
 Rs.  5.43 Lacs (P.Y. Rs. 307.22).
 
 (b) The company has granted interest free loan. There is no fixed
 schedule for repayment of these loans.
 
 (c) There is no stipulated repayment schedule for these loans. Thus
 this clause does not apply.
 
 (d) There is no overdue amount exceeding Rs. One Lac in case of loans
 given by the company.
 
 (e) The company has taken unsecured loan from 8 companies/ Firm/
 Persons covered in the register maintained under section 301 of the
 Companys Act 1956. The maximum amount involved during the year was
 Rs.3377.78 Lacs (P.Y. Rs. 3069.16) and the maximum balance outstanding
 of loan taken from such companies at any time during the year was Rs.
 3101.66 Lacs (P.Y. Rs.  1845.85)
 
 (f) In our opinion and according to the information and explanation
 given to us, the rate of interest and other terms and conditions in
 respect of loans taken from these parties are prima facie not
 prejudiced to the interest of the company.
 
 (g) Since the company has taken interest free loan s, and there is no
 stipulated repayment schedule for these loans, this clause does not
 apply.
 
 4.  In our opinion and according to the information a nd explanations
 given to us , there are adequate internal control procedures
 commensurate with the size of the Company and nature of its business
 with regards to the purchase of inventory & fixed assets and with
 regards to the sale of goods. During the course of our audit, we have
 not observed any continuing failure to correct the major weaknesses in
 internal controls.
 
 5.(a) In our opinion and according to the information and explanation
 given to us, the transactions that need to be entered into the Register
 maintain ed under Section 301 of the Companies Act, 1956 have been so
 entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions that need to be entered in the register
 in pursuance of Section 301 of the act, where the amount of such
 transaction with each party exceeds Rs. Five Lacs, during the financial
 year, have been made 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 the public.
 
 7.  The Company presently does not have a formal internal audit system.
 
 8.  As per the information and explanations given to us the Company is
 in the process of compiling cost records required to be maintained as
 pres cribed by the Central Government under Clause (d) of sub-section
 (1) of Secti on 209 of the Companies Act 1956.
 
 9(a) The Company has generally been irregular in depositing undisputed
 dues including Provident
 
 Funds, Employees State Insurance dues, Labour welfare fund, Sales Tax
 and Income Tax with appropriate authorities. According to the
 information and explanations given to us and as examined from the books
 of accounts of the Compan y, there are statutory dues outstanding for
 more than six months at the year end date.
 
 (b) According to the records of the Company, there are no dues
 outstanding of Sales Tax, Income Tax, Wealth Tax, Custom Duty or Excise
 Duty or Cess on account of any dispute except for TDS amounting to Rs.
 2276161/- for which the appeals are pending.
 
 10.  The Company has no accumulated losses as on the balance sheet
 date.
 
 11.  Based on our audit procedures and the information and explanations
 given by management, we are of the opinion that the Company has not
 defaulted in
 
 repayment of its dues to any financial institution or bank during the
 year.
 
 12.  The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other security.
 
 13.  The provisions of any special statute as specified under clause
 (xiii) of paragraph 4 of the Order are not applicable to the Company.
 
 14.  In our opinion and according to the information and explanations
 given to us, the Company is not a dealer or trader in securities.
 
 15.  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.
 
 16.  According to the information and explanations given to us, term
 loans have been applied for the purpose for which they were raised.
 
 17.  According to the information and explanations 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 preferential allotment of shares to the
 parties and companies covered in the Register maintained under section
 301 of the Companies Act, 1956 during the year.
 
 19.  The Company has not issued any debentures.
 
 20.  The Company has not raised any money by public issue during the
 year.
 
 21.  To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the company
 was noticed or reported during the year.
 
 
                                                 FOR KAPADIA SHAH & CO.  
 
                                                 CHARTERED ACCOUNTANTS
 
                                                    Shreyas S. Kapadia 
 
                                                               Partner
 
                                                   Membership No.41548 
 
 Place: Vapi 
 
 Date: 02.09.2009