We have audited the attached balance sheet of SUDARSHAN CHEMICAL
 INDUSTRIES LIMITED as at 31st March 2012, the Statement of Profit and
 Loss Account and the Cash Flow Statement 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 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 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.
 
 We report as follows:
 
 1.  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, we enclose in the Annexure a statement on the
 matters specified in paragraphs 4 and 5 of the said Order.
 
 2.  Further to our comments in the Annexure referred to in paragraph 1
 above:
 
 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, the Statement of 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, the Statement of 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 Companies Act, 1956;
 
 e) On the basis of written representations received from the directors,
 as on 31st March 2012 and taken on record by the 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;
 
 f) In our opinion, and to the best of our information and according to
 the explanations given to us, the said accounts, read together with the
 Company''s Accounting Policies and the Notes thereto, 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;
 
 i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March 2012.
 
 ii) in the case of the Statement of Profit and Loss Account, of the
 Profit for the year ended on that date; and
 
 iii) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 
 Referred to in paragraph 1 of 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) As explained to us, physical verification of major portion of the
 fixed assets as at 31st March, 2012 was conducted by the Management
 during the year. In our opinion, the frequency of physical verification
 is reasonable having regard to the size of the operations of the
 Company and nature of its fixed asset.
 
 (c) During the year, the Company has not disposed of any substantial or
 major part of fixed assets.
 
 ii.  (a) As explained to us, the inventory has been physically verified
 during the year by the management. In our opinion, the frequency of
 verification is reasonable.
 
 (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) In our opinion and according to the information and explanations
 given to us and on the basis of our examination of the records of
 inventory, the Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to the book records were not material and have been properly dealt with
 in the books of account.
 
 iii. 1) (a) According to the information and explanations given to us,
 the Company has granted unsecured loans to wholly owned subsidiaries
 covered in the register maintained under Section 301 of the Companies
 Act, 1956. The maximum amount involved during the year was Rs.
 428,806,056 and the year-end balance of loan granted to such companies
 is Rs. 428,743,000.
 
 (b) According to the information and explanations given to us, in our
 opinion, the rate of interest and other terms and conditions of above
 unsecured loans granted by the Company are not prima facie, prejudicial
 to the interest of the Company.
 
 (c) According to the information and explanations given to us the
 company to whom loans and advances in the nature of loan have been
 given is repaying the principal amount as stipulated and is also
 regular in payment of interest.
 
 (d) There is no overdue amount of loan granted to the companies listed
 in the register maintained under Section 301 of the Companies Act,
 1956.
 
 2) (a) According to the information and explanations given to us, the
 Company has taken unsecured loans and fixed deposits from 32 parties
 covered in the register maintained under Section 301 of the Companies
 Act, 1956. The maximum amount involved during the year was Rs.
 310,500,950 and the year-end balance of loan taken from such companies
 is Rs. 170,370,000.
 
 (b) According to the information and explanations given to us, in our
 opinion, the rate of interest and other terms and conditions of above
 unsecured loans and fixed deposits taken by the Company are not prima
 facie, prejudicial to the interest of the Company.
 
 (c) According to the information and explanations given to us, the
 company is regular in repayment of principal and interest.
 
 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 purchases of inventory and fixed assets, and
 with regard to the sale of goods and services. During the course of our
 audit, no continuing failure to correct major weakness has been noticed
 in the internal controls.
 
 v.  In respect of transactions entered in the register maintained in
 pursuance of Section 301 of the Companies Act 1956,
 
 (a) Based on audit procedures applied by us, to the best of our
 knowledge and belief and according to the information and explanations
 given to us, we are of the opinion that the contracts or arrangements
 that needed to be entered into the register maintained under Section
 301 have been so entered.
 
 (b) According to the information and explanations given to us,
 transactions of purchase of goods and services exceeding the value of
 Rs. 5 lakhs during the year have been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 vi.  In our opinion and according to the information and explanations
 given to us, the Company has complied with the directives issued by the
 Reserve Bank of India and the provisions of Sections 58A and 58AA or
 any other relevant provisions of the Companies Act, 1956 and the Rules
 framed there under in respect of the deposits accepted from the public.
 
 vii. In our opinion, the Company has an internal audit system
 commensurate with the size and the nature of its business.
 
 viii.  We have broadly reviewed the books of account maintained by the
 Company pursuant to the Order made by the Central Government for the
 maintenance of cost records under Section 209(1) (d) of the Companies
 Act, 1956, in respect of Pesticides and Pigments and are of the opinion
 that prima facie the prescribed accounts and records have been
 maintained. We have not, however, made a detailed examination of the
 records with a view to determining whether they are accurate or
 complete.
 
 ix.  (a) According to the records of the Company and information and
 explanations given to us, the Company has generally been regular in
 depositing undisputed statutory dues including Provident Fund, Investor
 Education and Protection Fund, Employees'' State Insurance, Income-Tax,
 Sales-Tax, Wealth-Tax, Service Tax, Custom Duty, Excise Duty, cess and
 other statutory dues with the appropriate authorities during the year.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Investor
 Education and Protection Fund, Employees'' State Insurance, Income-Tax,
 Wealth- Tax, Service Tax, Sales-Tax, Customs Duty, Excise Duty, Cess
 and other undisputed statutory dues were outstanding, at the year end,
 for a period of more than six months from the date they became payable.
 
 (c) According to the records of the Company and information and
 explanation given to us, details of dues of Excise Duty, Sales Tax and
 Income Tax which have not been deposited on account of any dispute are
 given below :
 
 Name of the      Nature      Amount      Financial 
                                          Years          Forum where the
 Statute          of Dues    (Rs.)        to which it
                                          pertains       dispute is
                                                         pending
 
 The Central      
 Excise Act,    
 1944            Excise duty  597,791     1999-00        Assistance
                                                         Collector
                                                         of Central
                                                         Excise
 
 The Central 
 Excise Act, 
 1944            Excise duty  227,682     2002-03        Assistance
                                                         Collector
                                                         of Central
                                                         Excise
 
 The Central 
 Excise Act, 
 1944            Excise
                 duty       3,954,881     2004-05        Custom Excise
                                                         and Service Tax
                                                         Appellate
                                                         Tribunal
 
 The Central 
 Excise Act, 
 1944            Excise duty   26,032     2004-05        Assistance 
                                                         Collector
                                                         of Central
                                                         Excise
 
 The Central 
 Excise Act,
 1944            Excise duty    2,355     2005-06        Assistance 
                                                         Collector
                                                         of Central 
                                                         Excise
 
 The Central 
 Excise Act, 
 1944            Excise duty  487,912     2006 to 2010   Assistance 
                                                         Collector
                                                         of Central
                                                         Excise
 
 The Central 
 Excise Act, 
 1944            Excise duty   17,550     2007-08        Assistance 
                                                         Collector
                                                         of Central 
                                                         Excise
 
 The Central 
 Excise Act, 
 1944            Excise duty  123,369     2009-10        Custom Excise
                                                         and Service 
                                                         Tax Appellate
                                                         Tribunal
 
 The Central 
 Excise Act, 
 1944            Excise 
                 duty      1,855,594      2010-11        Assistance
                                                         Collector
                                                         of Central
                                                         Excise
 
 The Central 
 Excise Act, 
 1944            Excise
                 duty        185,943      2011-12        Commissioner
                                                         Appeals
 
 The Income 
 Tax Act,1961    Income Tax  653,233      2007-08        Dy. Commissioner
                                                         Income Tax
 
 Total                     8,132,342
 
 x.  The Company does not have accumulated losses as at the end of the
 financial year and the Company has not incurred cash losses during
 current and the immediately preceding financial year.
 
 xi.  Based on our audit procedures and on the basis of information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in the repayment of dues to financial
 institutions and banks.
 
 xii. According to the information and explanations given to us and
 based on the documents and records produced 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, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 4(xiii) of the Companies (Auditor''s Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 xiv. 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.
 
 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, except for the corporate guarantee
 issued on behalf of its wholly owned subsidiary Prescient Color Limited
 and its step down subsidiary Sudarshan North America, Inc.  amounting to
 Rs. 12,25,00,000 and USD 1.5 Million respectively and terms and
 conditions thereof are not prejudicial to the interest of the company.
 
 xvi. Based on the information and explanation given to us by the
 management term loans availed by the company were, prima facie, applied
 by the company during the year for the purpose for which loans were
 obtained.
 
 xvii.  According to the Cash Flow Statement on the balance sheet date
 and records examined by us and according to the information and
 explanations given to us, on overall basis, we report that no funds
 raised on short term basis have, prima facie, been used during the year
 for long term investment.
 
 xviii.  The Company has not made any preferential allotment to parties
 and companies covered under register maintained under Section 301 of
 the Companies Act, 1956, during the year and the question of whether
 the price at which the shares have been issued is prejudicial to the
 interest of the Company does not arise.
 
 xix. The Company has not issued any debentures and hence the question
 of creation of any securities does not arise.
 
 xx.  The Company has not raised money by any public issues during the
 year and hence the question of disclosure and verification of end use
 of such money does not arise.
 
 xxi. 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 course of our audit.
 
                                            For B. K. Khare & Co.
 
                                           Chartered Accountants 
 
                                   Firm Registration No. 105102W
 
                                                 P. V. Paranjape
 
                                                         Partner
 
 Pune : 25th May 2012                     Membership No - 047296