1.  We have audited the attached Balance Sheet of TERAI TEA COMPANY
 LIMITED as at 31st March 2011, the Profit and Loss Account for the year
 ended on that date and the Cash Flow Statement for the year ended on
 that date both annexed thereto, both of which we have signed under
 reference to this report.  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 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.
 
 3.  As required by the Companies (Auditors'' Report) Order, 2003, as
 amended by the Companies (Auditor''s Report) (Amendment) Order, 2004,
 issued by the Central Government of India in terms of sub-section 4A of
 Section 227 of the Companies Act, 1956, of India (the Act) and on the
 basis of such checks of the books and records of the company as we
 consider appropriate and according to the information and explanations
 given to us we enclose in the Annexure a statement on the matters
 specified in Paragraphs 4 & 5 of the said Order to the extent
 applicable.
 
 4.  Further to our comments in the Annexure referred to in Paragraph
 (3) 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 purpose of our
 audit.
 
 b) In our opinion, the company has kept proper books of account as
 required by Law so far it appears from our examination of those books.
 
 c) The Balance Sheet, Profit and Loss account and Cash Flow Statement
 dealt with by the report are in agreement with the books of account.
 
 d) In our opinion, Balance sheet, Profit and Loss account and Cash Flow
 Statement dealt with by this Report comply with accounting standards
 referred to in sub-section 3C of Section 211of the Companies Act, 1956
 excepting those reported in Schedule XVII - Significant Accounting
 Policies.
 
 e) On the basis of written representations received from the directors,
 as on 31st March 2011 and taken on record by the Board of Directors, we
 report that none of the Directors is disqualified as on March 31, 2011
 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, subject to the Note 7
 regarding non-provision of Agricultural Income Tax liability, the
 impact of which on the company''s profit / reserves has been indicated
 in the said Note, and read together with the Notes appearing thereon,
 give the information required by the Companies Act, 1956, in the manner
 so required and give a true and fair view-
 
 a.  In the case of the Balance Sheet of the State of Affairs of the
 company as at 31st March 2011
 
 b.  In the case of Profit and Loss account of the Profit for the year
 ended 31st March 2011
 
 c.  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 (3) of our Report of even date) 
 
 i.  In respect of its fixed assets- 
 
 a.  The company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 b.  Some of the fixed assets have been physically verified by the
 management in accordance with a program of verification, which in our
 opinion provides for physical verification of all the fixed assets at
 reasonable intervals having regard to the size of the Company and the
 nature of its assets. According to the information and explanations
 given to us no material discrepancies have been noticed on such
 verification.
 
 c.  No fixed assets were disposed off during the year.  
 
 ii.  In respect of its inventories:
 
 a.  As explained to us, the stock of finished products and stores
 materials of the company have been physically verified by the
 management during the year except for stock of tea lying at warehouse
 or consignment agents which has been verified by subsequent sales.
 
 b.  In our opinion, the procedure of physical verification of stocks
 followed by the management is 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 the inventory records, in our
 opinion the Company is maintaining proper records of inventory. The
 discrepancies between the physical stocks and the book stocks have been
 dealt with properly and were not material.
 
 iii.  In respect of unsecured loans granted by the Company to the
 parties covered in Register under Section 301 of the Companies Act,1956
 and according to the information and explanations given to us:
 
 a.  The company has granted interest free unsecured loans / advances
 against contracts to 13 parties. The maximum amount involved during the
 year and the year-end outstanding balance of such loans/ advances
 aggregates to Rs.23.89 Crores and Rs.17.17 Crores respectively.
 
 b.  The company has taken interest free unsecured loans / advances
 against contracts from four parties. The maximum amount involved during
 the year and the year-end outstanding balance of such loans/ advances
 aggregates to Rs.10.3 Crores and Rs.9.58 Crores respectively.
 
 c.  In our opinion, considering the nature of transactions, the terms
 and conditions on which such loans/advances have been granted to and
 taken from such parties are not, prima facie, prejudicial to the
 interest of the company.
 
 d.  In respect of the loans/advances granted and taken as aforesaid
 there is no stipulation for repayment on fixed intervals.
 
 iv. In our opinion and in accordance with the information and
 explanation given to us, the internal control procedures for the
 purchase of inventory, raw materials, stores and fixed assets and for
 the sale of goods & services are adequate and commensurate with the
 size of the company and the nature of its business. During the course
 of our audit we have not observed any continuing failure to correct
 major weakness in the internal control system.
 
 v.  In respect of contracts or arrangements entered in the Register
 maintained in pursuance of Section 301 of the Companies Act 1956 and to
 the best of our knowledge & belief and according to information and
 explanations given to us:
 
 a.  The particulars of the contracts/ transactions that need to be
 entered into the register maintained under section 301 of the Companies
 Act, 1956, have been so entered.
 
 b.  In our opinion and having regards to our comments in paragraph (iv)
 above, the transactions (excluding loans/ advances reported in
 paragraph iii above) exceeding the value of Rs 5 lakhs in respect of
 any party during the period, have been made at prices which are prima
 facie reasonable having regard to the prevailing market prices at the
 relevant time.
 
 vi.  In our opinion and according to the explanations given to us, the
 company has not accepted Deposits from the public during the year.
 Therefore, the provisions of clause 4(vi) of CARO are not applicable to
 the Company.
 
 vii.  In our opinion the company has internal audit system commensurate
 with the size and nature of its business.
 
 viii.  The Central Government has not prescribed maintenance of the
 cost records under Section 209(1)(d) of the Companies Act, 1956 for the
 product of the company.
 
 ix.  According to the information and explanations given to us in
 respect of statutory dues:
 
 a.  The Company has generally been regular in depositing undisputed
 statutory dues including provident fund, income tax, sales tax, service
 tax, excise duty, cess and other material statutory dues applicable to
 it with the appropriate authorities during the year.
 
 b.  According to the information and explanations given to us, no
 undisputed amounts payable in respect of Income Tax, Wealth Tax,
 Service Tax, Sales Tax, Custom Duty, Excise Duty, Cess and other
 material statutory dues applicable to it were in arrears as at 31st
 March, 2011 for a period of more than six months from the date they
 became payable.
 
 c.  According to the information and explanations given to us and in
 our opinion, there are no dues of customs duty, Wealth Tax, Service
 Tax, Excise Duty, Cess and Income Tax which have not been deposited as
 on 31st March 2011 on account of any dispute, excepting Agricultural
 Income Tax liability of Rs. 54.39 lakhs for accounting year 1994-95,
 1995-96 and 1996-97 which is pending at West Bengal Tax Tribunal.
 (Refer Note No. 7 of Notes to Accounts
 
 x.  The Company does not have any accumulated losses and has not
 incurred cash losses during the financial year covered by our audit and
 the immediately preceding financial year.
 
 xi.  In our opinion and according to the explanations given to us, the
 company has not defaulted in repayment of dues to financial
 institution, bank or debenture holders.
 
 xii.  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.  The company is not a chit fund or a nidhi/ mutual benefit
 fund/society.
 
 xiv.  The company has not entered in to transactions of dealing or
 trading in shares, securities, debentures and other investments.
 
 xv. The company has given guarantees of Rs.634.76 Lakhs for loans taken
 by others from banks or financial institutions. According to the
 information and explanations given to us, we are of the opinion that
 the terms and conditions thereof are not prima facie prejudicial to the
 interests of the company.
 
 xvi. To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, term loans
 availed by the Company were, prima facie, applied by the Company during
 the year for the purposes for which the loans were obtained.
 
 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 there are no funds raised on short-term basis that
 have been used for long-term investment.
 
 xviii. The company has not made any preferential allotment of shares to
 parties and companies covered in the register maintained under section
 301 of the Act.
 
 xix.  The company has not issued any debentures.
 
 xx.  The Company has not raised any money by way of public issue during
 the year.
 
 xxi. 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
 has been noticed or reported during the year.
 
                                                 For P. K. SHAH & CO.
                                                Chartered Accountants
                                      Firm Registration No. : 308150E
 
                                                           P. K. Shah
                                                              Partner 
                                              (Membership No. 014740)
 
 Place  Kolkata 
 Dated  31st May, 2011