1.  We have audited the attached Balance Sheet of The Ugar Sugar Works
 Limited as at 31st March, 2011 and the Profit and Loss Account for the
 year ended on that date 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.
 
 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 misstatements. 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.
 
 3.  As required by the Companies (Auditors'' Report) Order, 2003 [as
 amended by the Companies (Auditors'' 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 we enclose in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the said
 Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 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 purpose 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 such
 books;
 
 (iii) the Balance Sheet, Profit and Loss Account and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account of the Company;
 
 (iv) in our opinion, the Balance Sheet, 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) on the basis of the 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
 31st March, 2011, 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 accounts, read together with the
 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, 2011;
 
 b) in the case of the Profit and Loss Account, of the Profit for the
 year ended on that date; and
 
 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) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) Fixed assets have been physically verified during the year and
 reconciled with the book records.  According to information and
 explanations given to us and records produced to us for our
 verification, discrepancies were not, in our opinion, material and the
 same have been properly dealt with in the books of account.
 
 (c) The fixed assets which were disposed off during the year do not
 form substantial part of the fixed assets owned by the Company.
 
 (ii) (a) The inventory was physically verified during the year by the
 Management. In our opinion, the frequency of verification is
 reasonable.
 
 (b) 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) The Company is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 (iii) The Company has neither granted nor taken any loans, secured or
 unsecured, to /from companies, firms or other parties covered in the
 register maintained as per section 301 of the Companies Act, 1956.
 Consequently, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(e), (iii)(f),
 (iii)(g) of paragraph 4 of the Order are not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there were adequate internal control systems commensurate
 with the size of the Company and nature of its business with regard to
 purchase of inventory and fixed assets and for sale of goods and
 services. During the course of the audit, we have not observed any
 continuing failure to correct major weaknesses in internal control
 system.
 
 (v) (a) According to the information and explanations given to us, we
 are of the opinion that the particulars of contracts or arrangements
 referred to in section 301 of the Act have been entered in the register
 required to be maintained under that section; and
 
 (b) According to the information and explanations given to us, the
 transactions made in pursuance of such contracts or arrangements 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 provisions of section 58A, 58AA or any other
 relevant provisions of the Companies Act, 1956 and the Companies
 (Acceptance of Deposits) Rules, 1975, with regard to deposits accepted
 from the public.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 (viii) We have broadly reviewed the books of account relating to
 materials, labour and other items of cost, maintained by the Company
 pursuant to the rules made by the Central Government for maintenance of
 cost records under section 209(1) (d) of the Companies Act, 1956 and we
 are of the opinion that prima facie the prescribed accounts and records
 have been made and maintained.
 
 (ix) (a) The Company is regular in depositing with appropriate
 authorities undisputed statutory dues including Provident Fund,
 Investor Education and Protection Fund, Employees'' State Insurance,
 Income Tax, Sales Tax, Wealth Tax, Custom Duty, Service Tax, Excise
 Duty, Cess and other material statutory dues applicable to it except
 for delays in remittance of Income Tax deducted at source.
 
 (b) According to information and explanations given to us, there are no
 dues of income tax, sales tax, wealth tax, service tax, customs duty,
 excise duty and cess, which have not been deposited on account of any
 dispute other than those mentioned below:
 
 Nature of     Name of Statute   Period to    Amount  Forum where 
                                                      dispute is
 Dues                            which the      Rs.   is pending
                                    amount     Lakh
                                   relates
 
 Central 
 Excise        Central Excise 
               Act                 2000-01      0.94  Commissioner of
                                                      Central Excise
                                                      (Appeals)
 
 Central 
 Excise        Central Excise Act  2003-04     80.91  Commissioner of 
                                                      Central Excise,
                                                      Belgaum
 
 Central 
 Excise        Central Excise Act  2006-07     26.31  CESTAT, Bangalore
 
 Central 
 Excise        Central Excise Act  2007-08     22.92  CESTAT, Bangalore
 
 Central 
 Excise        Central Excise Act  2008-09     13.36  Joint Commissioner
                                                      of Central Excise,
                                                      Belgaum
 
 Central 
 Excise        Central Excise Act  2009-10      2.76  Joint Commissioner 
                                                      of Central Excise,
                                                      Belgaum
 
 Central 
 Excise        Central Excise Act  2010-11      8.82  Joint Commissioner
                                                      of Central Excise,
                                                      Belgaum
 
 Central 
 Excise        Central Excise Act  2009-10      2.78  Joint Commissioner
                                                      of Central Excise,
                                                      Belgaum
 
 Service Tax   Central Excise Act  2008-09     21.11  Additional 
                                                      Commissioner of 
                                                      Central Excise,
                                                      Belgaum
 
 (x) In our opinion, the accumulated losses of the Company are not more
 than fifty percent of its net worth. The Company has not incurred cash
 losses during the financial year and in the immediately preceding
 financial year.
 
 (xi) In our opinion and according to information and explanations given
 to us, the Company has not defaulted in repayment of dues to a
 financial institution or bank. The Company has no debenture- holders.
 
 (xii) According to information and explanations given to us, the
 Company has not granted loans and advances on the basis of security by
 way of pledge of shares, debentures and other securities.  Accordingly,
 the provisions of clause 4(xii) of the Companies (Auditors'' Report)
 Order, 2003, are not applicable to the Company.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Accordingly, the provisions of clause
 4(xiii) of the Companies (Auditors'' Report) Order, 2003, are not
 applicable to the Company.
 
 (xiv) According to information and explanations given to us, 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 (Auditors'' Report) Order, 2003, are not applicable to the
 Company.
 
 (xv) In our opinion, the terms and conditions on which the Company has
 given guarantees for loans taken by others from banks or financial
 institutions are not prejudicial to the interest of the Company.
 
 (xvi) In our opinion, term loans were applied for the purpose for which
 the loans were obtained.
 
 (xvii) The funds raised on short-term basis have not been utilised for
 long-term investment.
 
 (xviii) According to information and explanations given to us, the
 Company has not made any preferential allotment of shares to parties
 and companies covered under section 301 of the Companies Act, 1956.
 
 (xix) According to information and explanations given to us, the
 Company has not issued any debentures.  Accordingly, the provisions of
 clause 4(xix) of the Companies (Auditors'' Report) Order, 2003, are not
 applicable to the Company.
 
 (xx) According to information and explanations given to us, the Company
 has not made any public issue of its shares to raise money.
 Accordingly, the provisions of clause 4(xx) of the Companies (Auditors''
 Report) Order, 2003, are not applicable to the Company.
 
 (xxi) According to information and explanations given to us, no
 material fraud on or by the Company has been noticed or reported during
 the course of our audit
 
 
                                                For M/s P. G. Bhagwat
 
                                                Chartered Accountants,
 
 Place: Panhala                                      M. K. Shevade
 
 Date: 20-05-2011                                       Partner
 
                                                 Membership No. 18651
 
                                           Firm Registration No. 101118W