1.  We have audited the attached Balance Sheet of Unimers India Limited
 as at 31st March, 2011 and the annexed Profit & Loss Account and also
 Cash Flow Statement of the Company 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 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 the management, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 3.  We draw attention to:
 
 (a) Note no. B1 and B4 of Schedule 14 of Significant Accounting
 Policies and Notes on Financial Statements. The Company has incurred
 loss in the current period as well as in the preceding period and the
 accumulated losses as at the period end have exceeded its entire net
 worth and reference has to be made to the Board for Industrial and
 Financial Reconstruction. However, as per expert opinion obtained the
 company is not required to make a reference to BIFR.  Besides, plant
 operations were suspended since October, 2007 and thereafter formally
 closed and workers retrenched effective from 26th June, 2008. These
 financial statements have, however, been prepared by the management on
 a going concern basis, considering the various revival/restructuring
 options being actively pursued by the management. This being a
 technical matter and in view of uncertainty, we are unable to express
 an opinion as to whether the Company can now operate as a going
 concern. However, as explained, should the Company be unable to
 continue as a going concern, the extent of the effect of the resultant
 adjustments to the accumulated losses, assets and liabilities as at the
 year end and loss for the year is presently not ascertainable.
 
 (b) The Company has not carried out impairment test as required by
 Accounting Standard (AS) 28 ''Impairment of Assets'', particularly in
 respect of Building and Plant & Machinery as explained in note A5 of
 Schedule 14 of Significant Accounting Policies and Notes on Financial
 Statements. We are unable to express an opinion as to when and to what
 extent the carrying value of Building and Plant & Machinery would be
 recovered in view of the suspension of all manufacturing activities,
 the impact whereof on the loss for the period, accumulated losses,
 assets and liabilities as at the period end is presently, not
 ascertainable.
 
 (c) Note no. B 8(b) of Schedule 14 of the financial statements
 regarding the accounts of certain Creditors of Rs.31,557,964, Bank
 balances (Dr) of Rs.167,192 and Loans and advances recoverable of Rs.
 4,883,983 being subject to confirmations, reconciliations, and
 adjustments, if any, having consequential impact on the loss for the
 year, assets, liabilities and accumulated losses as at the close of the
 year, the amounts of adjustment if any, are presently not ascertainable
 and therefore not provided for.
 
 (d) Exceptional item of Rs.23,611,485 represents amount payable to
 Union covered workers (Net of already provided Rs.120 Lacs in the
 year 2008-09). This amount was due to be paid by 31st March, 2011 but
 could not be paid because of financial stringencies. Consequently
 further liability, if any, in this regard has not been provided for,
 amount being unascertainable, as explained.
 
 (e) Note no. B 15 of Schedule 14 regarding Company having not deposited
 long outstanding amount of Rs.16,469,354 to the Investor Education &
 Protection Fund and consequential liability of interest / other charges
 on the same.
 
 (f) Further, we are unable to express an opinion as to when and what
 extent the carrying value of Raw Material of Rs.1,360,944 Stores and
 Spares of Rs 8,940,526 would be recover in view of the suspension of
 production in October, 2007 and deterioration of quality, if any.
 
 (g) (i) Note no. B9 (a) of Schedule 14 of the said Schedule regarding
 recognition of deferred tax asset of Rs.266,117,387 on the basis that
 there would be sufficient future income. However, in our opinion there
 is no virtual certainty of future profitability and therefore deferred
 tax asset recognized should be reversed.
 
 (ii) Note no. B 4(b) of Schedule 15 of the financial statements
 regarding non-provision of interest liability aggregating to Rs.
 31,756,177 on assigned loans and debentures on the basis that the
 management is expecting waiver thereof.
 
 4.  We further report that, without considering matters mentioned in
 Para 3(a) to (f) above, the effect of which could not be determined,
 had the observation made by us in Para 3(g) above been considered the
 loss for the year would have been Rs.414,255,291 (as against the
 reported figure of Rs.116,381,727), accumulated losses would have been
 Rs.826,410,235 (as against the reported figure of Rs.528,536,671) and
 secured loans would have been Rs.613,323,008 (as against the reported
 figure of Rs.581,566,831).
 
 5.  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 (hereinafter referred to as the ''Act''), we enclose
 in the Annexure a statement on the matters specified in paragraphs 4
 and 5 of the said Order, to the extent applicable.
 
 6.  Further to our comments in the Annexure referred to in paragraph
 (5) 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 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 it appears from our examination of those
 books;
 
 c) The Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 accounts;
 
 d) In our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report comply with the
 Accounting Standards referred to in Section 211(3C) of the Act, to the
 extent applicable except as stated in Para 3(b) above.
 
 e) On the basis of written representations received from the Directors
 as on 31st March, 2010 and taken on record by the Board of Directors,
 we report that none of the Directors is disqualified as on 31st March,
 2010 from being appointed as a Director in terms of Section 274 (1)(g)
 of the Act;
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements subject to
 what is stated in paragraphs 3 and 4 above, and read together with Note
 no. B 12(a) of Schedule 14 regarding pending approval of Central
 Government in respect of managerial remuneration, Note no. B 13
 regarding interest liability in respect of dues to micro, small and
 medium enterprises, Note no. B 14 of Schedule 14 regarding appointment
 of Company Secretary and other notes in the said Schedule and those
 appearing elsewhere in the financial statements 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:
 
 i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2011;
 
 ii) in the case of the Profit and Loss Account, of the loss of the
 Company for the year ended on that date; and
 
 iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 Annexure referred to in paragraph 4 of our report of even date to the
 Members of UNIMERS INDIA LIMITED on the financial statements for the
 year ended 31st March 2011.
 
 On the basis of such checks as we considered appropriate and according
 to the information and explanations given to us during the course of
 audit, we state that:
 
 1.  (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 (b) All fixed assets have been physically verified by the management at
 the year end which is considered reasonable no discrepancies were
 noticed on such verification.
 
 (c) No substantial part of fixed assets has been disposed of during the
 year.
 
 2.  (a) The inventory has been physically verified by the management at
 reasonable intervals during the year.
 
 (b) The procedures for physical verification of inventory followed by
 the management are reasonable and adequate in relation to the size of
 the Company and nature of its business.
 
 (c) The Company is maintaining proper records of inventory. No material
 discrepancies were noticed on physical verification of inventories as
 compared to book records.
 
 3.  Read with what is stated in point 5 below, during the year, the
 Company has not taken/granted any loans, secured or unsecured, from/to
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Act.
 
 4.  In our opinion and according to the information and explanations
 given to us having regard to the explanations that certain items
 purchased are of special nature for which suitable alternative sources
 do not exist for obtaining comparative quotations, there is adequate
 internal control system commensurate with the size of the Company and
 nature of its business, for the purchase of inventory and fixed assets
 and for the sale of goods. During the course of our audit, no major
 weakness has been noticed in the internal control system.
 
 5.  We are informed by the management that as per the legal opinion
 obtained by them, the transactions with other companies in which
 Directors of the Company and who are also holding the positions as
 directors in the other companies (not holding shares exceeding 2% of
 paid up capital) are not required to be entered in the register
 maintained under sub- section (1) of Section 301 of the Act. In view of
 above, there are no entries recorded in the Register maintained under
 Section 301 of the Act.
 
 6.  The Company has not accepted any deposits within the meaning of
 Section 58A, 58AA or any other relevant provisions of the Act and Rules
 framed there under.
 
 7.  During the year, no internal audit has been carried out.
 
 8.  We have broadly reviewed the books of account maintained by the
 Company in respect of products where pursuant to the Rules made by the
 Central Government of India, the maintenance of cost records has been
 prescribed under clause (d) of sub - section (1) of Section 209 of the
 Act and are of the opinion that prima facie, the prescribed accounts
 and records have been made and maintained. We have not, however, made a
 detailed examination of the records with a view to determine whether
 they are accurate or complete.
 
 9.  (a) According to the information and explanations given to us and
 according to the books and records as produced to and examined by us,
 the Company has been regular in depositing undisputed statutory dues
 including Provident Fund, Employees'' State Insurance, Income Tax, Sales
 Tax, Value Added tax, Wealth Tax, Service Tax, Custom Duty, Excise
 Duty, Cess and other material statutory dues applicable to it with
 appropriate authorities and there were no undisputed amounts
 outstanding as at 31st March, 2011 for a period of more than six months
 from the date they became payable except as mentioned below:
 
 Name of the   Nature of dues   Amount          Period to which  Due date
 statute                       (Rs. in lacs)*   the amount 
                                                relates
 
 The Companies Investor Education    164.69     1991-2003       1998-2011
 Act, 1956     and Protection
               Fund
 
 * it does not include interest and other charges as may be livable
 owing to non payment of the aforesaid amount.
 
 (b) According to the records of the Company and information and
 explanations given to us by the management, the details of disputed
 Excise Duty, Custom Duty, Service Tax, Income Tax, Wealth Tax and Cess
 which have not been deposited are as under:
 
 Nature of Dues    Year         Forum where dispute           Amount
                                is pending                   (Rs)
 
 
 Sales Tax         1999-2000    Dy. Comm                   1,349,213
 
 Sales Tax         2000-2001    App. Tribunal                191,264
 
 Excise Duty       Oct''2006     CESTAT                     6,226,499
 
 Cess Liability    Oct''2007     NMMC                         117,785
 
 
 10.  The Company''s accumulated losses as at 31st March, 2011 are more
 than fifty percent of its net worth. The Company has incurred cash
 losses during the current financial year and in the immediately
 preceding financial year.
 
 11.  During the year, the Company has defaulted in repayment of dues to
 financial institutions and debentures holders as per details below:
 
 Nature of Dues              Amount (Rs. in lacs)         Paid On
 Financial Institutions -
 Principal                               1194.37
 
 Interest                                 898.38    Still Pending
 
 Debenture Holders -
 
 Principal                                557.31
 
 Interest                                 549.88 
                              (up to March, 2008)   Still Pending
 
 
 (*) - Also refer Para 3 (c) of the main report.
 
 12. During the year, 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. The Company is not a chit fund or a nidhi/mutual fund benefit
 fund/society. Therefore, the provisions of clause 4(xiii) of the Order
 are not applicable to the Company.
 
 14. As the Company is not dealing or trading in shares, securities,
 debentures and other investments the provisions of clause 4(xiv) of the
 Order is not applicable to the Company.
 
 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, the term
 loans were applied for the purpose for which the loans were obtained.
 
 17. The Company hasn''t raised any short term funds during the year.
 
 18. During the year, the Company has not made any preferential
 allotment of shares to parties and companies covered and recorded in
 the Register maintained under section 301 of the Act.
 
 19. The Company has not issued any debentures during the year or in the
 recent past.
 
 20. The Company has not raised any money by public issues during the
 year or in the recent past.
 
 21. During the course of our examination of the books and records of
 the Company, 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 instances of
 material fraud on or by the Company, noticed or reported during the
 year, nor have we been informed of such case by management.
 
 
                                                 For LODHA & COMPANY
 
                                               Chartered Accountants
 
                                                     A. M. Hariharan
 
                                                             Partner
 
                                               Membership No.: 38323
 
                                       Firm Registration No.:301051E
 
 Place : Mumbai
 
 Date  : September 2, 2011