1.  We have audited the attached Balance Sheet of United Phosphorus
 Limited (''the Company'') as at March 31, 2012 and also the Statement of
 Profit and Loss 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 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.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 (as
 amended) 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 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 purposes 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
 those books;
 
 iii. The balance sheet, statement of profit and loss and cash flow
 statement dealt with by this report are in agreement with the books of
 account;
 
 iv.  In our opinion, the balance sheet, statement of profit and loss
 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 March 31, 2012, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 March 31, 2012 from being appointed as a director in terms of clause
 (g) of sub-section (l) 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, they said accounts 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 March 31, 2012;
 
 b) in the case of the statement of profit and loss, 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.
 
 i) a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 b) All fixed assets have not been physically verified by the management
 during the year but there is a regular programme of verification which,
 in our opinion, is reasonable having regard to the size of the Company
 and the nature of its assets. No material discrepancies were noticed on
 such verification.
 
 c) There was no disposal of a substantial part of fixed assets during
 the year.
 
 ii) a) The management has conducted physical verification of inventory
 at reasonable intervals during the year.
 
 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 and no
 material discrepancies were noticed on physical verification.
 
 iii) a) The Company has granted loan to three companies covered in the
 register maintained under Section 301 of the Companies Act, 1956. The
 maximum amount involved during the year was Rs.9,8l6 lacs and the year-
 end balance of loans granted to such parties was Nil.
 
 b) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions for
 such loans are not prima facie prejudicial to the interest of the
 Company.
 
 c) In respect of loans granted, repayment of the principal amount is as
 stipulated and payment of interest have been regular.
 
 d) There is no overdue amount of loans granted to companies, firms or
 other parties listed in the register maintained under Section 301 of
 the Companies Act, 1956.
 
 e) The Company has taken loan from three companies covered in the
 register maintained under Section 301 of the Companies Act, 1956. The
 maximum amount involved during the year was Rs.7,243 lacs and the
 year-end balance of loan taken from such parties was Rs.179 lacs.
 
 f) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions for
 such loans are not prima facie prejudicial to the interest of the
 Company.
 
 g) In respect of loans taken, repayment of the principal amount is as
 stipulated and payment of interest has been regular.
 
 iv) In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business, for the
 purchase of inventory and fixed assets and for the sale of goods and
 services. During the course of our audit, we have not observed any
 major weakness or continuing failure to correct any major weakness in
 the internal control system of the company in respect of these areas.
 
 v) a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in Section 301 of the Companies Act, 1956,
 that need to be entered into the register maintained under Section 301
 have been so entered.
 
 b) In our opinion and according to the information and explanations
 given to us, transactions made in pursuance of such contracts or
 arrangements and exceeding the value of Rupees five lakhs have been
 entered into during the financial year at prices which are reasonable
 having regard to the prevailing market prices at the relevant time
 except in respect of certain transactions, because of the unique and
 specialized nature of the items involved and absence of any comparable
 prices, we are unable to comment whether the transactions were made at
 prevailing market prices at the relevant time.
 
 vi) The Company has not accepted any deposits from the public.
 
 vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business
 
 viii) We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under section 209(l)(d) of the Companies
 Act, 1956, and are of the opinion that prima facie, the prescribed
 accounts and records have been made and maintained.
 
 ix) a) Undisputed statutory dues including provident fund, investor
 education and protection fund, employees'' state insurance, income-tax,
 sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and
 other material statutory dues have generally been regularly deposited
 with the appropriate authorities though there has been a slight delay
 in a few cases.
 
 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 material 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, the dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and cess on account of any dispute, are as follows:
 
 Name of the  statute   Nature of dues     Amount      Period to which 
                                          
                                         (Rs.in lacs)  the amount relates
 
 Income Tax Axt, 1961   Income-tax 
                        demands             88            1995-96, 
 
                                                          1997-98 & 
                                                          2003-04
 
 Sales Tax Act          Sales tax 
                        demands          1,399            1985 to 
                                                          2005-06 
 
 Central Excise 
 Act/                   Excise duty/
                        Service tax:     4,790            1995 to 
                                                          2011-12 
 
 
 Customs Act            Custom duty 
                        demands          2,193            1992-93 to 
                                                          1995-96 
 
 Foreign Trade 
 (Development           Fiscal penalty   3,348            1992 to 1997 
 and regulation) 
 Act
 
 
 Name of the Statue    Forum where dispute is
                       pending
 
 Income Tax Act,1961   Income - tax Appellate tribunal
 
 Sales Tax Act         Supreme court, Commissioner of
                       sales - Tax Bsroda sales Tax 
                       Tribunal,Ahmedabad
 
 Central Excise Act    Commissioner (Appeals). Central.
 /Financial Act        Excise and service Tax 
                       Appeallate Tribunal
 
 Customs Act           Commissioner (Appeals) central 
                       Excise and service Tax Appellate 
                       Tribunal,Mumbai
 
 Foreign Trade         Bombay High Court
 (Development and 
 regulation)Act
 
 x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a financial
 institution, bank or debenture holders.
 
 xii) According to the information and explanations given to us and
 based on the documents and records produced before us, the Company has
 not granted 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 given guarantee for loans taken by others from bank or
 financial institutions, the terms and conditions whereof, in our
 opinion, are not prima-facie prejudicial to the interest of the
 Company.
 
 xvi) Based on information and explanations given to us by the
 management, term loans were applied for the purpose 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 report
 that no funds raised on short- term basis have been used for long-term
 investment.
 
 xviii) The Company has not made any preferential allotment of shares to
 parties or companies covered in the register maintained under Section
 301 of the Companies Act, 1956.
 
 xix) According to the information and explanations given to us, during
 the period covered by our audit report, the Company has created
 security or charge in respect of debentures issued. The Company also
 has unsecured debentures outstanding during the year on which no
 security or charge is required to be created.
 
 xx) The Company has not raised any money by public issue during the
 year.
 
 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 year.
 
                                         For S.V. CHATALIA & ASSOCIATES
 
                                      Firm registration number: 103162W 
 
                                                  Chartered Accountants
 
 
 
                                                        per Sudhir Soni
 
 Place: Mumbai                                                  Partner
 
 Date: April 30, 2012                              Membership No. 41870