Gujchem Distillers India Ltd.

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.

In accordance with provisions of Section 227 of the Companies Act 1956, we report that:

1. As required by the Companies (Auditor's Report) Order, 2003 as amended by the Companies (Auditor's Report) (Amendment) Order, 2004 (together the 'Order') 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 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 Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account of the Company;

(d) in our opinion the Balance sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956, to the extent applicable; and

(e) on the basis of the 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 Section 274(1)(g) of the Companies Act, 1956.

In our opinion and according to the explanations given to us, the said financial statements read together with the Significant Accounting Policies in Note 2 and Notes forming part of the financial statements in Note 3 to 31 thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view;

(i) in the case of Balance Sheet, of the state of the Company's affairs as at 31st March, 2012;

(ii) in the case of the Statement of Profit and Loss, 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)

1. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) All the 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 Company and the nature of its assets. No material discrepancies were notice on such verification.

(c) The Company has not disposed off any substantial part of its fixed assets during the year, so as to affect its going concern status.

2. The Company did not carry any inventory during the year. Accordingly, the Clauses 4 (a), (b) and (c) of the Order are not applicable to the Company.

3. (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms and parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Accordingly, Clauses 4 (iii) (b), (c) and (d) of the Order are not applicable to the Company.

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms and parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Accordingly, Clauses 4 (iii) (f) and (g) of the Order are not applicable to the Company.

4. 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 purchase of inventory, fixed assets and for the sale of goods and services. During the course of audit, we have not observed any continuing failure to correct major weakness in internal controls.

5. (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, there are no transactions made in pursuance of contract or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year.

6. In our opinion and according to the information and explanations given to us, the Company has generally complied with the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposit) Rule, 1975, except for non filing of return of deposits, with regard to the deposits accepted from the public. During the year, no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

7. The Company had appointed an independent firm of chartered accountants as internal auditors up till for the year 1993-94. Due to stoppage of the manufacturing activities of the Company, the internal audit function has not been carried out since then.

8. As there are no manufacturing activities carried out during the year, the requirements of the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956 are not applicable to the Company.

9. (a) The Company has been generally regular in depositing undisputed statutory dues in respect of investor education and protection fund, wealth tax, service tax, sales tax, VAT, custom duty, excise duty, cess wherever applicable with appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of excise duty, income tax, wealth tax, service tax, customs duty, excise duty and cess were in arrears, as at 31st March, 2012 for a period of more than six months from the date they become payable.

(c) According to the information and explanations given to us, the disputed dues which have not been deposited since the matters are pending with the relevant forum are:

Nature of Nature of Amount Period to Forum where Statute the dues which the dispute is (Rs. lakhs) amount pending relates

The Central Central Excise 16.62 1985-86 and A.O. Excise and 1986-87 Central Salt Act Excise Department

10. 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.

11. Pursuant to the BIFR Order letter dated 16th September, 2003, in our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions, debenture holders and banks.

12. According to the 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.

13. In our opinion, the Company is not a chit fund or nidhi/mutual benefit fund/society Accordingly, the Clause 4 (xiii) of the Order is not applicable to the Company.

14. According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the 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 loan taken by others from banks or financial institutions.

16. According to the information and explanations given to us, the Company has not accepted any term- loan during the year. Accordingly, the Clause 4 (xvi) of the Order is not applicable to the Company.

17. According to the information and explanations given to us and on 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.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956, during the year.

19. The Company has not issued any debentures during the year. Hence, the reporting on Clause 4 (xix) of the Order pertaining to creation of security or charge for debentures does not arise.

20. The Company has not raised money by way of public issue during the year. Accordingly, Clause 4 (xx) of the Order is not applicable to the Company.

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 the management.

SHARP & TANNAN Chartered Accountants Registration No. 109982W

By the hand of Milind P.Phadke Partner Membership No. 033013

Mumbai, 24th July, 2012