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Auditor Report of Kutch Salt & Allied Industries Ltd.

Mar 31, 2011

1 We have audited the attached Balance Sheet of the "THE KUTCH SALT & ALLIED INDUSTRIES LTD. as at 31 st March, 2011, the Profit & Loss Account and also 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 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 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 those Books;

(iii) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the Books of Account;

(iv) In our opinion, the Balance Sheet, Profit & 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 Compares Act, 1956 except non-fulfillment of AS-15 "Employee Benefits". Due to the same Profit of the company is overstated by Rs. 12,62,052/- and also no effect on the profit is taken in respect of leave encashment payable to the employees.

(v) On the basis of the written representation received from the Directors, as on 31st March, 2011 and taken on record by the Board of the Directors, we report that none of the Director is disqualified as on 31st March, 2011 from being appointed as a Director under 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, 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 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.

RE.: THE KUTCH SALT & ALLIED INDUSTRIES LIMITED

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) All the assets have been physically verified by the management during the year and 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, as reported by the Management.

(c) According to the information and explanations given to us, the Company has not disposed off substantial part of Fixed Assets and the going concern status of the Company is not affected, -

(ii) (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories 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) (a) According to the information and explanations given to us, the company has granted unsecured loans to three company, firm or other parties covered in register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year in respect thereof was.Rs. 2233.12 lacs and the yearend balance of loan granted to such parties was Rs.2089.57 Lacs.

(b) In. our opinion, the rate of interest and other terms and conditions on which loans have been given to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company.

(c) The Company is regularly receiving the principal amount and interest as stipulated.

(d) There is no overdue amount of loans granted to Companies, Firms or Other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(e) According to the information and explanations given to us, the Company has not taken any loan from a Company/Finn or other party covered in the Register maintained under section 301 of the Companies Act, 1956. Hence sub clause (f) & (g) of clause (iii) of the report are not applicable.

(iv) 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 purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) (a) According to the information and explanations given to us, the 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 according to the intonation and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees 5.00 (Five) lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) According to information and explanations given to us, the Company has not accepted deposits from public hence directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA of the Companies Act, 1956 and rules framed there under are not applicable for the year under audit.

(vii) As per the intonation and explanations given to us, the Company's internal control procedures together with the internal checks conducted by the management staff during the year can be considered as an Internal Audit System commensurate with the size and nature of its business.

(viii) The Central Government has not prescribed the maintenance of Cost Records under section 209 (1) (d) of The Companies Act, 1956 for any of the product of the Company.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education protection fund, employees' state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31-03-2011 for a period of more than- six months from the date they became payable.

(c) According to the intonation and explanations given to us, there are no dues of sales tax, income, tax, custom duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute.

(x) The company does not have accumulated losses at the end of financial year. The Company has not incurred cash losses during the financial year covered by our audit and immediately preceding financial year.

(xi) In our opinion and according to the intonation and explanations given to us, the Company has not defaulted in repayment of dues to a Financial Institution or Bank.

(xij) According to the information and explanations given to us, 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) 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 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 are not applicable to the * Company.

(xv) In our opinion, The Company has not given any guarantees for loans taken by others from banks or financial institutions.

(xvi) In our opinion and according to the Information & explanations given to us, tenn loans have been utilized for the purpose for which the same were obtained.

(xvii) According to the information and explanations given to us arid 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. No long-term funds have been used to finance short-term assets except permanent working capital.

(xviii) According to the Information and explanations given to us, the Company has not made any preferential allotment of Shares to parties covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) During the year, the Company has not issued any Debentures hence clause (4) (xix) of the Companies (Auditor's Report) Order, 2003 is not applicable to the Company.

(xx) During the year covered by our report, the Company has not raised any money by way of public issues.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For M. B. SORATHIA & CO.

CHARTERED ACCOUNTANTS

Place: Gandhidham-Kachchh

DATE: 20-08-2011

(M. B. SORATHIA)

Proprietor

Membership No.: 36992

Firm RegisfrationNo.ll0420W


Mar 31, 2010

1 We have audited the attached Balance Sheet of the "THE KUTCH SALT & ALLIED INDUSTRIES LTD." as at 31st March, 2010, the Profit & Loss Account and also 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 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 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 those Books ;

(iii) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the Books of Account;

(iv) In our opinion, the Balance Sheet, Profit & 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 except non-fulfillment of AS-15 "Accounting for Retirement benefit in the financial statement of employer". Due to the same Profit of the company is overstated by Rs. 10,72,054/- and also no effect on the profit is taken in respect of leave encashment payable to the employees.

(v) On the basis of the written representation received from the Directors, as on 31 st March, 2010 and taken on record by the Board of the Directors, we report that none of the Director is disqualified as on 31st March, 201 off that as a Director under clause (g) of sub-section (1) of section 274 /Act, 1956.

(vi) In our opinion and to the best of our information and according to the explanation 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 31st March, 2010;

(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.

RE.: THE KUTCH SALT & ALLIED INDUSTRIES LIMITED :

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) All the assets have been physically verified by the management during the year and 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, as reported by Management.

(c) According to the information and explanations given to us, the Company has not disposed off substantial part of Fixed Assets and the going concern status of the Company is not affected.

(ii) (a) The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories 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) (a) According to the information and explanation given to us, the company has granted unsecured loans to two' company, firm or other parties covered in register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the |

year in respect thereof was Rs. 2496.54 lacs and the yearend balance of loan granted to such parties was Rs.2230.92.

(b) In our opinion, the rate of interest and other terms and conditions on which loans have ' been given to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company.

(c) The Company is regularly receiving the principal amount and interest as stipulated. ;

(d) There is no overdue amount of loans granted to Companies, Firms or Other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(e) According to the information and explanations given to us, the Company has not taken loan from a Companies/Firms or other parties covered in the Register maintained under section 301 of the Companies Act, 1956. Hence sub clause (f) & (g) of clause (iii) of the report are not applicable.

(iv) 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 purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

(v) (a) According to the information and explanations given to us, the 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 according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees 5.00 (Five) lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) According to information and explanation given to us, the Company has not accepted deposits from public hence directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA of the Companies Act, 1956 and rules framed there under are not applicable for the year under audit.

(vii) In our opinion, The company has an internal audit system commensurate with the size and nature of its business.

(viii) The Central Government has not prescribed the maintenance of Cost Records under section 209 (1) (d) of The Companies Act, 1956 for any of the product of the Company.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed 1 statutory dues including provident fund, inventor education protection fund, employees state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31-03-2010 for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us, there are no dues of sales tax, income tax, custom duty, wealth tax, excise duty and crossing which have not been deposited on account of any dispute.

(x) The accumulated losses of the Company as on 31st March 2010 are not in excess of 50% of the net worth of the Company. The Company has not incurred cash losses during the financial year covered by our audit and immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a Financial Institution or Bank.

(xii) According to the information and explanations given to us, 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) 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 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 are not applicable to the Company.

(xv) In our opinion, The Company has not given any guarantees for loans taken by others from banks or financial institutions.

(xvi) In our opinion and according to the Information & explanation given to us, term loans have been utilized for the purpose for which the same 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. No long-term funds have been used to finance short-term assets except permanent working capital.

'xviii According to the Information and explanations given to us, the Company has not made any preferential allotment of Shares to parties covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) During the year, the Company has not issued any Debentures and hence clause (4) (xix) of the Companies (Auditor's Report) Order, 2003 is not applicable to the Company.

(xx) During' the year covered by our report, the Company has not raised any money by way of public issues.

(xxi) According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For M. B. SORATHIA & CO.

0;hartered accountants

(M. B. SORATHIA)

Proprietor

Membership No.: 36992

Firm Registration No.l 10420W

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