untitled

Auditor’s Report to the Board of Directors of Atul Ltd on the

Consolidated Financial Statements of Atul Ltd and Its Subsidiaries

| Annual Report 2008-09

We have examined the attached Consolidated Balance Sheet of

Atul Ltd and its subsidiaries as at March 31, 2009, the

Consolidated Profit and Loss Account and the Consolidated Cash

Flow Statement for the year then ended.

These financial statements are the responsibility of the

management of the Company. Our responsibility is to express

an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted

auditing standards in India. These standards require that we plan

and perform the audit to obtain reasonable assurance whether

the financial statements are prepared, in all material respects, in

accordance with an identified financial reporting framework and

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

statements. We believe that our audit provides a reasonable

basis for our opinion.

We did not audit the financial statements of Atul Americas Inc.,

Atul Europe Ltd and Atul International Trading (Shanghai) Co.

Ltd - China whose financial statements reflect total assets of

Rs4,639.29 lacs as at March 31, 2009 and total revenues of

Rs16,493.80 lacs for the year then ended. These financial

statements have been audited by other auditors whose reports

have been furnished to us, and our opinion, in so far as it relates

to the amounts included in respect of the subsidiaries, is based

solely on the report of the other auditors. We also did not audit

the financial statement of Atul Deutschland GmbH – Germany

whose financial statements are compiled by the management

and are also not audited. Any adjustment to their balances could

have consequential effect on the attached Consolidated Financial

Statements.

We are not auditing the financial statement of associate

companies viz. Amal Ltd. whose financial statement as at March

31, 2008 have been audited by other auditor whose report have

been furnished to us, and our opinion, in so far as it relates to

the amounts included is based on the report of other auditor

reflects total assets of Rs883.12 lacs as at March 31, 2008 and

total revenue of Rs45.89 lacs for the year ended on that date.

The financial statements of other associates as at March 31,

2008 are audited by us.

We report that the Consolidated Financial Statements have been

prepared by the Company in accordance with the requirements

of Accounting Standard AS 21, “Consolidated Financial

Statements”, Accounting Standard AS – 23 “Accounting for

Investments in Associates in consolidated financial statements”

issued by the Institute of Chartered Accountants of India.

Based on our audit and on consideration of reports of other

auditor on separate financial statements and on the other

financial information of the components and to the best of our

information and according to the explanations given to us, we

are of the opinion that attached consolidated financial

statements give a true and fair view in conformity with the

accounting principles generally accepted in India,

except, where

the Company has not recognized the mark-to-market losses of

Rs5,484.09 lacs on its derivative contracts to hedge highly

probable forecast transactions and firm commitments not

covered under AS-11, either by way of creating a Hedge Reserve

as recommended by the ICAI or by prudently charging the same

to the Profit and Loss Account as recommended under AS-1,

consequently the profit for the year and the reserves and surplus

at the close of the year, both resulting higher by Rs5,484.09

lacs.

(a) in the case of the Consolidated Balance Sheet, of the state

of affairs of Atul Ltd and its subsidiaries as at March 31,

2009;

(b) in the case of Consolidated Profit and Loss Account, of the

profit for the year then ended on that date; and

cash flows for the year ended on that date.

For and on behalf of

Dalal & Shah

Chartered Accountants

(Ashish S Dalal)

Mumbai

Partner

June 05, 2009

Membership No 033596