Khaitan India Ltd has informed BSE that in the limited review report of the Company for the quarter ended December 31, 2007, the Auditors of the Company have made the following observations:

“Accruing gratuity / leave encashment is treated on cash basis in Sugar Mill and Agriculture Division which is not in accordance with Accounting Standard - 15 and impact of revised AS 15 has not been taken, and the value of the total employee cost is understated by Rs 30.92 lacs thus overstating the profits by the same amount and non accounting / working has been made regarding deferred tax assets / liability and tax expenses as per Accounting Standard - 22 issued by The Institute of Chartered Accountants of India”.