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Auditor Report of Aditya Spinners Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of M/s Aditya Spinners Limited. Hyderabad ("the Company"), which comprise the Balance Sheet as at 3ST March, 201S, the Statement of Profit and Less, the Cash Flow Statement for Ehe year then ended, and a summary of the significant accounting policies and other explanatory information

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated -n Section 134< 5) o- the Com pa ries Act. 203 (Jthe Act") with respect te the preparation of these financial statements that give a tme and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, inciudirrg the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 This -responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies' making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from matenal misstatement, whether due to fraud or error

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit

We have taken into account the provisions of the Act. the accounting and auditing standards and mailers which are required to be included n the audit report under the provisions of the Act and the Rules made (hereunder.

We conducted our auoit in accordance with the Standards on Auditing specifieo under Section 143(1 Q) of the Act. Those Standards require that we comply with ethical requirements and pian and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evsaence about trie amounts and the disclosures in the financial slatenreuts The procedures selected depend an the auditor s judgment, including the essessmentof the risks of matenal misstatement of the financial statements, whether due la fraud or error, in making those risk assessments, the auditor considers internal financial conlrol relevant to the Compa ay's preparation of the financial statements that give a Vue and fair view in order to desig n audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting pol-cies used and the reasonableness of the accounting estimates made by the Company's rectors, as well as evaluating Ihe overall presentation of the financial statements

We beiieve that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion or the financial statements

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required Joy the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India,

fal in the case of the Balance Sheet, of the state of affairs of the Company as at 31" March, 2015;

(bj tn th e case of the Stare nient of Profit and Loss, of the orofir of the Company for the year ended on that date; and

tc) En Ihe case of Ihe Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Report on Other Legal end Regulatory Requirements

As required by the Companies (Auditor's Report) order, 2)0tSr issued by the Central Government of India in terms of sub-section {HI of Section 143 of the Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of Ihe order, to the extent applicable

As required by Section 143 (3} of the Act, we report that:

fa'i We have sought and 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 apoears from our examination oi those books

(c) The Balance Sheet, the Statement of Profit and Loss, and Ihe Cash Flow Statement dealt with by this Repad are in agreement with Ihe books of account.

idl In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 cf th e AcL read with R me 7 of the Companies (Accounts) Rules, 2014

i si Based on the Written Representation received from the directors as on 31 March 2D15, and taken on record by the Board of Directors, we report that none of the director are c isq u alified as an 31 March, 2D 15 from being ap pointed as a director in terms of Sub-section 2 of Section 154 of the Act.

(II} With respect to the other matters to be included in tl'.e Auditor's Report in accordance with Ru le 11 of th b Com pan les (Audit a nd Auditors) Rules. 2014, In our opinion and to the best of our information and according to the explanations given to us:

i. The Company does not have any penoing legal litigations.

ii The company dees not have any pending amounts required to be transferred to the Investor Education and Protection Fund

Annexure referred to in paragraph 3 of the Independent Auditor's Report of even date of Aditya Spinners Limited, Hyderabad on the financial statements for the year ended March 31,2015.

i In respect of fixed assets

(a) The company is maintaining proper records shewing mil particulars, including quantitative details and situation of fixed assets;

(bj As explamed to us, ail the fixed assets hove been physsca:ly verified by the Management during the year No matenel discrepancies were noticed on such verification

ii. In reaped of its inventories:

(a) As explained to us, the inventories excepting in case of goods in transit, stocks lying in Central / Elate Warehouses (where confirmation were obtained from the parties and relied uporu were physically verified during the year by the Management at reasonable intervals.

(b) In our opinion, procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation lo the size of the Company and the nature of its business.

(c) On the basis at our examination of records of the inventory, in oar opinkzi, the Company is maintaining proper records of inventory. No material discrepancies were noted on such verification.

iii In respect of loans"

As informed to usr the company has not granted any loans, secured or unsecured tc companies, fimts or other parties coveretr in the register maintained under section 139 of the Companies Act

iv. tn our opinion and according to the information and explanations given to us, there are adequate into mar control systems commensurate with [he size of the company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods & services.

v The company has net accepted any deposits, and hence clause (v) of Companies (Auditor's Report} Order, 2015 is not applicable.

VL We have broadly reviewed the books of account maintained by company pursuant to rules p nescribed by the centra- government of I nd ia for maintenance of cost records under Section of the Companies Act 2013 in respect of products {Yam) of (he company and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained However, we have not made a detailed examination of the records

vii.a} According to the information and explanations given la us and The records as produced and examined by us, in our opinion, the company is regular in depositing undisputed statutory dues including income tax, service tax, Customs Duly and other materia: statutory dues during the year by the company with the appropnate authorities though there are no ahnomnar deays in respect at Professional Tax As explained to us. the company did not have any dues on accounl of Employee's State insurance, Sales lax, Excise duty. Wealth tax and Investor Education and Protection Fund.

According to the information ana explanations given to us no undisputed amounts payable in respect of Provident Fund, fncanTje-tax. Service tax, Customs duty and other material statutory dues were in arrears as at 31K March 2D15 for a period of more than six months from the period they became payable.

b) According to the information and explanations given to us, there are no dues of income-tax. Service tax and Customs duly which have not been deposited with the appropriate authorities on account of any dispute As informed to us, the company did not have any dues on account of Wealth tax and Excise duly.

c) According to the information and explanations given lo us, there are no pending amounts required to be transferred to Erie Investor Education and Protection Fund and hence clause (vii) {c) of Companies (Auditor's Report) Order. 2D15 is not appNcabhe

viii The Company does not have any accumulated lasses and has not incurred any cash losses in the current financial year and in Ihe immediately preceding financial year

ix. in our opinion and according to the information and explanations given to us, the company has noL defaulted in repayment of loans to its bankers and financial institutions:

x- According lo the information and explanatory given to us the company has not given any guarantee for loans taken by others- or banks or financial institutions. Thus paragraph 3 (x) of the order does not apply to the company for the year

xi in our option and according to the information and explanations given to uar the term loans taken by the company have been aopliec for the purpose for which they wens rais-ea

xii. According to ihe mfomnason a no explanations given to us, no fraud on or by the company has been noticed or reported dunng the course of audit.

For C Ramachandram & Co,L Chartered accountants, Firm Registration No. 0028645

C.Ramach andram Partner M.No:Q25B34

Place: Hyderabad Date: 29.0B3}15


Mar 31, 2014

We have audited the accompanying financial statements of M/s. Aditya Spinners Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the companies Act 1956 ("The Act") read with the general circular 15/2013 dated 13th September 2013 of the Ministry of Corporate affairs in respect of Section 133 of the Companies Act 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's Judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. But not for the purpose of expressing on opinion on the effectiveness of the entitys internal capital. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial Statements give the information required by the Act 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, 2014;

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 the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A)of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

- 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.

- 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.

- 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.

- In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the companies Act 1956 ("The Act") read with the general circular 15/2013 dated 13th September 2013 of the Ministry of Corporate affairs in respect of Section 133 of the Companies Act 2013.

- On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS REPORT

Referred to in paragraph (5) of our report of even date of the Auditors to the members of ADITYA SPINNERS LIMITED on the (financial statments for the year ended March 31, 2014).

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

(b) As explained to us, the fixed assets have been physically verified by the management during the year in a phased periodical manner, which in our opinion is reasonable, having regard to size of the company and nature of its assets. No material discrepancies were notice on such physical verification.

(c) In our opinion the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the company is not affected.

2. (a) As explained to us, inventories have been physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, 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) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on Physical verification of inventory as compared to books records were not material.

3. (a) The company has not granted any loans, secured or unsecured to companies, firms, or other parties covered in the register maintained U/s.301 of the Companies Act 1956.

(b) The Provisions of Clause (b), (c), and (d) of Paragraph 4(iii)of the companies (Auditors Report) order, 2003 are not applicable to the company.

(c) The Company has taken loans from parties covered in the register maintained U/s.301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.230.61 lakhs and the year end balance of loans outstanding from such party was Rs.166.65 lakhs.

(d) The rate of interest and other terms of loan as explained above, are prima facie not prejudicial to the interest of the company.

(e) The loans taken by the company are repayable on demand.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the company.

5. In our opinion and according to the information and explanations given to us, we are of the opinion that there are no contracts or arrangements which need to be entered in the register maintained under section 301 of the Act. In view of this, paragraphs 4 v (a) and 4 v (b) of CARO are not applicable.

6. The company has not accepted any deposits from the public within the meaning of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

8. We have broadly reviewed the books of accounts maintained by the Company in respect of manufacturing yarn, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of section 209 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. In respect of Statutory dues:

a. According to the information and explanations given to us, the company has regular in depositing with appropriate authorities undisputed statutory dues including investor education and protection fund, wealth tax, customs duty, excise duty, service tax, cess and other statutory dues to the extent applicable to it.

b. According to the information and explanations given to us no undisputed amounts payable in respect of income tax, wealth tax, service tax, customs duty, excise duty and cess were in arrears as at March 31,2013 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 income tax, sales tax, excise duty, service tax, custom duty, wealth tax and cess which have not been deposited on account of the dispute.

10. In our opinion the accumulated losses of the company are more than fifty percent of its net worth. The company has not incurred cash losses during the financial year covered by our report and in the immediately preceding financial year.

11. In our opinion that the company has not defaulted in repayment of dues to a financial institution or debenture holders during the year.

12. The Company has not granted any 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 a nidhi mutual benefit fund/society. Therefore, the provision of clause 4(xiii) of the companies (Auditor's Report) Order, 2003 are not applicable to the Company.

14. In our opinion, the company has maintained proper records of transaction and contracts relating to dealing or trading in shares, securities, debentures and other investments and timely entries have been made therein. The shares, debentures and other securities have been held by the company in its own name.

15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

16. The company has not raised any term loans during the year. The term loans out standings at the beginning of the year were applied for the purposes for which they were raised.

17. According to the information and explanation 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.

18. The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under sec 301 of the act during the year.

19. The Company has not issued any debentures during the year.

20. The Company has not raised any money by way of public issue during the year.

21. In our opinion and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year that causes the financial statements to be materially misstated.

For C.RAMACHANDRAM & CO. Chartered Accountants Firm Reg. No. : 002864S

C.RAMACHANDRAM Partner Membership No. 025834

Place : Hyderabad Date : 25-04-2014


Mar 31, 2012

1. We have audited the attached balance sheet of M/s. Aditya Spinners Limited as at March 31' 2012 and the related profit and loss Account for the year ended on that date annexed there to and the cash flow statement of the year ended on that date. 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.

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 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 estimate 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 (Auditors Report) Order 2003 issued by the Central Government 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.

4. Further to our comments in the annexure referred to in paragraph 3 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 Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

d) In our opinion' these financial statements have been prepared in compliance with the applicable accounting standards referred to in Section 211 (3C) of the companies Act' 1956.

e) Based on the representations made by all the Directors of the Company as on March 31' 2012 and taken on record by the Board of Directors of the Company and in accordance with the information and explanations as made available' the Directors of the Company do not' prima face' have any disqualification as referred to in Clause (g) of subsection (1) to Section 274 of the Companies Act 1956.

f) In our opinion and to the best of our information and according to the explanations given to us' the 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 :

(i) in the case of the Balance Sheet' of the State of affairs of the Company as at March 31' 2012.

(ii) in the case of the profit and loss Account' of the loss for the year ended on that date' and

(Hi) in the case of cash flow statement' of the cash flows for the year ended on that date.

ANNEXURE TO AUDITORS REPORT

(Refferred to in paragraph 3 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) As explained to us the fixed assets have been physically verified by the management during the year in a phased periodical manner' which in our opinion is reasonable' having regard to size of the company and nature of its assets. No material discrepancies were noticed on such physical verification.

(c) In our opinion the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the company is not affected.

2. (a) As explained to us' inventories have been physically verified during the year by the management. In our opinion' the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us' 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) On the basis of our examination of the inventory records in our opinion the Company is maintaining proper records of inventory. The Discrepancies noticed on Physical verification of inventory as compared to book records were not material.

3. (a) The Company has not granted any loans' secured or unsecured to companies' firms' or other parties covered in the register maintained U/s301 of the companies Act 1956.

(b) The Provisions of Clause (b)' (c)' and (d) of Paragraph 4(iii) of the companies (Auditors Report) order' 2003 are not applicable to the company.

(c) The Company has taken loans from two parties covered in the register maintained U/s.301 of the Companies Act' 1956. The maximum amount involved during the year was Rs.20.14 lakhs and the year end balance of loans outstanding from such party was Rs.20.14 Lakhs.

(d) The rate of interest and other terms of loan as explained above' are prima facie not prejudicial to the interest of the company.

(e) The loans taken by the company are repayable on demand.

4. In our opinion and according to the information and explanations given to us' there is adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of inventory' fixed assets and with regard to the sale of goods and services. During the course of our audit' we have not observed any continuing failure to correct major weaknesses in internal control system.

5. According to the information and explanations given to us' we are of the opinion that there are no contracts or arrangements which need to be entered in the register maintained under section 301 of the Act. In view of this' paragraphs 4 v (a) and 4 v (b) of CARO are not applicable.

6. The Company has not accepted any deposits from the public within the meaning of sections 58 A and 58AA or any other relevant provisions of the Company Act' 1956 and the ruled framed there under.

7. In our opinion the company has an internal audit system commensurate with its size and nature of its business.

8. We have broadly reviewed the books of accounts maintained by the Company in respect of manufacturing yarn' pursuant to the Rules made by the Central Government of India' the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of section 209 of the Act and are of the opinion that prima facie' the prescribed accounts and records have been made and maintained. We have not' however' made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanation given to us' the Company has

been regular in depositing with appropriate authorities undisputed statutory dues including investor education and protection fund' wealth tax' custom duty' excise duty' service tax' cess' other statutory dues to the extent applicable to it.

(b) According to the information and explanations given to us no undisputed amounts payable in respect of income tax' wealth tax' services tax' custom duty' excise duty and cess were in arrears as at March 31' 2012 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 income tax' sales tax' excise duty' service tax' custom duty' wealth tax and cess which have not been deposited on account of the dispute.

10. In our opinion the accumulated losses of the company are more than fifty percent of its networth. The company has not incurred cash losses during the financial year covered by our report and in the immediately proceeding financial year.

11. In our opinion that the Company has not defaulted in repayment of dues to a financial institution or debenture holders during the year.

12. The Company has not granted any 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. Therefore' the provisions of clause 4 (xiii) of the companies (Auditor's Report) Order' 2003 are not applicable to the company.

14. In our opinion the Company has maintained proper records of transaction and contracts relating to dealing or trading in shares' securities' debentures and other investments and timely entries have been made therein. The shares' debentures and other securities have been held by the Company in its own name.

15. In our opinion and according in the information and explanations given to us' the company has not given any guarantee for loans taken by others from banks for financial institutions during the year.

16. The company has not raised any new term loans during the year. The term loans out standings at the beginning of the year were applied for the purposes for which they were raised.

17. 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.

18. The company has made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the year. The No. of shares alloted is 91'40'000 shares at a price of Rs.10/- each and the price at which shares have beef) issued is not prejudicial to the interest of the company.

19. The company has not issued any debentures during the year.

20. The company has not raised any money by way of public issue during the year.

21. In our opinion and according to the information and explanations given to us' no fraud on or by the company has been noticed or reported during the year' that causes the financial statements to be materially misstated.

For C.RAMACHANDRAM & CO.'

Chartered Accountants

Sd/-

C.RAMACHANDRAM

Partner

Membership No. 02S834

Place: Hyderabad

Date: 31st May' 2012


Mar 31, 2011

1. We have audited the attached balance sheet of M/s. Aditya Spinners Limited as at March 31, 2011 and the related profit and loss Account for the year ended on that date annexed there to and the cash flow statement of the year ended on that date.' 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.

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 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 estimate 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 (Auditors Report) Order 2003 issued by the Central Government 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.

4. Further to our comments in the annexure referred to in paragraph 3 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 Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

d) In our opinion, these financial statements have been prepared in compliance with the applicable accounting standards referred to in Section 211 (3C) of the companies Act, 1956.

e) Based on the representations made by all the Directors of the Company as on March 31, 2011 and taken on record by the Board of Directors of the Company and in accordance with the information and explanations as made available, the Directors of the Company do not, prima face, have any disqualification as referred to in Clause (g) of subsection (1) to Section 274 of the Companies Act 1956

f) In our opinion and to the best of our information and according/ the explanations given to us, the said accounts, subject to our comments made on Secured Loans vide Notes on Accounts SI No.6, 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 :

(i) in the case of the Balance Sheet, of the State of affairs of the Company as at March 31, 2011.

(ii) in the case of the profit and loss Account, of the loss for the year ended on that date, and

(iii) in the case of cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO AUDITORS REPORT

(Refferred to in paragraph 3 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) As explained to us the fixed assets have been physically verified by the management during the year in a phased periodical manner, which in our opinion is reasonable, having regard to size of the company and nature of its assets. No material discrepancies were noticed on such physical verification.

(c) In our opinion the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the company is not affected.

2 (a) As explained to us, inventories have been physically verified during the year by the management In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, 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) On the basis of our examination of the inventory records in our opinion the Company is maintaining proper records of inventory. The Discrepancies noticed on Physical verification of inventory as compared to book records were not material.

3. (a) The Company has not granted any loans, secured or unsecured to companies, firms, or other parties covered in the register maintained U/s301 of the companies Act 1956.

(b) The Provisions of Clause (b), (c), and (d) of Paragraph 4(iii) of the companies (Auditors Report) order, 2003 are not applicable to the company

(c) The Company has taken loans from two parties covered in the register maintained U/s.301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 14.55 lakhs and the year end balance of loans outstanding from such party was Rs.14.55 Lakhs.

(d) The rate of interest and other terms of loan as explained above, are prima facie not prejudicial to the interest of the company.

(e) The loans taken by the company are repayable on demand.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. According to the information and explanations given to us, we are of the opinion that there are no contracts or arrangements which need to be entered in the register maintained under section 301 of the Act. In view of this, paragraphs 4 v (a) and 4 v (b) of CARO are not applicable.

6. The Company has not accepted any deposits from the public within the meaning sections 58 A and 58AA or any other relevant provisions of the CompanyAct,1956 and the ruled framed there under.

7. In our opinion the company has an internal audit system commensurate with its size and nature of its business.

8. We have broadly reviewed the books of accounts maintained by the Company in respect of manufacturing yarn, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of section 209 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanation given to us, the Company has been regular in depositing with appropriate authorities undisputed statutory dues including investor education and protection fund, wealth tax, custom duty, excise duty, service tax, cess, other statutory dues to the extent applicable to it.

(b) According to the information and explanations given to us no undisputed amounts payable in respect of income tax, wealth tax, services tax, custom duty, excise duty and cess were in arrears as at March 31, 2011 for a period of more than Six months from the date they became payable, except - In respect of Sales tax deferment dues amounting to a total of Rs.2,89,67,579/-. The Company has obtained relief from BIFR in respect of these dues to repay the same in equal Instalments over a period of Six Years commencing from 1st April 2011.

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

10. In our opinion the accumulated losses of the company are more than fifty percent of its networth. The company has not incurred cash losses during the financial year covered by our report and in the immediately proceeding financial year.

11. According to the records of the company examined by us and the Information and explanations given to us, the Company has entered into One Time Settlement in respect of Long Term Loans including interest accrued thereon and cleared the entire dues as per said OTS agreement made and the Company has obtained the No Dues Certificates from the Financial Institutions and Banks but the effect of OTS settlements were not reflected in the books of account.

12. The Company has not granted any 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. Therefore, the provisions of clause 4 (xiii) of the companies (Auditor's Report) Order, 2003 are not applicable to the company.

14. In our opinion and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks for financial institutions during the year.

15. The company has not raised any new term loans during the year. The term loans out standings at the beginning of the year were applied for the purposes for which they were raised.

16. 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.

17. The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the year.

18. The company has not issued any debentures during the year.

19. The company has not raised any money by way of public issue during the year.

20. In our opinion and according to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year, that causes the financial statements to be materially misstated.

For C.RAMACHANDRAM & CO.,

Chartered Accountants

Sd/-

C.RAMACHANDRAM

Partner

Membership No. 25834

Place: Hyderabad

Date: 24th August, 2011.


Mar 31, 2010

1. We have audited the attached balance sheet of Aditya Spinners Limited as at March 31. 2010 and the related profit and loss Account for the year ended on that date annexed there of and the cash flow statement of the year ended on that date. 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.

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 estimate 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 (Auditors Report) Order 2003 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.

4. Further to our comments in the annexure referred to in paragraph 3 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 appears from our examination of those books.

c) The balance Sheet and profit and loss account dealt with by this report are in agreement with the books of account.

d) In our opinion, these financial statements have been prepared in compliance with the applicable accounting standards referred to in Section 21 I (3C) of the companies Act, 1956.

e) Based on the representations made by all the Directors of the Company as on March 31, 2010 and taken on record by the Board of Directors of the Company and in accordance with the information and explanations as made available, the Directors of the Company do not, prima lace, have any disqualification as referred to in Clause (g) of subsection (1) to Section 274 of the Companies Act 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, subject to our comments made on secured loans and interest on secured loans vide Notes on Accounts SI No. 6, 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 :

(i) in the case of the Balance Sheet, of the State of affairs of the Company as at March 31,2010.

(ii) in the case of the profit and loss Account, of the loss for the year ended on that date, and

(iii) in the case of cash flow statement, of the cash flows for. the year ended on that date,

ANNEXURE TO AUDITORS REPORT

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

(b) As explained to us the fixed assets have been physically verified by the management during the year in a phased periodical manner, which in our opinion is reasonable, having regard to size of the company and nature of its assets. No materia] discrepancies were noticed on such physical verification.

(c) in our opinion the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the company is not affected,

2. (a) As explained to us, inventories have been physically verified during the year by the management. in our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, 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) On the basis of our examination of the inventory records in our opinion the Company is maintaining proper records of inventory. The Discrepancies noticed on Physical verification of inventory as compared to book records were not material.

3.. (a) The Company ha.s not granted any loans, secured or unsecured to companies, firms, or other parties covered in the register maintained U/s301 of the companies Act 1956.

(b) The Provisions of Clause (b), (c), and (d) of Paragraph 4{iii) of the companies (Auditors Report) order, 2003 are not applicable to the company.

(c) The Company has taken loans from one party covered in the register maintained U/s.301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 14.55 lakhs and the year end balance of loans outstanding from such party was Rs. 14.55 Lakhs.

(d) The rate of interest and other terms of loan as explained above, are prima facie not prejudicial to the interest of the company.

(e) The loans taken by the company are repayable on demand.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system,

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the companies Act, 1956 have been entered in the register required to be maintained under that section.

b) According to the information and explanations given to us, the Company has not entered into any transaction for purchase of goods and materials and sale of goods and services made in the registers maintained u/s 301, of the Companies Act, 1956 aggregating during the year to Rs.5,00,000/- or more in respect of the each party.

6. The Company has not accepted any deposits from the public within the meaning of sections 58 A and 5SAA or any other relevant provisions of the Company Act, 956 and the ruled framed there under,

7. In our opinion the company has an internal audit system commensurate with its size and nature of its business.

8. We have broadly reviewed the books of accounts maintained by the Company in respect of manufacturing yarn, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (I) of section 209 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not. however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanation given to us, the Company has been regular in depositing with appropriate authorities undisputed statutory dues including investor education and protection fund, wealth tax, custom duty, excise duty, service tax, cess, other statutory dues to the extent applicable to it.

(b) According to the information and explanations given to its no undisputed amounts payable in respect of income tax, wealth tax, services tax, custom duty, excise duty and cess were in arrears as at March 31, 2010 for a period of more than Six months from the date they became payable, except - In respect of Sales tax deferment dues, the company has not paid Rs.1,52,13,448/— as on March 31, 2010 for which the Company has a protection under Section 22(1) of Sick Industrial Companies (Special Provision) Act, 1985.

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

10. In our opinion, the accumulated losses of the company are more than fifty percent of its net worth. The company has not incurred cash losses during the financial year covered by our report and in the immediately preceding financial year.

11, According to the records of the Company examined by us and the Information and explanations given to us, the Company has entered into One Time Settlement and cleared the entire dues as per the said OTS agreement made with them and the Company has obtained the No Dues Certificates from the Financial Institutions and Banks but the effect of OTS settlements were not reflected in the books of account,

12. The Company has not granted any 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, Therefore, the provisions of clause 4 (xiii) of the companies {Auditors Report) Order, 2003 are not applicable to the company.

14. The company has maintained proper records of transactions and contracts in respect of purchase of shares and timely entries have been made therein. All shares have been held by the company its own name.

15. In our opinion and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks for financial institutions during the year.

16. The company has not raised any new term loans during the year. The term loans out standings at the beginning of the year were applied for the purposes for which they were raised.

17. 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.

18. The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the year,

19. The company has not issued any debentures during the year.

20. The company has not raised any money by way of-public issue during the year.

21. In our opinion and according to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year, that causes the financial statements to be materially misstated,

For C,RAMACHANDRAM & CO.,

Chartered Accountants

C, RAMACHANDRAM

Partner

Membership No. 25834

Place; Hyderabad

Date: August 18,2010

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