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Auditor Report of Alps Industries Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of ALPS INDUSTRIES LIMITED (the Company ) which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134 (5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone 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 principles generally accepted in India, includingthe 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 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 material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report underthe provisions ofthe Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. 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 the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement ofthe financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal financial control relevant to the Company's preparation ofthe financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofthe accounting estimates made by the Company's Directors, as well as evaluating the overall presentation ofthe financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our Qualified audit opinion on the standalone financial statements.

Basis for Qualified Opinion

The company has not made any provision towards losses amounting to Rs. 39205 Lac on derivative contracts (refer to note nos. 36 (A) (c) I, II and III to the notes to account) and towards claim amounting to Rs. 6259 Lac against the corporate guarantee provided by the company on behalf of one of its subsidiary company (Refer to note no. 36 (A) (c) IV to the notes to account), hence to these extent the loss as shown in the statement of profit and Loss, accumulated losses and current liabilities are understated. This matter was also qualified in our report on the financial statements for the year ended on 31st March 2014.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid standalone 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, of the state of affairs of the Company as at 31st March, 2015, and its loss and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following matters in the Notes to Financial Statements:

1. To the Note no. 37 relating to non provision of interest amounting to RS. 12291.33 lac for the financial year 201415 on loans taken from banks/Financial Institution/ARC/Subsidiary companies pursuant to consent of the secured lenders, constituting more than 83% of the outstanding secured debt of the company, to the Draft Rehabilitation Scheme (DRS) which is pending consideration before the Hon'ble BIFR, which interalia envisages the complete waiver of all outstanding interest from these lenders.

2. To note no 42 regarding pending confirmation of balances from trade receivable, loans & Advances and trade payables and reconciliation thereof and ascertainment of slow, non moving and damaged inventory and impact thereof, if any.

3. To the Note no. 43 relating to non adjustment of amounts paid to secured lenders in terms of settlement reached with them, under consideration ofthe DRS by the Hon'ble BIFR.

4. To the Note no. 45 which briefs the status ofthe reference ofthe company filed with the Hon'ble Board of Industrial & Financial Reconstruction (BIFR) u/s 15 ofthe Sick Industrial Companies (Special Provisions) Act, 1985. The financial statements have been prepared by the company on going concern basis pending sanction of the rehabilitation scheme by the Hon'ble BIFR.

Our opinion is not modified in respect ofthese matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraph 3 and 4 ofthe Order, to the extent applicable:

2. As required by Section 143 (3) ofthe Act, we report that:

(a) 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 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;

(d) Except for the effects ofthe matter described in the basis for qualified opinion paragraph above, in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 ofthe Act, read with Rule 7 ofthe Companies (Accounts) Rules, 2014;

(e) The matters described in the Basis for Qualified Opinion paragraph and Emphasis on Matters above, in our opinion, may have an adverse effect on the functioning ofthe Company;

(f) On the basis ofthe written representations received from the directors as on 31st March 2015 and taken on record by the Board of Directors, none ofthe directors is disqualified as on 31st March, 2015, from being appointed as a director in terms of Section 164 (2) ofthe Act;

(g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above; and

(h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 ofthe Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements- Refer Note No. 36 to the financial statements;

ii. Except non provision of losses stated in the Basis for Qualified Opinion paragraph above, the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on longterm contracts including derivative contracts;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT

Referred to in paragraph 1 under the heading of "Report on other Legal and Regulatory Requirement" of our report of even date In terms ofthe information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under:

I. (a) The Company has maintained records which are yet to be updated showing full particulars including quantitative details and situation of its fixed assets.

(b) As explained to us, the management has physically verified all the fixed assets during the year except for Jaspur and Kashipur unit due to closure, in a phased periodical manner, which in our opinion is reasonable having regard to the size ofthe Company. We have been informed that no material discrepancies were noticed on such physical verification during the year.

II. (a) The inventory has been physically verified during the year by the management in phased manner.

(b) In our opinion and according to the information and explanations given to us, the procedure of physical verification of inventory followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company has maintained proper records of inventories. As explained to us, the discrepancies noticed on physical verification as compared to book records were not material and have been dealt with in the books of account other than ascertainment of slow moving, non moving and damaged inventories, and impact there of, if any, as referred in note on 42.

III. According to the information and explanation given to us, the company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register required to be maintained under section 189 ofthe Act. Accordingly paragraph 3 (iii) ofthe order is not applicable.

IV. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size ofthe Company and the nature of its business, for purchases of inventory and fixed assets and for the sale of goods and services. In our opinion, there is no continuing failure to correct major weaknesses in internal control systems.

V. In our opinion and according to the information and explanations given to us, the company has not accepted deposits from the public.

VI. We were informed that company has maintained cost records pursuant to Companies (Cost Records and Audit) Rules, 2014 as amended and prescribed by the Central Government under section 148(1) ofthe Companies Act, 2013 and we are ofthe opinion that prima facie, the prescribed cost records have been maintained. We have however not made a detailed examination ofthe records with a view to determine whether they are accurate and complete.

VII. a) The Company is generally regular in depositing undisputed statutory dues including Provident Fund Employees'State Insurance, Income-tax, Sales tax, Wealth Tax, Service Tax, Duty of Custom, Duty of Excise, Value Added Tax, Cess and any other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, no amounts payable in respect of Income-tax, Wealth Tax, Service Tax, Sales-tax, Duty of Custom, Duty of Excise, Cess and other aforesaid statutory dues were outstanding as at 31st March, 2015 for a period of more than six months from the date they became payable.

b) The disputed statutory dues aggregating to Rs. 567.49 Lac as on 31st March, 2015 have not been deposited on account of matters pending before appropriate authorities are as under:

Sr. No. Name of the Statute Nature of Dues Amount

1 U.P. Tax on entry of Goods Entry Tax Rs. 3.56 Lac

2 Nagar Nigam Act, 1959 Sewerage Tax Rs. 5.13 Lac

3 Uttrakhand Agriculture Produce Mandi Samitee Cess Rs. 558.80 Lac Marketing (Development & Regulation) (Amended) Act 2012

Sr. No. Name of the Statute From where Dispute is pending

1 U.P. Tax on entry of Goods Hon'ble Tribunal Ghaziabad

2 Nagar Nigam Act, 1959 Hon'ble Commisioner, Nagar Nigam Gzb

3 Uttrakhand Agriculture Produce Hon'ble Supreme Court of Marketing (Development & India Regulation) (Amended) Act 2012

(c) The amount required to be transferred to Investor protection fund in accordance with the relevant provisions of the Companies Act, 1956 and rule made there under has been transferred to such fund within time.

VIII. The accumulated losses of the company as at 31st March, 2015 are more than fifty percent of its net worth. As per the financial statements, the Company has not incurred cash losses during the current financial year ended 31st March, 2015 but incurred cash loss in the immediately preceding financial year.

I . By order dated 02.09.2011 of Board of Industrial and Financial Reconstruction (Board), the amount becoming due after May, 2011 to Banks and Financial institutions are deferred till the date of sanction of the scheme of the Draft Rehabilitation Scheme (DRS) by Board and further 83% of the secured lenders (including One Time Settlement with the company) have consented to DRS which is pending before the Board. Having regard to pending approvals of DRS, we are unable to express any opinion about the default of Principal/interest and period of default, if any.

* According to information and explanations given to us, the company has not given any guarantees for loan taken by others from Banks & Financial Institution during the year.

I. According to information and explanations given to us by the management, no term loans have been obtained during the year.

II. As per information and explanation given to us, no fraud on or by the company noticed or reported during the year.

For P. Jain & Co. Chartered Accountants (Firm Reg. No. : 000711C)

Munish Kr. Jain Place : Ghaziabad Partner Date : May 30, 2015 Membership No. : 070335


Mar 31, 2014

We have audited the accompanying financial statements of ALPS INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2014, 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 and in accordance with the accounting principles generally accepted in India. 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 judgment, 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 an opinion on the effectiveness of the company''s Internal Control. 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 Qualified audit opinion.

Basis for Qualified Opinion

The company has not made any provision towards losses amounting to Rs. 38979 Lacs on derivative contracts crystallized (refer to note nos. 36 (A) (d) I, II and III to the notes to account) and towards claim amounting to Rs. 6009 Lacs against the corporate guarantee provided by the company on behalf of one of Its subsidiary company (Refer to note no. 36 (A) (d) IV to the notes to account), hence to these extent the loss as shown In the statement of profit and Loss, accumulated losses and current liabilities are understated.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described above in the Basis for Qualified Opinion paragraph, 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 loss 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;

a) 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;

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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) Except for the effects of the matters described above in the basis for Qualified opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards Notified under 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.

e) 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 Act.

ANNEXURE TO INDEPENDENT AUDITORS'' REPORT

Referred to in paragraph 1 under the heading of "Report on other Legal and Regulatory Requirement" of our report of even date In terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under;

I. (a) The Company has maintained records showing full particulars including quantitative details and situation of its fixed assets, however, these records are in process of completion.

(b) As explained to us, the management has during the year physically verified all the fixed assets in a phased periodical manner which in our opinion is reasonable having regard to the size of the Company. We have been informed that no material discrepancies were noticed on such physical verification during the year.

(c) During the year the Company has not disposed off substantial part of its fixed assets.

II. (a) The inventory has been physically verified during the year by the management at reasonable intervals. In our opinion and according to the information and explanations given to us, the procedure 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.

(b) The Company has maintained proper records of inventories. As explained to us, the discrepancies noticed on physical verification as compared to book records were not material, however, the same have been properly dealt with in the books of account.

III. There are no Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 to which the company has granted any loans, secured or unsecured, as per information and explanation given to us. Consequently paras 4 (III) (b), (lll)(c) and (III) (d) of the order are not applicable to the Company.

The company has not taken any loan secured or unsecured from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956 as per information and explanation given to us. Consequently paras 4 (III) (e), (lll)(f) and (III) (g) of the order are not applicable to the Company.

IV. 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, for purchases of inventory and fixed assets and for the sale of goods and services. In our opinion, there is no continuing failure to correct major weaknesses in internal control procedures.

V. (a) According to the information and explanations given to us, we are of the opinion that particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register as required to be maintained under that section, wherever applicable.

(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 have been made at the prices, which appear reasonable as per information available with the Company.

VI. In our opinion and according to the information and explanations given to us, the company has not accepted deposits from the public with in the meaning of section 58A and 58-AA or any other relevant provisions of the Companies Act, 1956, and the Rules framed there under.

VII. In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business.

VIII. We have broadly reviewed the cost records maintained by the Company pursuant to the companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under section 209 (1) (d) of the companies Act, 1956 and are of the opinion that prima facie, the prescribed cost records have been maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate and complete.

IX. a) The Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom duty. Excise duty. Cess and any other statutory dues applicable to it with the appropriate authorities.

b) According to the information and explanations given to us, no amounts payable in respect of Income-tax, Wealth tax, Service Tax, Sales-tax, Custom duty, Excise duty, Cess and other aforesaid statutory dues were outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable.

c) The disputed statutory dues aggregating to Rs. 429.27 Lacs have not been deposited on account of matters pending before appropriate authorities as on 31st March, 2014, are as under;

Sr. Name of the Statute Nature of Dues Amount From where Dispute Pending

1. U.P. Tax on entry of Entry Tax Rs. 3.56 Tribunal Ghaziabad Goods Lacs

2. Nagar Nigam Act, 1959 Sewerage Tax Rs. 4.72 Hon''ble Allahabad Lacs High Court

3. Uttrakhand Mandi Samitee Rs.420.99 Hon''ble Agriculture Cess Lacs Uttarakhand High Produce Marketing Court at Nainital (Development & Regulation) (Amended) Act 2012

X. (a) The accumulated losses of the company as at 31st March, 2014 are more than fifty percent of its net worth.

(b) The Company has incurred cash losses during the current year ended 31st March, 2014 and in the immediately preceding financial year.

XI. Based on our audit procedure and the information and explanations given to us, the Company has defaulted in repayment to the Bank as given below.

Other than above by Order dated 02.09.2011 of Hon''ble BIFR, the amounts becoming due after May 2011 to banks and financial institution are deferred till the date of sanction of the scheme by the Board.

XII. Based on our examination of records and explanations given to us during the year, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

XIII. As per the information and explanations given to us, the provisions of special statute applicable to chit fund do not apply to the company. The company is also not a Nidhi/Mutual Benefit Fund/Society.

XIV. In our opinion, and according to the information and explanations given to us, the Company is not dealing or trading in Shares, Securities, debentures and other investments.

XV. Based on our examination of records and information and explanations given to us, the company has not given corporate guarantees on behalf of other body corporate to the banks during the year.

XVI. Based on information and explanations given to us by the management, the term loans have been applied for the purpose for which they were obtained.

XVII. According to the information and explanation given to us and on an overall examination of the Balance sheet of the company, we are of the opinion that funds raised on short-term basis have not been used for long-term investment.

XVIII. As explained to us, the company has not made any preferential allotment of shares to companies or parties covered in the register maintained under section 301 of the Act during the year.

XIX. According to information and explanations given to us, the company has not issued debentures during the year.

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

XXI. During the course ofour 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 have been informed of such case by the management.

For P. Jain & Co. Chartered Accountants (Firm Reg. No: 000711C)

Munish Kr. Jain Place : Ghaziabad Partner Date : May 30, 2014 Membership No.: 70335


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of ALPS INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and the 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 referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). 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.

Auditors'' 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 judgment, 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. 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 Qualified audit opinion.

Basis for Qualified Opinion

As discussed in Note Nos. 35 (A) (d) I, II and III to the notes to account, the company has not made any provision towards the losses on derivative contracts crystallized amounting to Rs. 38458 Lacs and claims of Rs. 5439 Lacs against the corporate guarantee provided by the company on behalf of one of its subsidiary company (Refer to note no. 35 (A) (d) IV of notes to account), hence to that extent the loss as shown in statement of profit & Loss, accumulated losses and current liabilities is understated.

Qualified opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualified Opinion paragraph, 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, 2013;

b) in the case of the Statement of Profit and Loss, of the loss 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:

a) 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;

b) In our opinion proper books of account as required by law have been kept by the Companies of are as appears from our examination of those books;

c) 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;

d) Except for the effects of the matters described in the basis for Qualified opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Act;

e) On the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

ANNEXURE TO INDEPENDENT AUDITORS'' REPORT

Referredtoinparagraph1under the heading of "Report on other Legal and Regulatory Requirement" of our report fever date.

In terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under:

I. (a) The Company has maintained records showing full particulars including quantitative details and situation of its fixed assets, however, these records are in process of updating.

(b) As explained to us, the management has during the year physically verified all the fixed assets in a phased periodical manner which in our opinion is reasonable having regard to the size of the Company. We have been informed that no material discrepancies were noticed on such physical verification during the year.

(c) During the year the Company has not disposed off substantial part of its fixed assets.

II. (a) The inventory has been physically verified during the year by the management at reasonable intervals. In our opinion and according to the information and explanations given to us, the procedure 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.

(b) The Company has maintained proper records of inventories. As explained to us, the discrepancies noticed on physical verification as compared to book records were not material, however, the same have been properly dealt with in the books of account.

III. There are no Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 to which the company has granted any loans, secured or unsecured, as per information and explanation given to us. Consequently paras 4 (III) (b), (III)(c) and (III) (d) of the order are not applicable to the Company.

The company has not taken any loan secured or unsecured from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956 as per information and explanation given to us. Consequently paras 4 (III) (e), (III)(f) and (III) (g) of the order are not applicable to the Company.

IV. 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, for purchases of inventory and fixed assets and for the sale of goods and services. In our opinion, there is no continuing failure to correct major weaknesses in internal control procedures.

V. (a) According to the information and explanations given to us, we are of the opinion that particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register as required to be maintained under that section, wherever applicable.

(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 have been made at the prices, which appear reasonable as per information available with the Company.

VI. In our opinion and according to the information and explanations given to us, the company has not accepted deposits from the public with in the meaning of section 58A and 58-AA or any other relevant provisions of the Companies Act, 1956, and the Rules framed there under.

VII. In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business.

VIII. We have broadly reviewed the cost records maintained by the Company pursuant to the companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under section 209 (1) (d) of the companies Act, 1956 and are of the opinion that prima facie, the prescribed cost records have been maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate and complete.

IX. a) The Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom duty, Excise duty, Cess and any other statutory dues applicable to it with the appropriate authorities.

b) According to the information and explanations given to us, no amounts payable in respect of Income-tax, Wealth tax, Service Tax, Sales-tax, Custom duty, Excise duty, Cess and other aforesaid statutory dues were outstanding as at 31st March, 2013 for a period of more than six months from the date they became payable.

c) The disputed statutory dues aggregating to Rs. 236.64 Lacs have not been deposited on account of matters pending before appropriate authorities as on 31st March, 2013, are as under:

Sr. From where Dispute Name of the Statute Nature of Dues Amount is Pending

1 U.P. Tax on entry of Goods Entry Tax Rs. 3.56 Lacs Tribunal Ghaziabad

2 Nagar Nigam Act, 1959 Sewerage Tax Rs. 3.70 Lacs Humble Allahabad High Court

3 Uttrakhand Agriculture Mandi Samitee Cess Rs. 229.38 Lacs Humble Uttarakhand High Produce Marketing Court at Nainital (Development & Regulation) (Amended) Act 2012

X. (a) The accumulated losses of the company as at 31st March, 2013 are more than fifty percent of its net worth.

(b) The Company has incurred cash losses during the current year ended 31st March, 2013 and in the immediately preceding financial year.

XI. Based on our audit procedure and the information and explanations given to us, the Company has defaulted in repayment to the Bank as given below.

Nature of Dues Rs. in Lacs

Principal Interest Default w.e.f

1500.00 817.77 February 2009

1000.00 529.13 March 2009

Other than above by Order dated 02.09.2011 of Humble BIFR, the amounts becoming due after May 2011 to banks and financial institution are deferred till the date of sanction of the scheme by the Board.

XII. Based on our examination of records and explanations given to us during the year, the company has not granted loans and advances on the basis of security byway of pledge of shares, debentures and other securities.

XIII. As per the information and explanations given to us, the provisions of special statute applicable to chit fund do not apply to the company. The company is also not a Nidhi/Mutual Benefit Fund/ Society.

XIV. In our opinion, and according to the information and explanations given to us, the Company is not dealing or trading in Shares, Securities, debentures and other investments.

XV. Based on our examination of records and information and explanations given to us, the company has not given corporate guarantees on behalf of other body corporate to the banks during the year.

XVI. Based on information and explanations given to us by the management, the term loans have been applied for the purpose for which they were obtained.

XVII. According to the information and explanation given to us and on an overall examination of the Balance sheet of the company, we are of the opinion that funds raised on short-term basis have not been used for long-term investment.

XVIII. As explained to us, the company has not made any preferential allotment of shares to companies or parties covered in the register maintained under section 301 of the Act during the year.

XIX. According to information and explanations given to us, the company has not issued debentures during the year.

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

XXI. 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 we have been informed of such case by the management.

For P. Jain & Co.

Chartered Accountants

(Firm Reg. No. 000711C)

Munish Kr. Jain

Place : Ghaziabad Partner

Date : May 30, 2013 Membership No. 70335


Mar 31, 2012

1. We have audited the attached Balance Sheet of ALPS INDUSTRIES LIMITED as at 31st March 2012, and also the Statement of Profit and Loss and 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 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 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 and Para 5 below, 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 purpose of our audit;

b) In our opinion proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books;

c) 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;

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in compliance with the applicable accounting standards referred to in sub section (3C) of section 211 of the Companies Act, 1956.

e) On the basis of written representations received from the directors as on 31st March, 2012 and taken on record by the Board of Directors, in our opinion, none of the director is disqualified as on 31.03.2012 from being appointed as director u/s274 (1) (g) of the Companies Act, 1956.

5. Referring to note no 35 (d) I,II and III of Notes to Accounts, the Company has not made any provision towards the losses on derivative contracts crystallized amounting to Rs 395.27 Crore and claims of Rs 51.16 Crore against the corporate guarantee provided by the Company on behalf of one of it's subsidiary company (refer to note no. 35 (d) IV of notes to accounts), hence to that extent the loss as shown in the Statement of profit & loss, accumulated losses and current liabilities is understated.

6. In our opinion and to the best of our information and according to the explanations given to us, the said Accounts subject to para 5 above read together with Accounting Policies and Notes thereon, 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 Balance Sheet, of the state of affairs of the Company as at 31st March, 2012.

b) In the case of Statement of Profit and Loss, of the Loss for the year ended on that date. and

c) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT

Referred to in paragraph 3 of our report of even date on the Financial Statements for the year ended 31st March, 2012 of Alps Industries Ltd.

In terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under:

I. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets, however, these records are in process of completion.

(b) As explained to us, the management has during the year physically verified all the fixed assets in a phased periodical manner which in our opinion is reasonable having regard to the size of the Company. We have been informed that no material discrepancies were noticed on such physical verification during the year.

(c) During the year the Company has not disposed off substantial part of its 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 at reasonable intervals. In our opinion and according to the information and explanations given to us, the procedure 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.

(b) The Company has maintained proper records of inventories. As explained to us, the discrepancies noticed on physical verification as compared to book records were not material, however, the same have been properly dealt with in the books of account.

III. There are no Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 to which the company has granted any loans, secured or unsecured, as per information and explanation given to us. Consequently paras 4 (III) (b), (III)(c) and (III) (d) of the order are not applicable to the Company.

The company has not taken any loan secured or unsecured from companies, firms and other parties covered in the register maintained under section 301 of the Companies Act, 1956 as per information and explanation given to us. Consequently paras 4 (III) (e), (III)(f) and (III) (g) of the order are not applicable to the Company.

IV. 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, for purchases of inventory and fixed assets and for the sale of goods and services. In our opinion, there is no continuing failure to correct major weaknesses in internal control procedures.

V. (a) According to the information and explanations given to us, we are of the opinion that particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register as required to be maintained under that section, wherever applicable.

(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 have been made at the prices, which appear reasonable as per information available with the Company.

VI. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 58A and 58-AAor any other relevant provisions of the Companies Act, 1956, the Companies (Acceptance of Deposits) Rules, 1975 and the directives issued by the Reserve Bank of India, with regard to the deposits accepted from the public by private circulation. No order has been passed with respect to the deposits accepted from the public by private circulation by National Company Law Tribunal/Company Law Board.

VII. In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business.

VIII. The Central Government has prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of manufacturing activity of the Company. We have broadly reviewed the accounts and records of the Company and are of the opinion that prima facie, the prescribed records are being maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate and complete.

IX. a) The Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom duty, Excise duty, Cess and any other statutory dues applicable to it with the appropriate authorities.

b) The undisputed amounts payable in respect of Sales Tax and Service Tax aggregating to Rs. 6.20 lac and Rs. 6.03 Lac respectively were outstanding as at 31st March, 2012 for a period of more than six months from the date they became payable.

c) The disputed statutory dues aggregating to Rs. 351.21 lacs have not been deposited on account of disputed matters pending before appropriate authorities as on 31st March, 2012 , are as under:

Sr. , From where Dispute Name of the Statute Nature of Dues Amount No. is Pending

1 U.P. Tax on entry of Goods Entry Tax Rs. 26.96 Lac Addl. Commissioner (Appeal)

2 Nagar Nigam Act, 1959 Sewerage Tax Rs. 4.75 Lac Hon'ble Allahabad High Court

3 Uttrakhand Agriculture

Produce Marketing Market Fee and rs 31950 Lac Hon'ble Uttarakhand High

(Development & Regulation) Development Cess Court at Nainital Act 2011

X. (a) The accumulated losses of the company as at 31st March, 2012 are more than fifty percent of its net worth.

(b)The Company has incurred cash losses during the current year ended 31st March, 2012 and in the immediately preceding financial year.

XI. Based on our audit procedure and the information and explanations given to us, the Company has defaulted in repayment to the Banks as given below.

Nature of Dues Rs. in Lacs

Principal Interest Default w.e.f

1500.00 498.75 February 2009

1000.00 321.34 March 2009

Other than above, by Order dated 02.09.2011 of Hon'ble BIFR, the amounts becoming due after May 2011 to banks and financial institution are deferred till the date of sanction of the scheme by the Board .

XII. Based on our examination of records and explanations given to us during the year, the company has not granted loans and advances on the basis of security byway of pledge of shares, debentures and other securities.

XIII. As per the information and explanations given to us, the provisions of special statute applicable to chit fund do not apply to the company. The company is also not a Nidhi/Mutual Benefit Fund/Society.

XIV. In our opinion, and according to the information and explanations given to us, the Company is not dealing or trading in Shares, Securities.

XV. Based on our examination of records and information and explanations given to us, the company has not given corporate guarantees on behalf of other body corporate to the banks during the year.

XVI. Based on information and explanations given to us by the management, the term loans have been applied for the purpose for which they were obtained.

XVII. According to the information and explanation given to us and on an overall examination of the Balance sheet of the company, we are of the opinion that funds raised on short-term basis have not been used for long-term investment.

XVIII. As explained to us, the company has not made any preferential allotment of shares to companies or parties covered in the register maintained under section 301 of the Act during the period.

XIX. According to information and explanations given to us, during the year, company has not issued debentures and accordingly, the creation of securities thereof does not arise.

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

XXI. 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 have been informed of such case by the management.

For P. Jain & Co.

Chartered Accountants (Firm Reg. No. 000711C)

Munish Kr. Jain

Place : Ghaziabad Partner

Date : August 13, 2012 Membership No.70335


Mar 31, 2010

1. We have audited the attached Balance Sheet of ALPS INDUSTRIES LIMITED as at 31st March 2010, the Profit and Loss Account and the Cash Flow Statement for the period ended on that date annexed thereto. These financial statements are the responsibility of the Companys 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 test basis, evidence supportingthe 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 (Auditors Report) Order,2003 issued by the Central Government 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 para 3 above and Para 5 below, 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 purpose of our audit;

b) In our opinion proper books of accounts as requ ired by law have been kept by the Company so far as appears from our examination of those books.

c) The Balance Sheet, Profit and Loss account and Cash Flow Statement referred to in this report are in agreement with the books of accounts of the company;

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow dealt with by this report comply with the accounting standards referred to in section 211 (3C) of the Companies Act, 1956.

e) On the basis of written representations received from the directors, and taken on record by the Board of Directors, in our opinion, none of the director is disqualified as on 31st March, 2010 from being appointed as director u/s 274(1 )(g)ofthe Companies Act, 1956.

5. (i) Referringto note nos. 1 (f) I, III and IV of part B ofSchedule20, Notes to Accounts, the company has not assessed and made any provision towards the losses on derivative contracts crystallized amounting to Rs. 1 88.69 Crore and claims ofRs. 45.14 Crore against the corporate guarantee provided by the Company on behalf of one of its subsidiary company (refer to note no. 1 (f) II of part B of Schedule 20 notes to Accounts), hence to that extent the loss as shown in the profit & loss Account, accumulated losses and current liabilities are understated.

(ii) The Company has not assessed and provided for the Profit/Loss, if any, against foreign currency derivative transactions outstanding as on 31.03.2010 (refer to Para 4 of part B of schedule 20, Notes on Accounts).

6. In our opinion and to the best of our information and according to the explanations given to us, the said Accounts subject to note no. 5 above read together with significant Accounting Policies and Notes thereon, 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 Balance Sheet, of the state of affairs of the Company as at 31 st March, 2010. ii) In the case of the Profit and Loss account, of the Loss for the period ended on that date. iii) In the case of Cash Flow Statement, of the cash flows for the period ended on that date.

ANNEXURE TO THE AUDITORS REPORT Referred to in paragraph 3 of our report of even date on the accounts for the period ended 31 st March, 2010 of Alps Industries Ltd.

In terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under:

I. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets, however, these records are in process of updation.

(b) As explained to us, the management has during the year physically verified all the fixed assets. We have been informed that no material discrepancies were noticed on such physical verification duringthe period.

(c) During the period the Company has not disposed off substantial part of the fixed assets.

II. (a) The inventory has been physically verified during the period by the management at reasonable intervals. In our opinion and according to the information and explanations given to us, the procedure 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. (b) The Company is maintaining proper records of inventory. As explained to us the discrepancies noticed on physical verification of stocks as compared to book records were not material, however, the same have been properly dealt with in the books of account.

III. The Company has granted unsecured loans aggregating Rs 735.62 Lac to four member companies, firms or parties covered in the register maintained under section 301 of the Companies Act 1956. The company has not taken any loans from any such party. The rate of interest and other terms and condition of such loans are, in our opinion, prima facie, not prejud icial to the interest of the Company.

IV. 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, for purchase of inventory and fixed assets and also forthe sale of goods and services. In our opinion, there is no continuing failure to correct major weaknesses in internal control procedures.

V. (a) According to the information and explanations given to us, we are of the opinion that particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained underthat section, wherever applicable. (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 have been made at the prices, which are reasonable having regard to prevailing market prices attherelevanttime.

VI. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 58A and 58-AA or any other relevant provisions of the Companies Act, 1 956, the Companies (Acceptance of Deposits) Rules, 1 975 and the directives issued by the Reserve Bank of India, with regard to the deposits accepted from the public by private circulation. No order has been passed with respect to the deposits accepted from the public by private circulation by National Company Law Tribunal/Company Law Board.

VII. In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business.

VIII. The Central Government has prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of manufacturing activity of Cotton yarn of the Company. We have broadly reviewed the accounts and records of the Company and are of the opinion that prima facie, the prescribed records are being maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate and complete.

IX. a) The Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom duty, Excise duty, Cess and any other statutory dues applicable to it with the appropriate authorities.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income-tax, Wealth tax, Service Tax, Sales-tax, Custom duty, Excise duty, Cess and other statutory dues were outstanding as at 31 st March, 2010 for a period of more than six months from the date they became payable.

c) The disputed statutory dues aggregating to Rs. 568.15 Lac have not been deposited on account of disputed matters pending before appropriate authorities as on 31 st March, 2010 , are as under:

Sr Name of the Statute Nature of Dues Amount Forum where No. Rs.(in Dispute is Lacs> Pending

1 U.P. Tax on entry of Goods Entry Tax 219.59 Honble Allahabad High Court

2 U.P. Sales Tax Liability against Form V 4.22 Deputy Commissioner Sales Tax, including Interest F.Y. Ghaziabad 2006-07

3 NagarNigam Act, 1959 Sewerage Tax 4.75 Honble Civil Court Chaziabad

4 Income Tax Disallowance of 339.59 C.I.T Appellate, Chaziabad Depreciation for the A.Y. 2007-08

X. (a) The accumulated losses of the company as at 31 st March, 2010 are more than fifty percent of its net worth. (b) The Company has incurred cash losses duringthe current period ended 31 st March, 2010 .

XI. Based on our audit procedure and the information and explanations given to us, the Company has defaulted in repaymentto the financial institutions/Banks as given below:-

Nature of Dues and Amount

Principal Interest Period of Default

95.83 10.94 March 2009

33.33 14.17 April 2009

33.33 14.19 May 2009

95.83 14.83 June 2009

33.33 15.66 July 2009

33.33 15.74 August 2009

95.83 15.58 September 2009

2479.15 15.99 October 2009

The entire loan in respect of above was recalled by the banks.

XII. Based on our examination of records 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.

XIII. As per the information and explanations given to us, the provisions of special statute applicable to chit fund do not apply to the company. The company is also not a Nidhi/Mutual Benefit Fund/Society.

XIV. In our opinion, and according to the information and explanations given to us, the Company is not dealing or trading in Shares, Securities.

XV. Based on our examination of records and information and explanations given to us, the company has not given corporate guarantees on behalf of other body corporate to the banks duringthe period.

XVI. Based on information and explanations given to us by the management, the term loans have been applied for the purposefor which theywere obtained.

XVII. According to the information and explanation given to us and on an overall examination of the Balance sheet ofthe company, we are ofthe opinion that funds raised on short-term basis have not been used for long-term investment.

XVIII. As explained to us, the company has not made any preferential allotment of shares to companies or parties covered in the register maintained under section 301 ofthe Act during the period.

XIX. According to information and explanations given to us, during the period, company has not issued debentures and accordingly, the creation ofsecuritiesthereofdoes not arise.

XX. The company has not raised any money by way of public issue duringthe period.

XXI. Duringthe course of our examination ofthe books and records ofthe 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 have been informed of such case by the management.

For P. jain & Co.

Chartered Accountants (Firm Reg. No. 000711C) Place : Chaziabad

Date: May 29th, 2010 (Munish Kr. jain)

Partner Membership No.70335

24. The previous period figures have been regrouped and rearranged, wherever considered necessary to make them comparable with those of current period.


Jun 30, 2009

1. We have audited the attached Balance Sheet of ALPS INDUSTRIES LIMITED as at 30th June, 2009, the Profit and Loss Account and the Cash Flow Statement for the period ended on that date annexed thereto. These financial statements are the responsibility of the Companys 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 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 the 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 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:-

a. 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;

b. In our opinion proper books of accounts as required by law have been kept by the Company so far as appears from our examination of the books of the Company;

c. The Balance Sheet, Profit and Loss account referred to in this report are in agreement with the books of accounts of the Company;

d. In our opinion, the balance sheet and profit and loss account dealt with by this report comply with the applicable accounting standards referred to in section 211(3C) of the Companies Act, 1956;

e. On the basis of written representations received from the directors, and taken on record by the Board of Directors, in our opinion, none of the directors is disqualified from being appointed as director u/s 274(l)(g) of the Companies Act, 1956.

5. The Company has not assessed and provided for profit/loss, if any on outstanding foreign currency derivative transactions as on 30th June, 2009 as referred in Note No. 21 of Schedule 19.

6. In our opinion and to the best of our information and according to the explanations given to us, the said Accounts Subject to para 5 above read together with Accounting Policies and Notes thereon as per Schedule No. 19, 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 Balance Sheet, of the state of affairs of the Company as at 30th June, 2009

b. In the case of the Profit and Loss account, of the Loss for the period ended on that date.

c. In the case of Cash Flow Statement, of the cash flow for the period ended on that date.

ANNEXURE TO THE AUDITORS REPORT

Referred to in paragraph 3 of our report of even date on the accounts for the period ended 30th June, 2009 of

Alps Industries Ltd.

In terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under:

I. a. The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets, however, these records are in process of updation.

b. As explained to us, die management has during the year physically verified all die fixed assets. We have been informed that no material discrepancies were noticed on such physical verification during the period.

c. During the period the Company has not disposed off substantial part of the fixed assets.

n. a. The inventory has been physically verified during me period by the Management at reasonable intervals. In our opinion and according to the information and explanations given to us, the procedure 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.

b. The Company is maintaining proper records of inventory. As explained to us the discrepancies noticed on physical verification of stocks as compared to book records were not material, however, the same have been properly dealt within the books of account.

III. The Company has granted unsecured loans aggregating Rs. 706.67 Lac to four companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. The company has not taken any loans from any such party. The rate of interest & other terms & condition of such loans are, in our opinion, prima facie not prejudicial to the interest of the Company.

IV. In our opinion and according to me information and explanations given to us, there is adequate internal control system commensurate with die size of the Company and the nature of its business, for purchase of inventory and fixed assets and also for the sale of goods and services. In our opinion, mere is no continuing failure to correct major weaknesses in internal control procedures.

V. (a) According to die information and explanations given to us, we are of me opinion that particulars of Contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section, wherever applicable.

(b) In our opinion and according to me information and explanations given to us, me transactions made in pursuance of Contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made at the prices, which are reasonable having regard to prevailing market prices at the relevant time.

VI. In our opinion and according to the information and explanations given to us, me company has complied with the provisions of section 58A & 58-AA or any other relevant provisions of me Companies Act, 1956, the Companies (Acceptance of Deposits) Rules, 1975 and the directives issued by the Reserve Bank of India, with regard to the deposits accepted from the public by private circulation. No order has been passed with respect to the deposits accepted from the public by private circulation by National Company Law Tribunal/Company Law Board.

VII. In our opinion, the Company has an adequate internal audit system commensurate with me size and nature of its business.

Vin. The Central Government has prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of manufacturing activity of Cotton yarn of me Company. We have broadly reviewed die accounts and records of me Company and are of the opinion that prima facie, the prescribed records are being maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate and complete.

DC a) The Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales-tax, Wealm Tax, Service Tax, Custom duty, Excise duty, Cess and any odier statutory dues applicable to it with the appropriate auuiorities.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income-tax, Wealth tax, Service Tax, Sales-tax, Custom duty, Excise duty, Cess and other statutory dues were outstanding as at 30th June, 2009 for a period of more than six months from the date they became payable.

c) The disputed statutory dues aggregating to Rs. 211.80 Lac have not been deposited on account of disputed matters pending before appropriate authorities as on 30th June, 2009, are as under:

Sr. No. Name of Nature of Amount Forum where the Statute Dues Dispute is Pending

1 Central Entry Tax Rs. 208.43 Lac Honble Allahabad Sales Tax High Act, 1956 Court 2 Nagar Nigam Sewerage Tax Rs. 3.37 Lac Honble Civil Court Act, 1959 Ghaziabad

X. (a) The accumulated losses of the Company as at 30 June, 2009 are more than 50 % of its net worth. (b) The Company has incurred cash losess during the current period ended 30th June, 2009.

XI. Based on our audit procedure and the information and explanations given to us, the Company has defaulted in respect to the repayment to the financial institution/bank as given below: -

Nature of Dues Period of Default Rs. in Lac

Principal February, 2009 17.37 Interest February, 2009 467.12 Principal March, 2009 1404.03 Interest March, 2009 542.97 Principal April, 2009 116.63 Interest April, 2009 849.50 Principal May, 2009 57.37 Interest May, 2009 885.36 Principal June, 2009 6632.55 Interest June, 2009 871.02

XII Based on the our examination of records 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.

Xfll. As per the information and explanations given to us, the provisions of special statute applicable to chit fund do not apply to the company. The company is also not a Nidhi/Mutual Benefit Fund/ Society.

XIV. In our opinion, and according to the information and explanation given to us, the Company is not dealing or trading in Shares, Securities.

XV. Based on our examination of records and the information and explanations given to us, the company has not given corporate guarantees on behalf of other body corporate, to the banks during the period.

XVI. Based on the information and explanations given to us by management, the term loans have been applied for the purpose for which they were obtained.

XVU. According to the information and explanation given to us and on an overall examination of the Balance sheet of the company, we are of the opinion that funds raised on short-term basis have not been used for long-term investment.

XVHI. As explained to us, the company has not made any preferential allotment of shares to companies or parties covered in the Register maintained under section 301 of the Act during the period.

XK. According to information and explanations given to us, during the period, company has not issued debentures and accordingly, the creation of securities thereof does not arise.

XX. The company has not raised any money by way of public issue during the period.

XXI. 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 have been informed of such case by the management.

For P. Jain & Co.

Chartered Accountants

Place: Ghaziabad Munish Kr. Jain

Date: September 22, 2009 Partner

Membership No. 70335