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Auditor Report of Ambika Cotton Mills Ltd.

Mar 31, 2016

To

The Members of Ambika Cotton Mills Limited Report on the Financial Statements

We have audited the accompanying financial statements of Ambika Cotton Mills Limited (''the Company''), which comprise the Balance Sheet as at 31st March 2016, 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

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 and presentation 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 principles generally accepted in India, including 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 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.

Auditors'' 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 matters which are required to be included in the audit report under the provisions of the 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 of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, 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 on 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 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 31 st March 2016 and its profit and its 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, 2016 ("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, a statement on the matters specified in the paragraph 3 and 4 of the order.

2. As required by Section 143 (3) of the 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) in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e) on the basis of the written representations received from the directors as on 31st March 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2016 from being appointed as a director in terms of Section 164 (2) of the Act;

f) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure B"; and

g) with respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the 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 26 to the financial statements;

ii. The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses.

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

The Annexure referred to in Independent Auditors'' Report to the members of the Company on the financial statements for the year ended 31st March 2016, we report that:

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets on the basis of available information.

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

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.

(ii) As explained to us, the management has conducted the physical verification of inventory at reasonable intervals and there were no material discrepancies noticed on physical verification of the inventory as compared to book records.

(iii) The Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability partnerships or other parties covered in the Register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3 (iii) (a) to (c) of the Order are not applicable to the Company and hence not commented upon.

(iv) According to the information and explanations given to us, the Company has not made any loans, investments, guarantees and security attracting the provisions of sections 185 and 186 of the Companies Act,2013. Accordingly, the provisions of clause 3 (iv) of the Order are not applicable to the Company and hence not commented upon.

(v) The Company has not accepted any deposits from the public and hence the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable.

(vi) The Central Government has prescribed the maintenance of cost records under Section 148 (1) (d) of the Companies Act, 2013. We have broadly reviewed the accounts and records of the company in this connection 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 same.

(vii) (a) According to the information and explanations given to us the Company is regular in depositing undisputed statutory dues including provident fund, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax , cess and any other material statutory dues with the appropriate authorities. We are informed that the provisions of Employees State Insurance Act,1948 are not applicable to the Company.

According to the information and explanations given to us no undisputed amounts payable in respect of provident fund, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues were in arrears as at 31st March 2016 for a period of more than six months from the date they became payable

(b) According to the information and explanations given to us the following dues of, income-tax, sales-tax, service tax, duty of excise have not been deposited by the Company on account of disputes.

Name of the Statute

Nature of Dues

Amount

(Rs. in

Lakhs)

Period to which the amount relates

Forum where dispute is pending

Income -Tax Act, 1961

Income-Tax

26.12

Assessment year 1998-99

Madras High Court,

Service Tax

Service Tax

4.80

From 16.11.1997 to 01.06.1998

CESTAT, Chennai

Central Excise Act, 1944

Central Excise and Penalty

2.18

04.03.2005 (date of de-bonding)

CESTAT, Chennai

Service Tax

Service Tax,

Interest and Penalty

2.95

From 18.04.2006 to 29.02.2008

CESTAT, Chennai

Central Excise Act, 1944

Excise Duty

11.33

From 20.05.1999 to 06.08.1999

Madras High Court

Central Excise Act, 1944

Excise Duty

33.80

From 07.12.2008 to 06.07.2009

CESTAT, Chennai

Service Tax

Service Tax

23.99

From 01.10.2005 to 30.06.2006

Madras High Court

TNGST Act, 1959

Sales Tax

3.72

Assessment year 1996-1997

Deputy Commissioner of Appeals, (CT) Madurai

Central Excise Act, 1944

Interest and Penalty

4.91

November 2008 to December 2010

CESTAT, Chennai

Central Excise Act, 1944

Interest and Penalty

0.84

November 2007 to January 2011

CESTAT, Chennai

Central Excise Act, 1944

Central Excise

410.01

Assessment Year 2005-06

Madurai Bench of Madras High Court

Total

524.65

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks. The Company has not taken any loan either from financial institutions or from the Government and has not issued any debentures.

(ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3 (ix) of the Order is not applicable.

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

(xi) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, there are no transactions which falls under related parties transaction in terms of sections 177 and 188 of the Companies Act,2013 and details of transactions which are required to be disclosed, as required by the applicable accounting standards in this regard, have been disclosed in the financial statements.

(xiv) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

ANNEXURE - B TO INDEPENDENT AUDITORS'' REPORT

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Ambika Cotton Mills limited ("the Company") as of 31st March 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (''ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors'' Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For L. Venkatasubbu & Co

Chartered Accountants

Firm Regn No. 004627S Sd/-

(L. Venkatasubbu)

Date : 28.05.2016 Partner

Place : Coimbatore Membership No. 019791


Mar 31, 2015

We have audited the accompanying financial statements of Ambika Cotton Mills Limited ("the company"), which comprise the Balance Sheet as at 31 March 2015, the Statement of Profit and Loss, 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

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 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, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes the 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 the 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 control, 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 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 under the provisions of the Act and the Rules made thereunder.

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 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 financial control relevant to the Company's preparation of the financial statements that give 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 of the accounting estimates made by Company's Directors, 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 on 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 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 March 31, 2015; and its Profit and its 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 ,2015 ( " the Order " ) issued by the Central Government in terms of Section 143(11) of the Act, we give in Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order

2. As required by section 143 (3) of the 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) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

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

f) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the 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 to Note 25 to the financial statements.

ii. The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses.

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

Re : Ambika Cotton Mills Limited ( "the Company" ) Referred to in Paragraph 1 under "Report on other Legal and Regulatory Requirements" section of our report of even date

1. In respect of its fixed assets

a. The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets on the basis of available information.

b. As explained to us, the fixed assets have been physically verified by the Management during the year at reasonable intervals, which in our opinion is reasonable, having regard to the 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 of substantial part of fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of its inventories

a. As explained to us, inventories have been physically verified by the Management at reasonable intervals during the year.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.

c. The Company has maintained proper records of inventories. As explained to us there were no material discrepancies noticed on physical verification of inventory as compared to book records.

3. The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained U/s 189 of the Companies Act,2013.

4. In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods. During the course of our audit, we have not observed any major weakness in internal controls.

5. The Company has not accepted any deposits from the public.

6. The Central Government has prescribed the maintenance of cost records under Section 148 (1) (d) of the Companies Act, 2013. We have broadly reviewed the accounts and records of the company in this connection 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 same.

7. According to the information and explanations given to us in respect of statutory and other dues:

a. The Company is regular in depositing undisputed statutory dues including provident fund, income-tax, sales- tax, wealth tax, service tax, duty of customs, duty of excise, value added tax , cess and any other material statutory dues with the appropriate authorities during the year. We are informed that the provisions of Employees State Insurance Act,1948 are not applicable to the Company

b. No undisputed arrears of statutory dues were outstanding as at March 31, 2015 for a period of more than six months from the date they became payable.

c. Disputed dues are as under

Name of the Nature of Amount Period Statute Demand Rs. in Lakhs

Income -Tax Reopening of 26.12 Assessment year Act, 1961 assessment 1998-99

Service Tax Freight charges 4.80 From 16.11.1997 to 01.06.1998

Customs Act Interest for Assessment year payment of duty 7.06 2005-06

Central Excise Demand for Used 2.18 04.03.2005 Spares on (date of de-bonding de-bonding)

Service Tax Payment of Foreign 2.96 From 18.04.2006 agents' Commission to 29.02.2008

Central Excise Modvat Credit 11.33 From 20.05.1999 to 06.08.1999

Central Excise Cenvat Credit of 33.80 From 07.12.2008 to Excise Duty 06.07.2009

Central Excise Cenvat Credit of 28.90 From 01.10.2005 Service Tax to 30.06.2006

Sales Tax Non-filing of Form 4.96 Assessment year "H" and Bill of Lading 1996-1997 in respect of Exports

Central Excise Cenvat Credit of Excise Duty 4.91 November 2008 to December 2010

Central Excise Cenvat Credit of Excise Duty 0.84 November 2007 to January 2011

Central Excise Cenvat Credit of Excise Duty 3.38 December 2007 to January 2011

Customs Act De-bonding of 312.23 Assessment year Unit-II from 100% EOU 2005-06

Customs Act De-bonding of Unit-II from 97.77 Assessment year 100% EOU 2005 -06



Name of the Statute Forum where dispute is pending

Income -Tax Act, 1961 Madras High Court,

Service Tax CESTAT, Chennai

Customs Act CESTAT, Chennai

Central Excise CESTAT, Chennai

Service Tax CESTAT, Chennai

Central Excise Madras High Court

Central Excise CESTAT, Chennai

Central Excise Madras High Court

Sales Tax Deputy Commissioner of Appeals, (CT) Madurai

Central Excise CESTAT, Chennai

Central Excise CESTAT, Chennai

Central Excise CESTAT, Chennai

Customs Act Madurai Bench of Madras High Court

Customs Act Madurai Bench of Madras High Court

d. The company has transferred within time the amount required to be transferred to investor education and protection fund in accordance with the provisions of the Companies Act, 1956 ( 1 of 1956 ) and rules made there under .

8. The Company does not have any accumulated losses as at the end of the financial year and has not incurred cash losses in the financial year or in the immediately preceding financial year.

9. The Company has not defaulted in repayment of dues to Financial Institutions or Banks.

10. According to the information and explanations given to us the Company has not given any guarantee for loans taken by others from Bank or Financial Institutions.

11. The Company has not availed any new Term Loans during the year and hence its application for the purpose for which it was obtained does not arise.

12. 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.

For L. Venkatasubbu & Co

Chartered Accountants Firm Regn No. 004627S Sd/-

( L. Venkatasubbu )

Date : 26.05.2015 Partner

Place : Coimbatore Membership No. 019791


Mar 31, 2014

We have audited the accompanying financial statements of Ambika Cotton Mills Limited ("the Company") which comprise the Balance Sheet as at 31st March 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 accounting principles generally accepted in India , including the Accounting Standards notified under the Companies Act, 1956 (''the Act'') read with General Circular 15/2013 dated:13 September 2013, issued by 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 of 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 entity''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 audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanation 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.

(i) In the case of the Balance Sheet, of the state of affairs of the company as at 31 March, 2014

(ii) In the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

(iii) 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''), as amended, 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 paragraph 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 the 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 the Cash Flow Statement comply with the Accounting Standards notified under the Act read with General Circular 15/2013 dated 13 September 2013, issued by 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 31 March 2014, and taken on record by the Board of Directors, none of the Directors are disqualified as on 31 March 2014, from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Act.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT Re: Ambika Cotton Mills Limited ( "the Company" )

1. In respect of its fixed assets

a. The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets on the basis of available information.

b. As explained to us, the fixed assets have been physically verified by the Management during the year at reasonable intervals, which in our opinion is reasonable, having regard to the 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 of substantial part of fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of its inventories

a. As explained to us, inventories have been physically verified by the Management at reasonable intervals during the year.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.

c. The Company has maintained proper records of inventories. As explained to us there were no material discrepancies noticed on physical verification of inventory as compared to book records.

3. The Company has neither granted nor taken any loans, secured or unsecured to / from Companies, firms or other parties covered in the register maintained U/s 301 of the Act, and hence Para 4(iii) of the Order is not applicable.

4. In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods. During the course of our audit, we have not observed any major weakness in internal controls.

5. According to the Information & Explanations given to us, there are no transaction in excess of Rs.5,00,000/- (Rupees Five Lakh only) in respect of any party which need to be entered in a Register in pursuance of Section 301 of the Act, and hence Para 4(v) of the Order is not applicable.

6. The Company has not accepted any deposits from the public.

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

8. The Central Government has prescribed the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956. We have broadly reviewed the accounts and records of the company in this connection 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 same.

9. According to the information and explanations given to us in respect of statutory and other dues:

a. The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year.

b. No undisputed arrears of statutory dues were outstanding as at March 31, 2014 for a period of more than six months from the date they became payable.

c. Disputed dues are as under

Name of the Nature of Amount Period Statute Demand Rs. in Lakhs

Income -Tax Act, Reopening of 26.12 Assessment year 1961 assessment 1998-99

Service Tax Freight charges 4.80 From 16.11.1997 to 01.06.1998

Customs Act Interest for 7.06 Assessment year payment of duty 2005-06

Central Excise Demand for Used 2.18 04.03.2005 (date Spares on of de-bonding) de-bonding

Service Tax Payment of 2.96 From 18.04.2006 Foreign agents to 29.02.2008 Commission

Central Excise Modvat Credit 11.33 From 20.05.1999 to 06.08.1999

Central Excise Cenvat Credit of 33.80 From 07.12.2008 Excise Duty to 06.07.2009

Central Excise Cenvat Credit of 28.90 From 01.10.2005 Service Tax to 30.06.2006

Customs Act De-bonding of 312.23 Assessment year Unit-II from 100% 2005-06 EOU

Customs Act De-bonding of 97.77 Assessment year Unit-II from 100% 2005-06 EOU

Sales Tax Non-filing of Form 4.96 Assessment year "H" and Bill of 1996-1997 Lading in respect of Exports

Name of the Forum where Statute dispute is pending

Income -Tax Act, Madras High Court, 1961

Service Tax CESTAT, Chennai

Customs Act CESTAT, Chennai

Central Excise CESTAT, Chennai

Service Tax CESTAT, Chennai

Central Excise Madras High Court

Central Excise CESTAT, Chennai

Central Excise Madras High Court

Customs Act Madurai Bench of Madras High Court

Customs Act Madurai Bench of Madras High Court

Sales Tax Deputy Commissioner of Appeals, (CT) Madurai

10. The Company has no accumulated losses and has not incurred cash losses during the Financial Year covered by our audit or in the immediately preceding Financial Year.

11. According to the information and explanations given to us the Company has not defaulted in repayment of dues to Financial Institutions or Banks.

12. According to the information and explanations given to us no loans and advances have been granted by the company 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, clause 4(xiii) of the Order is not applicable to the company.

14. The Company is not dealing or trading in shares, securities, debentures and other investments. However, in respect of investments made by the company in shares/ mutual fund units in the nature of investments, the company holds the same in its own name.

15. According to the information and explanations given to us the Company has not given any guarantee for loans taken by others from Bank or Financial Institutions.

16. The Company has not availed any new Term Loans during the year and hence its application for the purpose for which it was obtained does not arise.

17. According to the Cash Flow Statement and other records examined by us and the information and explanations given to us, on an overall basis, funds raised on short-term basis have, prima-facie, not been used during the year for long term investment and vice versa.

18. The Company has not made any preferential allotment of shares during the year.

19. The Company has not raised any money by way of issue of debentures and therefore the question of creation of security in respect of the same does not arise.

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.

For L.VENKATASUBBU & CO., CHARTERED ACCOUNTANTS FIRM REGN.No.004627s

Sd/- (L.VENKATASUBBU) Place : Coimbatore PARTNER Date : 24.05.2014 MEMBERSHIP No : 019791


Mar 31, 2012

1. We have audited the attached Balance sheet of Ambika Cotton Mills Limited as at 31st March 2012 and also the Profit and Loss Account for the year ended on that date annexed thereto and the cash flow statement for the year ended on that date. 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 accoraance with auditing standaras generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act 1956, we give 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 such books.

c. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

d. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the requirements of the 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 we report that none of the Directors is disqualified as on 31st March 2012 from being appointed as a Director in terms of clause (g) of sub-section (1) of 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 31st March 2012.

ii. In the case of the Profit and Loss account, of the profit for the year ended on that date ana

iii. 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)

1. In respect of its fixed assets

a. The Company has maintained proper records showing full particulars including guantitative details and situation of its fixed assets on the basis of available information.

b. As explained to us, the fixed assets have been physically verified by the Management during the year at reasonable intervals, which in our opinion is reasonable, having regard to the 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 of substantial part of fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of its inventories

a. As explained to us, inventories have been physically verified by the Management at reasonable intervals during the year.

b. In our opinion and according to the information ana explanations given to us, the procedures of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.

c. The Company has maintainea proper records of inventories. As explained to us there were no material discrepancies noticed on physical verification of inventory as comparea to book records.

3. The Company has neither granted nor taken any loans, secured or unsecured to / from Companies, firms or other parties covered in the register maintained U/s 301 of the Act, and hence Para 4(iii) of the Order is not applicable.

4. In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods. During the course of our audit, we have not observed any major weakness in internal controls.

5. According to the Information & Explanations given to us, there are no transaction in excess of Rs,5,00,000/- (Rupees Five Lakh only) in respect of any party which need to be entered in a Register in pursuance of Section 301 of the Companies Act, 1956 and hence Para 4(v) of the Oraer is not applicable.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A, 58AA or any other relevant provisions of the Act.

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

8. The Central Government has prescribed the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956. We have broadly reviewed the accounts and records of the company in this connection 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 same. 9. According to the information ana explanations given to us in respect of statutory and other dues:

a. The Company is 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, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year.

b. No undisputed arrears of statutory dues were outstanding as at March 31, 2012 for a period of more than six months from the date they became payable.

c. Disputed dues are as under

Name of the Nature of Amount Statute Demand Rs.in Lakh

Income -Tax Reopening of Act, 1961 assessment 26.12

Customs Act Differential duty for import of raw material 30.12

Service Tax Freight charges 4.80

Customs Act Interest for payment of duty 7.06

Central Excise Demand for Used Spares on de-bonding 2.18

Service Tax Payment of Foreign Commission 2.96

Central Excise Modvat Credit 11.33

Central Excise Cenvat Credit of Excise Duty 31.02

Central Excise Cenvat Credit of Service Tax 28.90

Customs Act De-bonding of Unit-II from 100% EOU 312.23

Customs Act De-bonding of Unit-II from 100% EOU 97.77



Name of the Forum where dispute Statue Period is pending

Income -Tax Act, 1961 Assessment year Madras High Court, 1998-99 Chennai

Customs Act Assessment year Madras High Court, 2002-03 Chennai

Service Tax From 16.11.1997 CESTAT, Chennai to 01.06.1998

Customs Act Assessment year 2005-06 CESTAT, Chennai

Central Excise 04.03.2005 (date of de-bonding; CESTAT, Chennai

Service Tax From 18.04.2006 to 29.02.2008 CESTAT, Chennai

Central Excise From 20.05.1999 Madras High Court to 06.08.1999

Central Excise From 07.12.2008 to 06.07.2009 CESTAT, Chennai

Central Excise From 01.10.2005 to 30.06.2006 Madras High Court

Customs Act Assessment year Madurai Bench of 2005-06 Madras High Court

Customs Act Assessment year Madurai Bench of 2005-06 Madras High Court

10. The Company has no accumulated losses and has not incurred cash losses during the Financial Year covered by our audit or in the immediately preceding Financial Year.

11. According to the information and explanations given to us the Company has not defaulted in repayment of dues to Financial Institutions or Banks.

12. According to the information and explanations given to us no loans and advances have been granted by the company 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, clause 4(xiii) of the Companies (Auaitor's Report) Order 2003 is not applicable to the company.

14. The Company is not dealing or trading in shares, securities, debentures and other investments. However, in respect of investments maae by the company in shares/ mutual funa units in the nature of investments, the company hoias the same in its own name.

15. According to the information ana explanations given to us the Company has not given any guarantee for loans taken by others from Bank or Financial Institutions.

16. The Company has not availed any new Term Loans during the year ana hence its application for the purpose for which it was obtained does not arise.

17. According to the Cash Flow Statement and other records examined by us ana the information and explanations given to us, on an overall basis, funas raisea on short-term basis have, prima-facie, not been usea during the year for long term investment ana vice versa.

18. The Company has not made any preferential allotment of shares during the year.

19. The Company has not raised any money by way of issue of aebentures and therefore the question of creation of security in respect of the same does not arise.

20. The Company has not raisea any money by way of Public issue auring 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.

For L.VENKATASUBBU & CO.,

CHARTERED ACCOUNTANTS

FIRM REGN.NO.004627S

Sd/-

(L. VENKATASUBBU) PLACE : Coimbatore PARTNER

DATE : 29-05-2012 MEMBERSHIP No. 019791


Mar 31, 2011

1. We have audited the attached Balance Sheet of Ambika Cotton Mills Limited as at 31st March 2011 and also the Profit and Loss Account for the year ended on that date annexed thereto and the Cash Flow Statement for the year ended on that date. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we give 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 such books.

c. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account,

d. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the requirements of the 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 2011 and taken on record by the Board of Directors we report that none of the Directors is disqualified as on 31st March 2011 from being appointed as a Director in terms of clause (g) of sub-section (1) of 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 read 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 the Balance Sheet, of the state of affairs of the Company as at 31st March 2011.

ii. In the case of the Profit and Loss account, of the profit 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 THE AUDITORS' REPORT (Referred to in Paragraph 3 of our Report of even date)

1. In respect of its fixed assets

a. The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets on the basis of available information.

b. As explained to us, the fixed assets have been physically verified by the Management during the year at reasonable intervals, which in our opinion is reasonable, having regard to the 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 of substantial part of fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of its inventories

a. As explained to us, inventories have been physically verified by the Management at reasonable intervals during the year.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.

c. The Company has maintained proper records of inventories. As explained to us there were no material discrepancies noticed on physical verification of inventory as compared to book records.

3. The Company has neither granted nor taken any loans, secured or unsecured to / from Companies, firms or other parties covered in the register maintained U/s 301 of the Act.

4. In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods. During the course of our audit, we have not observed any major weakness in internal controls.

5. According to the Information & Explanations given to us, there is no transaction in excess of Rs. 5,00,000/- (Rupees Five Lakh only) in respect of any party which need to be entered in a Register in pursuance of Section 301 of the Companies Act, 1956 and hence the question of reasonable prices in respect of such transactions as regards to the prevailing market prices does not arise.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A, 58AA or any other relevant provisions of the Act.

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

8. The Central Government has prescribed the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956. We have broadly reviewed the accounts and records of the company in this connection 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 same.

9. According to the information and explanations given to us in respect of statutory and other dues:

a, The Company is 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, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year,

b. Disputed dues are as under

Name of the Nature of Amount Forum where dispute Rs. in Period Statute Demand is pending Lakh

Income - Tax Reopening of Assessment year Madras High Court, Act, 1961 assessment 26.12 1998-99 Chennai

Differential duty for 30.12 Assessment year Madras High Court, Customs ACT import of raw material 2002-03 Chennai

From 16.11. 1997 to Commissioner of Service Tax Freight charges 4.80 Central Excise 01.06.1998 (Appeals), Madurai

Customs Act Interest for Payment of 7.06 Assessment duty year CESTAT, Chennai. 2005-06 Central Excise Demand for used 2.18 04-03-2005 (date of CESTAT, Chennai spares on de-Pending de-Pending)

Service Tax Payment of Foreign 2.96 From 18.04. 2006 to CESTAT, Chennai Commission 29.02.2008

Payment of Licence 0.67 10.05.2006 Commissioner of Service Tax Central Excise (Appeals), Madurai

Customs Act De-Pending of Unit II 312.23 Assessment year Madurai Bench of from 100% EOU 2005-06 Madras High Court

De-Pending of Unit II 97.77 Assessment year Madurai Bench of Customs Act from 100 % EOU 2005-06 Madras High Court

EPF & MP PF dues made in 40.26 EPF Appellate Act, 1952 respect of apprentice From March 2006 Tribunal. New Delhi. covered by Standing To October 2007 Order of the prescribed authority

10. The Company has no accumulated losses and has not incurred cash losses during the Financial Year covered by our audit or in the immediately preceding Financial Year.

11. According to the information and explanations given to us the Company has not defaulted in repayment of dues to Financial Institutions or Banks.

12. According to the information and explanations given to us no loans and advances have been granted by the company 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, clause 4(xiii) of the Companies (Auditor's Report) Order 2003 is not applicable to the company.

14. The Company is not dealing or trading in shares, securities, debentures and other investments. However, in respect of investments made by the company in shares / mutual fund units in the nature of investments, the company holds the same in its own name.

15. According to the information and explanations given to us the Company has not given any guarantee for loans taken by others from Bank or Financial Institutions.

16. To the best of our knowledge and belief and according to the information and explanations given to us, term loans availed by the company were, prima-facie, applied by the company during the year for the purposes for which the loans were obtained.

17. According to the Cash Flow Statement and other records examined by us and the information and explanations given to us, on an overall basis, funds raised on short-term basis have, prima-facie, not been used during the year for long term investment and vice versa.

18. The Company has not made any preferential allotment of shares during the year.

19. The Company has not raised any money by way of issue of debentures and therefore the question of creation of security in respect of the same does not arise.

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.

For L.VENKATASUBBU & CO,,

CHARTERED ACCOUNTANTS

FIRM REGN.NO.004627S

Sd/-

(L. VENKATASUBBU)

PLACE : Coimbatore PARTNER

DATE : 30-05-2011 MEMBERSHIP No, 019791


Mar 31, 2010

1, We have audited the attached Balance sheet of Ambika Cotton Mills Limited as at 31st March 2010 and also the Profit and Loss Account for the year ended on that date annexed thereto and the cash flow statement for the year ended on that date, 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 a test basis, evidence supporting the amounts and disclosures in the financial statements, An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion,

3, As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we give 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 such books.

c. The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

d. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the requirements of the 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 2010 and taken on record by the Board of Directors we report that none of the Directors is disqualified as on 31st March 2010 from being appointed as a Director in terms of clause (g) of sub-section (1) of 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 read 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 the Balance Sheet, of the state of affairs of the Company as at 31st March 2010

ii. In the case of the Profit and Loss account, of the profit 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 THE AUDITORS REPORT (Referred to in Paragraph 3 of our Report of even date)

1. In respect of its fixed assets

a. The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets on the basis of available information.

b. As explained to us, the fixed assets have been physically verified by the Management during the year at reasonable intervals, which in our opinion is reasonable, having regard to the 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 of substantial part of fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of its inventories

a. As explained to us, inventories have been physically verified by the Management at reasonable intervals during the year.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.

c. The Company has maintained proper records of inventories. As explained to us.there were no material discrepancies noticed on physical verification of inventory as compared to book records.

3. The Company has neither granted nor taken any loans, secured or unsecured to / from Companies, firms or other parties covered in the register maintained U/s 301 of the Act.

4. In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods. During the course of our audit, we have not observed any major weakness in internal controls.

5. According to the Information & Explanations given to us, there is no transaction in excess of Rs. 5,00,000/- (Rupees Five Lakh only) in respect of any party which need to be entered in a Register in pursuance of Section 301 of the Companies Act, 1956 and hence the question of reasonable prices in respect of such transactions as regards to the prevailing market prices does not arise.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A, 58AA or any other relevant provisions of the Act.

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

8. The Central Government has prescribed the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956. We have broadly reviewed the accounts and records of the company in this connection 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 same.

9. According to the information and explanations given to us in respect of statutory and other dues:

a. The Company is 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, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year.

b. Disputed dues are as under

Name of the Nature of Amount Forum where dispute Rs. in Period Statute Demand is pending Lakh

Income - Tax Reopening of 26.12 Assessment year Madras High Court

Act, 1961 assessment 1998-99 Chennai

Differential duty for 30.12 Assessment year Madras High Court

cusToms act import of raw materia| 2002-03 Chennai

Customs Act interest for payment of 7.06 Assessment year CESTAT, Chennai

Customs Act De-bonding of Unit ii 312.23 Assessment year Madurai Bench of

from 100% EOU 2005-06 Madras High Court

De-bonding of Unit II 97.77 Assessment year Madurai Bench of

customs act from 100% EoU 2005-06 Madras High Court

From 16.11.1997 To Madras High Court

Service Tax Freight charges 4.80 01.06.1998 Chennai

EPF & MP PF dues made in EPF Appellate

Act 1952 respect of apprentice 40.26 From March 2006 Tribunal New De|hi

act, 1952 covered by Standing To October 2007

Order of the prescribed authority

10. The Company has no accumulated losses and has not incurred cash losses during the Financial Year covered by our audit or in the immediately preceding Financial Year,

11. According to the information and explanations given to us the Company has not defaulted in repayment of dues to Financial Institutions or Banks.

12. According to the information and explanations given to us no loans and advances have been granted by the company 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, clause 4(xiii) of the Companies (Auditors Report) Order 2003 is not applicable to the company.

14. The Company is not dealing or trading in shares, securities, debentures and other investments. However, in respect of investments made by the company in shares/ mutual fund units in the nature of investments, the company holds the same in its own name.

15. According to the information and explanations given to us the Company has not given any guarantee for loans taken by others from Bank or Financial Institutions.

16. To the best of our knowledge and belief and according to the information and explanations given to us, term loans availed by the company were, prima-facie, applied by the company during the year for the purposes for which the loans were obtained.

17. According to the Cash Flow Statement and other records examined by us and the information and explanations given to us, on an overall basis, funds raised on short-term basis have, prima-facie, not been used during the year for long term investment and vice versa.

18. The Company has not made any preferential allotment of shares during the year.

19. The Company has not raised any money by way of issue of debentures and therefore the question of creation of security in respect of the same does not arise.

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.

For L.VENKATASUBBU & CO.,

CHARTERED ACCOUNTANTS

FIRM REGN.NO.004627S

Sd/-

(L. VENKATASUBBU) PLACE : Coimbatore PARTNER

DATE : 31-07-2010 MEMBERSHIP No. 019791

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