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Auditor Report of Amit Spinning Industries Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of Amit Spinning Industries Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and 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 Financial Statements

The Company''s 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") read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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 the 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 the 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 entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the 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

Attention is drawn to:

(a) Note No. 29 with respect to recoverability of amount of 1,93,46,572 in respect of duty drawbacks.

(b) Note No. 33 with respect to realizability of amount of 8,78,24,766 in respect of deferred tax asset.

We report that had the Company decided to write off the sums as mentioned above, the loss for the year would have been greater by Rs.10,71,71,338 and would have amounted to Rs.20,33,73,207 (as against the reported figure of Rs.9,62,01,869), with a consequential effect on Accumulated losses, Loans and Advances and Deferred Tax Asset.

Without qualifying our opinion, attention is also drawn to Note No.30 regarding preparation of accounts on a going concern basis due to reasons indicated therein.

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

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014;

(b) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date, and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company 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 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, 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 referred to in sub-section (3C) of section 211 of 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 the written representations received from the directors as on 31st March, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on 31st 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 AUDITORS'' REPORT (Referred to in paragraph 3 of our report of even date)

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

b) According to the information and explanations given to us, the Company has a procedure to carry out physical verification of fixed assets by the management, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. The discrepancies noticed on physical verification were not material and have been properly dealt with in the books account.

c) During the year, the Company has not disposed off substantial part of its fixed assets, so as to affect its going concern. ii) a) The company has conducted physical verification of inventory at reasonable intervals during the year.

b) In our opinion and according to information and explanations given to us, the procedures for physical verification of inventory followed by the management are reasonable having regard to the size of the Company and nature of its business.

c) The company is maintaining proper records of inventory. The discrepancies noticed on physical verification were not material and have been properly dealt with in the books account.

iii) a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

b) As the Company has not granted any such loans, provisions of clause 4(iii)(b), (iii)(c) and (iii)(d) of the Order are not applicable to the Company.

c) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Therefore, the provisions of 4(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 an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing major weaknesses in such internal controls.

v) a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that particulars or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section; and b) during the year, there are no such transactions made in pursuance of contracts or agreements entered in the register maintained under section 301 of the companies Act, 1956, exceeding the value of Rupees Five Lakhs in respect of any party during the year and hence, the provisions of clause 4(v)(b) of the Order are not applicable to 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 during the year. Therefore, the provisions of clause 4(vi) of the Order are not applicable to the Company.

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

viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 and are of opinion that prima facie, the prescribed accounts and records have been made and maintained.

We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix) (a)According to the information and explanations given to us and records examined by us, the Company is generally regular in depositing the 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 others material statutory dues with the appropriate authority.

(b)According to the information and explanations given to us, there are no arrears of undisputed statutory dues as on March 31, 2014, for a period of more than six months from the date they become payable. (c) According to the information and explanations given to us, details of dues of Excise Duty, which have not been deposited on account of any dispute are given below:

S. No. Name of the Statute Nature of the dues Amount (in Rupees)

1 Maharashtra Value Sales Tax and penalty 10,44,000 Added Tax (net of payment of Rs.2,00,000 under protest)

2 Maharashtra Value Sales Tax and penalty 9,64,390 Added Tax (net of payment of Rs.16,90,614 by way of adjustment of refund)



Name of the Statue Period to which Forum where dispute the amount relates pending

Maharashtra Value Added Tax 2004-05 First Appellate Authority

Maharashtra Value Added Tax 2009-10 First Appellate Authority

x) The accumulated losses at end of financial year are more than 50% of its net worth. The Company incurred cash loss before working capital changes amounting to Rs.1,35,91,753 in the year under audit whereas there was no cash loss during the preceding financial year.

xi) According to the information and explanations given to us and records examined by us, we are of the opinion that the Company has defaulted in repayment of the dues to a bank as infra. The Company did not have outstanding dues to any financial institution and did not have outstanding debentures during the year.

(Rs. in lacs)

Bankers Type of Loan OutStanding Overdue Overdue as on 31.3.2014 Interest Principal

Axis Bank Term Loan 1615.08 13.70 81.38 (10% p.a.)

Axis Bank FITL (10% p.a.) 80.86 0.69 4.05

Axis Bank WCTL (10% p.a.) 70.90 0.60 3.30

UCO Bank WCTL 122.95 35.56 37.39

Grand Total 1889.80 50.55 126.13

Bankers Default status

Axis Bank The overdue principal as on 31.03.2014 has not been paid till balance sheet date. However, the interest has Axis Bank been paid (Except interest of Rs.2,73,582 on term loan Axis Bank of Rs.16.15 crores)

UCO Bank The Account has become NPA and the matter is before BIFR for restructuring.

Grand Total

Further, as informed to us, the loan facilities availed from UCO Bank as working capital term loan (outstanding balance as on 31.3.2014 amounting to Rs.1.23 crores) and cash credit facilities (outstanding balance as on 31.3.2014 amounting to Rs.8.28 crores) have become non-performing asset (NPA) for the lender as the company has not paid the dues within 90 days of payments being falling due.

xii) According to the information 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) In our opinion and according to the information and explanations given to us the Company is not a chit fund or Nidhi/ mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the order are not applicable to the Company.

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. Therefore, the provisions of clause 4(xiv) of the order are not applicable to the Company.

xv) According to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks or financial institutions during the year under audit, are not prejudicial to the interest of the Company.

xvi) In our opinion and according to information and explanations given to us, the term loans have been applied for the purpose for which these were raised.

xvii) On the basis of overall examination of the Balance Sheet of the Company and according to the information and explanations given to us, in our opinion the funds raised on short-term basis have not been used for long-term investment.

xviii) According to the information and explanations given to us, during the period under reference the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

xix) According to the information and explanations given to us, the Company has not issued any debentures. Therefore, the provisions of clause 4(xix) of the order are not applicable to the Company.

xx) According to the information and explanations given to us, the Company has not raised any money by public issues during the year under audit. Therefore, the provisions of clause 4(xx) of the order are not applicable to the Company.

xxi) Based on the audit procedures performed and information and explanations given to us by the management, we report that no material fraud on or by the Company has been noticed or reported during the year under audit.

For Sunil Jain & Co.

Chartered Accountants

(Registration No. 003855N)

Sd/-

Sanchit Jain

Place New Delhi Partner

Date : May 26, 2014 Membership No. 511714


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Amit Spinning Industries Limited ("the Company"), which comprise the Balance Sheet as at 31st March , 2013, the Statement of Profit and Loss and 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 Financial Statements

The Company''s 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 the 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 the 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 the 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

Attention is drawn to:

(a) Note No. 29 with respect to recoverability of amount of 1,93,46,572 in respect of duty drawbacks.

(b) Note No. 33 with respect to reliability of amount of 8,78,24,766 in respect of deferred tax asset.

We report that had the Company decided to write off the sums as mentioned above, the loss for the year would have been greater by Rs.10,71,71,338 and would have amounted to Rs.13,76,91,353 (as against the reported figure of Rs.3,05,20,015), with a consequential effect on Accumulated losses, Loans and Advances and Deferred Tax Asset.

Without qualifying our opinion, attention is also drawn to Note No.30 regarding preparation of accounts on a going concern basis due to reasons indicated therein.

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

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2013;

(b) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date, and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company 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 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, 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 referred to in sub-section (3C) of section 211 of the Act.

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

ANNEXURE TO THE AUDITORS'' REPORT

(Referred to in paragraph 3 of our report of even date)

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

b) According to the information and explanations given to us, the Company has a procedure to carry out physical verification of fixed assets by the management, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. The discrepancies noticed on physical verification were not material and have been properly dealt with in the books account.

c) During the year, the Company has not disposed off substantial part of its fixed assets, so as to affect its going concern.

ii) a) The company has conducted physical verification of inventory at reasonable intervals during the year.

b) In our opinion and according to information and explanations given to us, the procedures for physical verification of inventory followed by the management are reasonable having regard to the size of the Company and nature of its business.

c) The company is maintaining proper records of inventory. The discrepancies noticed on physical verification were not material and have been properly dealt with in the books account.

iii) a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

b) As the Company has not granted any such loans, provisions of clause 4(iii)(b), (iii)(c) and (iii)(d) of the Order are not applicable to the Company.

c) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Therefore, the provisions of 4(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 an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing major weaknesses in such internal controls.

v) a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that particulars or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section; and b) during the year, there are no such transactions made in pursuance of contracts or agreements entered in the register maintained under section 301 of the companies Act, 1956, exceeding the value of Rupees Five Lakhs in respect of any party during the year and hence, the provisions of clause 4(v)(b) of the Order are not applicable to 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 during the year. Therefore, the provisions of clause 4(vi) of the Order are not applicable to the Company.

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

viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 and are of opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix) (a)According to the information and explanations given to us and records examined by us, the Company is generally regular in depositing the 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 others material statutory dues with the appropriate authority.

(b)According to the information and explanations given to us, there are no arrears of undisputed statutory dues as on 31st March 2013, for a period of more than six months from the date they become payable.

(c) According to the information and explanations given to us, details of dues of Excise Duty, which have not been deposited on account of any dispute are given below:

S. No. Name of the Statute Nature of the dues Amount Period to which Forum where dispute (in Rupees) the amount relates pending

1 Maharashtra Value Sales Tax and penalty 8,44,000 2004-05 First Appellate Authority Added Tax (net of payment of Rs.2,00,000 under protest)

2 Employee''s Provident Damages and Interest - 2003-06 BIFR Fund and Miscellaneous (net of payment of Provisions Act, 1952 Rs.15,94,349 under

protest)

x) The accumulated losses at end of financial year are more than 50% of its net worth. There was no cash loss in the year under audit whereas the Company incurred cash loss before working capital changes Rs.18,18,94,013 during the preceding financial year.

xi) According to the information and explanations given to us and records examined by us, we are of the opinion that the Company has defaulted in repayment of the dues to a bank as infra. The Company did not have outstanding dues to any financial institution and did not have outstanding debentures during the year.

Bankers Type of Loan Out Standing Overdue Overdue Default status as on 31.3.2012 Interest Principal

Axis Bank Term Loan 1,970.75 50.06 74.69 The overdue principal and interest as on 31.03.2013 (10% p.a.) has not been paid till balance sheet date.

Axis Bank FITL (10% p.a.) 98.66 2.53 3.73 The overdue principal and interest as on 31.03.2013 has not been paid till balance sheet date.

Axis Bank WCTL (10% p.a.) 86.26 2.21 3.05 The overdue principal and interest as on 31.03.2013 has not been paid till balance sheet date.

UCO Bank WCTL 106.75 19.36 24.89 The overdue principal and interest as on 31.03.2013 has not been paid till balance sheet date.

Grand Total 2,262.42 74.17 106.35

Further, as informed to us, the loan facilities availed from UCO Bank as working capital term loan (outstanding balance as on 31.3.2013 amounting to Rs.1.07 crores) and cash credit facilities (outstanding balance as on 31.3.2013 amounting to Rs.7.15 crores) have become non-performing asset (NPA) for the lender as the company has not paid the dues within 90 days of payments being falling due.

xii) According to the information 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) In our opinion and according to the information and explanations given to us the Company is not a chit fund or Nidhi/ mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the order are not applicable to the Company.

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. Therefore, the provisions of clause 4(xiv) of the order are not applicable to the Company.

xv) According to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks or financial institutions during the year under audit, are not prejudicial to the interest of the Company.

xvi) In our opinion and according to information and explanations given to us, the term loans have been applied for the purpose for which these were raised.

xvii) On the basis of overall examination of the Balance Sheet of the Company and according to the information and explanations given to us, in our opinion the funds raised on short-term basis have not been used for long-term investment.

xviii) According to the information and explanations given to us, during the period under reference the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

xix) According to the information and explanations given to us, the Company has not issued any debentures. Therefore, the provisions of clause 4(xix) of the order are not applicable to the Company.

xx) According to the information and explanations given to us, the Company has not raised any money by public issues during the year under audit. Therefore, the provisions of clause 4(xx) of the order are not applicable to the Company.

xxi) Based on the audit procedures performed and information and explanations given to us by the management, we report that no material fraud on or by the Company has been noticed or reported during the year under audit.

For Sunil Jain & Co.

Chartered Accountants

(Registration No. 003855N) Sd/-

Sanchit Jain

Place New Delhi Partner

Date : May 27, 2013 Membership No. 511714


Mar 31, 2012

1. We have audited the attached Balance Sheet of AMIT SPINING INDUSTRIES LIMITED as at March 31, 2012 and also the related Profit and Loss Account and Cash Flow Statement of the Company 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 auditing 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 sub section (4A) of section 227 of the Companies Act, 1956 ("the Act"), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

4. Attention is drawn to:

(a) Note No. 29 with respect to recoverability of amount of Rs. 1,93,46,572 in respect of duty drawbacks.

(b) Note No. 33 with respect to realizability of amount of Rs. 8,78,24,766 in respect of deferred tax asset.

We report that had the Company decided to write off the sums as mentioned above, the loss for the year would have been greater by Rs. 10,71,71,338 and would have amounted to Rs. 40,73,41,899 (as against the reported figure of Rs. 30,01,70,561), with a consequential effect on Accumulated losses, Loans and Advances and Deferred Tax Asset.

5. Without qualifying our opinion, attention is also drawn to Note No.30 regarding preparation of accounts on a going concern basis due to reasons indicated therein.

6. Further to our comments referred to in paragraphs 3, 4 and 5 above, we report that:-

(i) 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;

(ii) 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;

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

(iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;

(v) On the basis of written representations received from the directors as on March 31, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements give the information required by the Act in the manner so required and subject to our remarks in paragraph 4 above, 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, 2012;

b) In the case Profit and Loss Account, of loss for the year ended on that date;

c) In 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)

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

b) According to the information and explanations given to us, the Company has a procedure to carry out physical verification of fixed assets by the management, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. The discrepancies noticed on physical verification were not material and have been properly dealt with in the books account.

c) During the year, the Company has not disposed off substantial part of its fixed assets, so as to affect its going concern.

ii) a) The company has conducted physical verification of inventory at reasonable intervals during the year.

b) In our opinion and according to information and explanations given to us, the procedures for physical verification of inventory followed by the management are reasonable having regard to the size of the Company and nature of its business.

c) The company is maintaining proper records of inventory. The discrepancies noticed on physical verification were not material and have been properly dealt with in the books account.

iii) a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

b) As the Company has not granted any such loans, provisions of clause 4(iii)(b), (iii)(c) and (iii)(d) of the Order are not applicable to the Company.

c) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Therefore, the provisions of 4(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 an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing major weaknesses in such internal controls.

v) a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that particulars or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section; and

b) during the year, there are no such transactions made in pursuance of contracts or agreements entered in the register maintained under section 301 of the companies Act, 1956, exceeding the value of Rupees Five Lakhs in respect of any party during the year and hence, the provisions of clause 4(v)(b) of the Order are not applicable to 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 during the year. Therefore, the provisions of clause 4(vi) of the Order are not applicable to the Company.

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

viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 and are of opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix) (a) According to the information and explanations given to us and records examined by us, the Company is generally regular in depositing the 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 others material statutory dues with the appropriate authority.

(b) According to the information and explanations given to us, there are no arrears of undisputed statutory dues as on March 31, 2012, for a period of more than six months from the date they become payable.

(c) According to the information and explanations given to us, details of dues of Excise Duty, which have not been deposited on account of any dispute are given below. S.No. Name of the Statute Nature of the dues Amount (in Rupees)

1. Central Excise Act, Excise duty and 80,408 1994 penalty

2. Maharashtra Value Sales Tax and penalty 8,44,000 Added Tax (net of payment of Rs. 2,00,000 under protest)

3. Employee's Provident Damages and Interest 15,94,349 Fund and Miscellaneous Provisions Act, 1952

S.No. Period to which Forum where dispute the amount relates pending

1. 2001-02 Central Excise and Service Tax Appellate Tribunal

2. 2004-05 First Appellate Authority

3. 2003-06 First Appellate Authority

x) The accumulated losses at end of financial year are more than 50% of its net worth. The Company has incurred cash loss before working capital changes Rs. 18,18,94,013 during the financial year covered by our audit whereas there was no cash loss in the immediately preceding financial year.

xi) According to the information and explanations given to us and records examined by us, we are of the opinion that the Company has defaulted in repayment of the dues to a bank as infra. The Company did not have outstanding dues to any financial institution and did not have outstanding debentures during the year.

(Rs. in lacs)

Bankers Type of Loan Out Standing Overdue Overdue as on 31.3.2012 Interest Principal

Axis Bank Term Loan 2270.98 58.10 67.80 (10% p.a.)

Axis Bank FITL (10% p.a.) 111.64 0.96 3.38

Axis Bank WCTL (10% p.a.) 99.37 2.57 3.00

UCO Bank WCTL 90.53 3.14 12.50

Grand Total 2572.52 64.77 86.68

Bankers Default status

Axis Bank The overdue principal and interest as on 31.03.2012 were paid on 30.06.2012

Axis Bank The overdue principal and interest as on 31.03.2012 were paid as on 30.06.2012

Axis Bank Out of the overdue principal and interest as on 31.03.2012, Rs. 5.25 lacs were paid as on 30.06.2012.

UCO Bank The overdue payments were unpaid as on date of signing of balance sheet.

xii) According to the information 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) In our opinion and according to the information and explanations given to us the Company is not a chit fund in Nidhi/ mutula benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the order are not applicable to the Company.

xiv) In our opinion and according to the information and explanations given to us the Company is not a dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the order are not applicable to the Company.

xv) According to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks or financial institutions during the year, are not prejudicial to the interest of the Company.

xvi) In our opinion and according to information and explanations given to us, the term loans have been applied for the purpose for which these were raised.

xvii) On the basis of overall examination of the Balance Sheet of the Company and according to the information and explanations given to us, in our opinion the funds raised on short-term basis have not been used for long-term investment.

xviii) According to the information and explanations given to us, during the period under reference the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

xix) According to the information and explanations given to us, the Company has not issued any debentures. Therefore, the provisions of clause 4(xix) of the order are not applicable to the Company.

xx) According to the information and explanations given to us, the Company has not raised any money by public issues during the year under reference. Therefore, the provisions of clause 4(xx) of the order are not applicable to the Company.

xxi) Based on the audit procedures performed and information and explanations given to us by the management, we report that no material fraud on or by the Company has been noticed or reported during the year under reference.



For Sunil Jain & Co. Chartered Accountants (Registration No. 003855N)

Sd/- Sanchit Jain Partner Membership No. 511714

Place New Delhi Date : August 7, 2012


Mar 31, 2010

1. We have audited the attached Balance Sheet of AMIT SPINNING INDUSTRIES LIMITED as at March 31, 2010 and also the related Profit and Loss Account and Cash Flow Statement of the Company for the year 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 auditing 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 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. Attention is drawn to Notes 5 and 6 on Schedule XXII (Notes to the accounts) with respect to recoverability of amounts from certain debtors and loans and advances.

5. Without qualifying our opinion, attention is also drawn to Note 7 on Schedule XXII (Notes to the accounts) regarding preparation of accounts on a going concern basis due to reasons indicated therein.

6. Further to our comments referred to in paragraphs 3, 4 and 5 above, we report that: -

(i) 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;

(ii) 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;

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

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

(v) On the basis of written representations received from the directors as on March 31, 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

(vi) 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:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;

b) In the case Profit and Loss Account, of loss for the year ended on that date;

c) In 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)

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

b) According to the information and explanations given to us, the Company has a procedure to carry out physical verification of fixed assets by the management, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. The discrepancies noticed on physical verification were not material and have been properly dealt with in the books account.

c) During the year, the Company has not disposed off substantial part of its fixed assets, so as to affect its going concern.

ii) a) The company has conducted physical verification of inventory at reasonable intervals during the year.

b) In our opinion and according to information and explanations given to us, the procedures for physical verification of inventory followed by the management are reasonable having regard to the size of the Company and nature of its business.

c) The company is maintaining proper records of inventory. The discrepancies noticed on physical verification were not material and have been properly dealt with in the books account.

iii) a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

b) As the Company has not granted any such loans, provisions of clause 4(iii)(b), (iii)(c) and (iii)(d) of the Order are not applicable to the Company.

c) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Therefore, the provisions of 4(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 an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing major weaknesses in such internal controls.

v) a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that particulars or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register requied to be maintained under that section; and

b) during the year, there are no such transactions that made in pursuance of need to be entered in the register maintained under section 301 of the companies Act, 1956 and hence, the provisions of clause 4(v)(b) of the Order are not applicable to 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 during the year. Therefore, the provisions of clause 4(vi) of the Order are ot applicable to the Company.

vii) In our opnion, the Company has an internal audit system commensurate with its size and nature of its business

viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 and are of opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix) (a) According to the information and explanations given to us and records examined by us, the Company is generally regular in depositing the 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 others material statutory dues with the appropriate authority.

(b) According to the information and explanations given to us, there are no arrears of undisputed statutory dues as on March 31, 2010, for a period of more than six months from the date they become payable.

(c) According to the information and explanations given to us, details of dues of Excise Duty and Income Tax, which have not been deposited on account of any dispute are given below:

S.No. Name of the Statute Nature of the dues Amount Period to which Forum where dispute pending (in Rupees) the amount relates

1 Central Excise Act, 1944 Excise duty 80,408 2001-02 Central Excise and Service Tax and penalty Appellate Tribunal

2 Central Excise Act, 1944 Excise duty 7,774,241 2004-05 Jurisdicti onal Officer, Central Excise

3 Central Sales Act, 1956 Sales Tax demand due to 10,19,645 2002-03 First Appe llate Authority non-submission of C forms



x) The accumulated losses at end of financial year are more than 50% of its net worth. The Company has not incurred cash loss before working capital changes during the financial year covered by our audit. However, the Company incurred cash loss before working capital changes of Rs.1,87,58,956 in the immediately preceeding financial year.

xi) According to the information and explanations given to us and records examined by us, we are of the opinion that the Company has not defaulted in repayment of the dues to a financial institution or bank.

xii) According to the information 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) In our opinion and according to the information and explanations given to us the Company is not a chit fund ir Nidhi/ mutula benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the order are not applicable to the Company.

xiv) In our opinion and according to the information and explanations given to us the Company is not a dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the order are not applicable to the Company.

xv) According to the information and explanations given to us, the Company has not given guarantee for loans taken by others and thus, the provisions of clause 4(xv) of the order are not applicable to the Company.

xvi) In our opinion and according to information and explanations given to us, the term loans have been applied for the purpose for which these were raised.

xvii) On the basis of overall examination of the Balance Sheet of the Company and according to the information and explanations given to us, in our opinion the funds raised on short-term basis have not been used for long-term investment.

xviii) According to the information and explanations given to us, during the period under reference the Company has not made prefertial allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956..

xix) According to the information and explanations given to us, the Company has not issued any debentures. Therefore, the provisions of clause 4(xix) of the order are not applicable to the Company.

xx) According to the information and explanations given to us, the Company has not raised any money by public issues during the year under reference. Therefore, the provisions of clause 4(xx) of the order are not applicable to the Company.

xxi) Based on the audit procedures performed and information and explanations given to us by the management, we report that no material fraud on or by the Company has been noticed or reported during the year under reference.



For Sunil Jain & Co.

Chartered Accountants

(Registration No. 003855N)

Sanchit Jain

Place New Delhi Partner

Date : August 9, 2010 Membership No. 511714

 
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