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Auditor Report of Bhilwara Spinners Ltd.

Mar 31, 2015

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

Management's Responsibility for the Standalone Financial Statements

The Board of Directors of the Company are 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 gives 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 Companies (Accounts) Rules 2014, This responsibility 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; design, implementation and maintenance of adequate internal financial controls, that are 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 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 audut 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 a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial 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 the Company's managemment and Board of 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

Opinion

In our opinion and 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 31st March 2015, 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 Commpanies (Auditor's Report) Order,2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in 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 purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

c. the Balance sheet, statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account

d. in our opinion, the aforesaid financial sttements comply with the applicable 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 March 31,2015, and taken on record by the Board of Directors none of the directors is disqualified as on March 31, 2015 from being appointed as a director in terms of section 164 (2) of the Act

f. In our opinion and to the best of our information and according to the explanations given to us we report as under with respect to other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014::

i. The Company have pending litigations which would impact its financial position :- Refer Note No. 22

ii. The Company did not have any long-term contracts including derivative contracts; as such the question of commenting on any material foressable losses thereon does not arise

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

ANNEXURE TO THE AUDITORS' REPORT

Referred to in paragraph 1 under the heading of" Report on Other Legal and Regulatory Requirements" of our report of even date

1. Fixed Assets

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

ii) As explained to us, all the fixed assets have been physically verified by the management in phase periodical manner, which is in our opinion reasonable. No material discrepancies were noticed on such verification.

2. i) The Management has conducted physical verification of inventory at reasonable interval.

ii) The procedure of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

iii) The company is maintaining proper records of inventory and no material descrepancies were noticed on physical verification as compared to book records.

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

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

5. According to the information and explanation given to us the Company has not accepted any deposits from the public during the year and, consequently the directives issued by the Reserve Bank of India and the provision of Section 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed there under are not applicable.

6. According to the information given to us by the management Maintenance of cost records under section 148 (1) of The companies Act, 2013 are not prescribed for the product & Services of the Company.

7. Taxes and Duties :

i) According to the books and records as examined by us and according to the information and explanation given to us, in our opinion, the Company is generally regular in depositing with appropriate authorities,undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, custom duty, excise duty, cess and other statutory dues applicable to it.

ii) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax wealth tax, sales tax, customs duty, and excise duty were outstanding, at the year end for a period of more than six months from the date they become payable.

iii) According to the information and explantions given to us there are no disputed dues of wealth Tax Sales Tax, Income tax, Income tax Custom duty Service tax however, following disputed demands of Excise duty has not been deposited:

Name of the Nature of Amount Forum Statute Dispute involved where (Rs. in dispute is lacs) pending

Excise Custom Duty 58.11 Applellate Act, 1944 on Conversion authority of EPCG licence

8. At the end of the current financial year Company's accumulated losses have exceeded 50% of its net worth however, the Company has not incurred any cash losses in the current year and in the immediately preceding financial year.

9. In our opinion and according to the information and explanation given to us, the Company has not defaulted in repayment of dues to financial institutions and banks. The Company has not issued any debenture.

10. According to the information and explantions given to us, in our opinion the Company has not given any guarantee for loans taken by others from banks or financial instiutions.

11. Accrding to the information and explanations given to us, and based on the examination of the records of the company no term loan taken during the year.

12. To the best of our knowledge and according to the information and explanation given to us, no fraud by the Company and no material fraud on the company has been noticed or repoted during the year.

For CLB & ASSOCIATES Chartered Accountants F.R. No. 124305W

CA. S. Sarupria Partner M.No. - 035783

Place: Bhilwara Date : 29-5-2015


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of BHILWARA SPINNERS LTD ("the Company"), which comprise the Balance Sheet as at March 31,2013 and the Statement of Profit and Loss and Cash Flow Statment for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 "the Act") This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error,

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 misstatment 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 finacial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the 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 the best of our information and according to the explanations given to us, the financial Statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance sheet, of the state of affairs of the company as at March 31, 2013;

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

(C) in the case of the Cash Flow Statement, of the cash flows for year ended on that date.

Report on Other Legal and Regulatory Requirements

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

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

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books [and proper returns adequate for the purposes of our audit have been received from branches not visited by us];

c. the Balance sheet, statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account [and with the returns received from branches not visited by us];

d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act. 1956;

e. on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors none of the directors is disqualified as on March 31, 2013 from being appointed as a director in terms of clause (g) of sub-section (I) of section 274 of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS'' REPORT

Referred to in paragraph 1 under the heading of" Report on Other Legal and Regulatory Requirements" of our report of even date

Fixed Assets

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

ii) As explained to us, all the fixed assets have been physically verified by the management in phase periodical manner, which is in our opinion reasonable. No material discrepancies were noticed on such verification.

iii) In our opinion the substantial part of fixed assets has been disposed off by the company however according to the information and explanation given to us the going concern status of the Company is not affected.

1. i) The Management has conducted physical verification of inventory at reasonable interval.

ii) The procedure of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

iii) The company is maintaining proper records of inventory and no material descrepancies were noticed on physical verification as compared to book records.

2. The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

3. In our opinion and according to the information and explanations given to us, there are adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, we have not observed any major weakness in such internal control system.

4. In our opinion and according to the information and explanations given to us and record examined by us there was no transaction in pursuance of such contract with parties exceeding in value Rupees five lakhs have been made.

5. According to the information and explanation given to us the Company has not accepted any deposits from the public during the year and, consequently the directives issued by the Reserve Bank of India and the provision of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under are not applicable.

6. In our opinion the company has no internal audit system commensurate with the size and nature of its business.

7. According to the information given to us by the management Maintenance of cost records under section 209(1) (d) of The companies Act, 1956 are not applicable to the company.

8. Taxes and Duties :

i) According to the books and records as examined by us and according to the information and explanation given to us, in our opinion, the Company is generally regular in depositing with appropriate authorities,undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, custom duty, excise duty, cess and other statutory dues applicable to it.

ii) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax wealth tax, sales tax, customs duty, and excise duty were outstanding, at the year end for a period of more than six months from the date they become payable.

iii)As at 31st March 2013, according to the records of the company and the information and explanation given to us, the following are the particulars of dues on account of Sales Tax, Income tax, Custom duty and Excise duty, as applicable, that have not been deposited on account of disputes :

Name of the Nature of Amount Forum Statute Dispute involved where (Rs. in dispute is lacs) pending

Excise Custom Duty 58.11 Applellate Act, 1944 on Conversion authority of EPCG licence

9. At the end of the current financial yearCompany''s accumulated losses have exceeded 50% of its net worth however, the Company has not incurred any cash losses in the current year and in the immediately preceding financial year.

10. Based on the audit procedures and according to the records of the Company examined by us and the information and explanations given to us, the company has not defaulted in repayment of dues to bank. The company has neither taken any loans from a financial institution nor issued any debentures.

11. Based on our examination of records and information and explanation given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provision of the clause 4 (xii) of the Order are not applicable to the company.

12. The Company is not a chit fund / Nidhi/ Mutual benefit fund/ Society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

13. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities.

14. As per the information and explanations given to us, in our opinion the Company has not given any guarantee for loans taken by others from banks or financial institutions.

15. Based on the examination of books of accounts no term loans taken during the year.

16. According to information and explanations given to us and on overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

17. The Company has not made any preferential allotment of shares to the Parties or companies covered in the register maintained under Section 301 of The Companies Act, 1956.

18. The Company has not issued any debentures during the year and there are No debentures outstanding on at the year end, therefore the question of creation of Securities does not arise.

19. The Company has not raised any money through a public issue during the year.

20. According to the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year.



For CLB & ASSOCIATES

Chartered Accountants

F.R. No. 124305W



CA. S. Sarupria

Partner

M.No. - 035783



Place: Bhilwara

Date : 28-5-2013


Mar 31, 2011

1. We have audited the attached Balance Sheet of BHILWARA SPINNERS LTD., as at 31 st March, 2011, the Profit and Loss Account and the cash flow statement for the year ended 31 st March 2011 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 bases 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) order, 2003 (Order) issued by the Company Law Board in terms of sub- section (4A) of section 227 of the Companies Act, 1956 and on the basis of such checks as considered appropriate and according to the information and explanation given to us during the course of audit, we annex hereto a Statement on the matters specified in Paragraphs 4 and 5 of the. said Order.

4. Further to our comments in the Annexure referred to above, we report that:

i). 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.

ii). In our opinion, proper books of account, as required by law, have been kept by the Company, so far, as appear from our examination of those books;

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

iv). In our opinion, the Balance Sheet, Profit and Loss Account dealt with 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 31,2011, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2011 from being appointed as 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 read with notes thereon, gives the information required by the Companies Act, 1956 in the manner so required and give a true and fair view: -

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011; and

b) In the case of the statement of Profit & Loss, profit of the year ended on that date;

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

ANNEXURE TO THE AUDITORS' REPORT

(Annexure referred to In paragraph 3 of our report of even date to the shareholders of Bhilwara Spinners Limited on the accounts for the year ended 31st March, 2011)

1. Fixed Assets

i) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets,

ii) As explained to us, all the fixed assets have been physically verified by the management In phase periodical manner, which Is In our opinion reasonable. No material discrepancies were noticed on such verification.

iii) In our opinion the substantial part of fixed assets has been disposed off by the company however according to the information and explanation given to us the going concern status of the Company is not affected.

2. The Company does not have any Stock during the year hence paragraphs 2 (a), 2(b), 2 (c) of the order, are not applicable.

3. The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, we have not observed any major weakness in such internal control system.

5. a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangement that need to be entered into the register maintained under Section 301 of the Companies Act, 1956, have been so entered.

b) In our opinion and according to the Information and explanations given to us aforesaid transaction exceeding the aggregate amount of Rs. five lacs In respect of each party made during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. According to the Information and explanation given to us the Company has not accepted any deposits from the public during the year and, consequently the directives Issued by the Reserve Bank of India and the provision of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under are not applicable,

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

8. Maintenance of cost records under section 209(1) (d) of The companies Act, 1956 are not applicable to the company.

9. Taxes and Duties:

i) According to the books and records as examined by us and according to the information and explanation given to us, in our opinion, the Company is generally regular in depositing with appropriate authorities, undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, wealth-tax, custom duty, excise duty, cess and other statutory dues applicable to it.

ii) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax wealth tax, sales tax, customs duty, and excise duty were outstanding, at the year end for a period of more than six months from the date they become payable.

iii) As at 31st March 2011, according to the records of the company and the information and explanation given to us, the following are the particulars of dues on account of Sales Tax, Income tax, Custom duty and Excise duty, as applicable, that have not been deposited on account of disputes :

Name of the Nature of Amount Forum Statute Dispute Involved where (Rs. in dispute is lacs) pending

Central Excise Excise 58.11 Applellate Act 1944 Duty authority/ High Court

10. At the end of the current financial year Company's accumulated losses have exceeded 50% of its net worth however, the Company not incurred cash losses in the current year but in the immediately preceding financial year.

11. Based on the audit procedures and according to the records of the company examined by us and the information and explanations given to us, the company has not defaulted in repayment of dues to bank. The company has neither taken any loans from a financial institution nor issued any debentures.

12. Based on our examination of records and information and explanation given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provision of the clause 4 (xii) of the order are not applicable to the company.

13. The Company is not a chit fund / Nidhi/ Mutual benefit fund/ Society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities.

15. As per the information and explanations given to us, in our opinion the Company has not given any guarantee for loans taken by others from banks or financial institutions.

16. Based on the examination of books of accounts no term loans taken during the year.

17. According to information and explanations given to us and on overall examination of the balance sheet of the Company,

we report that no funds raised on short-term basis have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to the Parties or companies covered in the register maintained under Section 301 of The Companies Act, 1956

19. The Company has not issued any debentures during the year and there are No debentures outstanding on at the year end, therefore the question of creation of Securities does not arise.

20. The Company has not raised any money through a public issue during the year.

21. According to the information and explanations given to us. we report that no fraud on or by the Company has been noticed or reported during the year.

For CLB & ASSOCIATES Chartered Accountants

(S. SARUPRIA) Partner M.No. - 035783

Place : Bhilwara Dated : 14-5-2011


Mar 31, 2010

We have audited the attached balance sheet of Bhilwara Spinners 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 as 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.

We conducted our audit in accordance with auditing standard 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.

As required by the Companies (Auditors Report) Order, 2003 (as amended by the Companies (Auditors Report) (Amendment) Order,2004 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we give our comments in the annexure on the matters specified in paragraphs 4 and 5 of the said order.

Further to our comments in the Annexure referred to 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 accounts 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 accounts;

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

(v) On the basis of written representation 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;

In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with Accounting Policies & notes given in schedule 15, give the information required by Companies Act, 1956, in the manner so required and give true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; and

(ii) In the case of Profit and Loss account, of the loss for the year ended on that date.

(iii) In the case of Cash Flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

(Annexure referred to in paragraph 3 of our report of even date to the shareholders of Bhilwara Spinners Limited on the accounts for the year ended 31st March, 2010.)

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

(b) As explained to us, major fixed assets have been physically verified by the management at such intervals as considered appropriate by the Management. We have been explained that no material discrepancies were noticed on such verification as compared to book records.

(c) Inouropinion, Fixed assets disposed off during the year were not substantial and therefore do not affect the going concern assumption.

(ii) (a) We have been explained that the inventory

with the company except lying with the outside parties has been physically verified by the management at the year end;

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business;

(c) In our opinion the company is maintaining proper records of inventory and as far as we could ascertain and according to the information and explanations given to us, no material discrepancies were noticed on physical verification of the Inventory;

(iii) (a) 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. Accordingly sub-clauses (b), (c) and (d) are not applicable.

(b) The company had taken unsecured loan from one company covered in the register maintained under Section 301 of the Companies Act, 1956 in the past. The maximum amount involved during the year was Rs. 840 Lacs and the same was squared off during the year.

(c) In our opinion, the rate of interest and other terms and conditions of the aforesaid unsecured loan taken by the company are not prima facie prejudicial to the interest of the company;

(d) In our opinion and according to the information and explanations given to us, the payment of the principle amount and interest thereon are also regular.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination and according to the information and explanations given to us, we have neither came across nor have been informed of any instance of major weakness in the aforesaid internal control procedures.

(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered in to the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us aforesaid transactions exceeding the aggregate amount of Rs. five lacs in respect of each party made during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public and consequently, the directives issued by the Reserve bank of India and the provision of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under are not applicable.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the order made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed accounts and records have been made & maintained. We have however, not made a detailed examination of such books and records to determine whether these are accurate or complete.

(ix) (a) According to the information and explanation given to us and on the basis of our examination of the books of account, the company has been 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, Custom Duty, Excise Duty, cess and any other material statutory dues applicable to it with the appropriate authorities. According to information & explanations given to us, no undisputed amounts in respect of the above were in arrears, as at 31st March, 2010 for a period of more than six month from the date they become payable.

(b) As at 31st March, 2010, according to the records of the company and the information and explanations given to us, the following are the particulars of dues on account of Sales Tax, Income Tax, Customs Duty and Excise Duty, as applicable, that have not been deposited on account of disputes:



Name of the Nature of Amount Forum

Statute Dispute Involved where

(Rs. In dispute is lacs) pending

Customs Custom Duty 226.20 CESTAT

Act, 1964 on conversion of EPCG licence



(x) At the end of the current financial year companys accumulated losses have exceeded 50 % of the net worth of the Company.

The company has incurred cash losses during the current financial year as well as in the immediate previous year also.

(xi) According to the information and explanation given to us, we are of the opinion that the company has not defaulted in repayment of dues to the financial institutions or banks

(xii) The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provision s of clause 4(xiii) of the Companies (Auditors report) Order, 2003 (as amended) are not applicable to the company.

(xiv) On the basis of examination of books of accounts and according to information and explanations given to us, the company is not dealing or trading in shares, securities, debentures and other Investments.

(xv) As per the information and explanations given to us, during the year company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The Company has not obtained any fresh term loans from Banks or Financial Institutions during the current financial year.

(xvii) According to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term Investment.

(xviii) According to the information and explanation given to us, the company has not made any preferential allotment of shares to parties or companies covered in register maintained under Section 301 of the Act.

(xix) The company has not issued any debentures, consequently the provisions of clause 4(xix) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the company

(xx) The company has not raised any money by means of public issue.

(xxi) According to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the year.



For K S M N & Company

Chartered Accountants

Firms Regn No 001075N

Harish Gupta

Partner

Membership No. 98336

Place : New Delhi

Date :29th April, 2010