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Auditor Report of Bombay Dyeing & Manufacturing Company Ltd.

Mar 31, 2016

We have audited the accompanying standalone financial statements of THE BOMBAY DYEING AND MANUFACTURING COMPANY LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2016, Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report 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 standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the standalone financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2016 and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to:

1) Note 37 to the financial statements regarding agreements to sell certain apartments in the proposed residential towers being constructed at Island City Centre to SCAL Services Ltd., a Group Company, in terms of various MOUs entered between the companies till March 2016. The Company has during the year recognized net revenues of Rs, 239.26 crores (2014-15: Rs, 301.11 crore) and resultant profit before tax ofRs, 158.63 crore (2014-15: Rs, 224.49 crore) on sale of said apartments to SCAL.

2) Note 41 to the financial statements regarding the remuneration paid to the Managing Director in excess of the limits prescribed under Section 197 read with Schedule V of the Act by Rs,4.40 crore, due to inadequacy of profits. The excess remuneration is subject to the approval of the Central Government for which an application has been made.

Our opinion is not modified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of sub- section (11) of section 143 of the Act, we give in Annexure ''A'' a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2) As required by section 143(3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

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

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) On the basis of written representations received from the directors as on March 31, 2016 and taken on record by the Board of Directors, none of the directors is disqualified as on

March 31, 2016 from being appointed as a director in terms of section 164(2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financial reporting of the company and the operating effectiveness of such controls, refer to our separate report in Annexure ''B''; and,

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

i. The Company has disclosed the impact of pending litigations on its financial position in the financial statements - Refer Notes 31 and 40 to the standalone financial statements.

ii. The Company does not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

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

Referred to in Para 1 ''Report on Other Legal and Regulatory Requirements'' of our Report to the members of the Company on the standalone financial statements for the year ended March 31, 2016:

Statement on Matters Specified in paragraphs 3 and 4 of the Companies (Auditors Report) Order, 2016

1. (a) The Company has maintained records showing full

particulars, including quantitative details and situation of fixed assets. The records of certain assets need to be assimilated to make identification possible.

(b) The Company has a program for physical verification of fixed assets in a phased manner. In our opinion, the period of verification is reasonable, having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed in respect of the assets physically verified during the year.

(c) According to the information and explanation given to us and based on the documents and records produced before us, the title deeds of immoveable properties are held in the name of the company.

2. (a) The Management has conducted physical verification of

inventory (excluding stocks lying with third parties) at reasonable intervals. In respect of inventory lying with third parties, these have substantially been confirmed by them.

(b) The discrepancies noticed on verification between physical stock and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3. The Company has granted unsecured loans / deposits to two companies and an interest free shareholders'' deposit to a jointly controlled entity covered in the register maintained under section 189 of the Companies Act.

(a) The terms and conditions of the grant of such loans are not prima facie prejudicial to the Company''s interest;

(b) The principal amount and interest on the loans / deposits have been repaid regularly, as stipulated. The shareholder''s deposit is free of interest and repayment thereof was due on December 31, 2015.

(c) The shareholder''s deposit is overdue for more than ninety days. The Company has made an application to Reserve Bank of India for further extension of five years which is pending.

4. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act in respect of grant of loans, making investments and providing guarantees and securities, as applicable.

5. In our opinion and according to the information and explanations given to us, the Company has complied with directives issued by Reserve Bank of India and the provision of sections 73 to 76 or any other applicable provisions of the Act and The Companies (Acceptance of Deposits) Rules, 2014 with regard to the deposits accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal.

6. We have broadly reviewed the books of accounts and records maintained by the Company in respect of manufacture of products covered under the Rules made by the Central Government for maintenance of cost records, under section 148 (1) of the Companies Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

7. (a) According to the information and explanation given

to us and the records examined by us, the Company is generally regular in depositing undisputed statutory dues, including dues pertaining to provident fund, employees'' state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities. According to the information and explanations given to us, there are no undisputed dues which have remained outstanding as at the end of the financial year, for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of sales tax, income tax, custom duty, service tax, excise duty or cess which have not been deposited on account of any dispute, except as stated below:

No. Name of the statute Nature of dues Amount Period to which the (Rs, in crores) amount relates

1 Sales Tax and Value Sales tax 0.09 1999-2000 Added Tax MVAT 2.33 2008-09

CST 4.00 2008-09

2 Income Tax Act, 1961 Income tax 0.03 2007-08

Income tax 0.02 2008-09 3 The Customs Act, 1962 Interest on customs 0.95 1995-2012 duty

4 The Central Excise Act, Excise Duty 0.16 1989-90 to 1995-96 1944

Excise Duty 0.62 1995-96 to 1996-97

Excise Duty 0.03 1997-1998

Excise Duty 0.09 2000-2001

Service Tax 0.76 2003-04 to 2005- 06 Interest on excise duty 0.20 2002-2006

5 Municipal Corporation Octroi 2.16 2007-2008 of Greater Mumbai Octroi Rules, 1965





NAME of the Statute Forum where dispute is pending

Sales Tax AND Value Deputy Commissioner Appeal - II Added Tax

Maharashtra Sales Tax Tribunal

Maharashtra Sales Tax Tribunal

Income Tax Act,1961 Deputy Commissioner of Income Tax- TDS, Mumbai

Deputy Commissioner of Income Tax- TDS, Mumbai

The Customs Act,1961 Commissioners of Customs (Appeals), Mumbai

The Central Excise Commisioners of Central Excise Act,1944 (Appeals), Mumbai

Customs, Excise and Service Tax Appellate Tribunal (CESTAT),Mumbai

Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai

Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai

Commissioner of Service Tax, Mumbai Tribunal

Bombay High Court

Municipal Cororation Deputy Assessor & Collector (Octroi) of Greater Mumbai Octroi Rules,1965

8. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of loans on borrowing to financial institutions, banks or government. The Company has not issued any debentures.

9. The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments). The monies raised by way of term loans were applied for the purposes for which those were raised.

10. Based upon the audit procedures performed by us, to the best of our knowledge and belief and according to the information and explanations given to us by the Management, no fraud by the Company or fraud on the Company by its officers or employee has been noticed or reported during the year.

11. According to the information and explanations give to us and based on our examination of the records of the Company, the managerial remuneration paid or provided to the Managing Director is in excess of the limits prescribed under Section 197 read with Schedule V of the Act byRs, 4.40 crore, due to inadequacy of profits. The Company has made an application to the Central Government for the excess remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

12. In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company.

13. According to the information and explanations given to us and based on the documents and records produced before us, the transactions with related parties are in compliance with section 177 and 188 of the Act and the details thereof have been disclosed in the Financial Statements as required by the applicable accounting standards.

14. According to the information and explanations given to us and based on the documents and records produced before us, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, the provisions of Clause (xiv) of the order are not applicable.

15. According to the information and explanations given to us and based on the documents and records produced before us, the Company has not has entered into any non-cash transactions with directors or persons connected with them.

16. According to the information and explanations given to us and based on the documents and records produced before us, the Company is not required to be registered under section 45- IA of the Reserve Bank of India Act, 1934.

For Kalyaniwalla & Mistry

Chartered Accountants

Firm Registration No. 104607W



ERMIN K. IRANI

Place: Mumbai Partner

Date: 27th May, 2016 Membership No.: 35646


Mar 31, 2015

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of THE BOMBAY DYEING AND MANUFACTURING COMPANY LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and the Cash Flow statement for the year then ended, and a summary of significant accounting policies andother explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

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

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2015 and its profit and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to:

1. Note No. 36 to the financial statements regarding agreements to sell certain apartments in the proposed residential towers being constructed at Island City Centre to SCAL Services Ltd., a Group company, in terms of various MOUs entered between the companies till March 2015. The Company has during the year recognized net revenues of Rs. 301.11 crores (2013-14: Rs. 670.13 crores) and resultant profit before tax of Rs. 224.49 crores (2013-14: Rs. 355.45 crores) on sale of apartments to SCAL.

2. Note 38 to the financial statements regarding the giving of advance possession of earmarked lands at Spring Mills, Wadala to MCGM and MHADA under the Integrated Development Scheme as per the provisions of DCR 58. In lieu of the physical possession given to MCGM, the Company has recognized the entitlement of additional Development Rights (FSI) available for its own use and has converted the same into stock in trade at market value. An amount of Rs. 351.24 crores has been released from Revaluation Reserve to the credit of the Statement of Profit and Loss in respect of areas agreed for sale /sold and percentage of work completed.

3. Note 40 to the financial statements regarding the remuneration paid to the Managing Director being in excess of the limits prescribed under sections 197 read with schedule V of the Companies Act, 2013 by Rs. 3.26 crore, due to inadequacy of profits. The excess remuneration is subject to the approval of the Central Government for which an application has been made.

Our opinion is not modified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

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

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

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

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

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

d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of the written representations received from the directors as on March 31, 2015 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) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

a. The Company has disclosed the impact of pending litigations on its financial position in the financial statements - Refer Notes 30 and 39 to the financial statements.

b. The Company does not have any long term contracts including derivative contracts for which there were any material foreseeable losses.

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

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT

The Annexure referred to in Para 1 'Report on Other Legal and Regulatory Requirements' of our Independent Auditors' Report to the members of the Company on the standalone financial statements for the year ended March 31, 2015.

i) (a) The Company has maintained records showing full particulars, including quantitative details and situation of fixed assets. The records of certain assets need to be assimilated to make identification possible.

b) The Company has a program for physical verification of fixed assets in a phased manner. In our opinion, the period of verification is reasonable, having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed in respect of the assets physically verified during the year.

ii) a) The Management has conducted physical verification of inventory (excluding stocks lying with third parties) at reasonable intervals. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

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

c) The Company is generally maintaining proper records of inventory. The discrepancies noticed on verification between physical stock and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

iii) a) The Company has granted unsecured loans/ deposits to two companies and an interest free shareholders' deposit to a jointly controlled entity covered in the register maintained under section 189 of the Companies Act. The principal amount and interest on the loans/ deposits have been repaid regularly, as stipulated. The shareholder's deposit is free of interest and repayment thereof has been extended up to December 2015 as permitted by Reserve Bank of India.

b) There is no amount overdue more than rupees one lakh as on the Balance sheet date, as the repayment of the shareholder's deposit has been extended.

iv) In our opinion and according to the information and explanations given to us, the Company has an internal control system which is generally adequate, commensurate with the size of the Company and nature of its business, with regard to purchases of inventory, fixed assets, and for the sale of goods and services. On the basis of our examination of the books and records and the information and explanations given to us, we have not come across any continuing failure to correct major weakness in the internal control system.

v) In our opinion and according to the information and explanations given to us, the Company has complied with directives issued by reserve Bank of India and the provision of sections 73 to 76 or any other applicable provisions of the Act and The Companies (Acceptance of Deposits) Rules, 2014 with regard to the deposits accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal.

vi) We have broadly reviewed the books of accounts and records maintained by the Company in respect of manufacture of products covered under the Rules made by the Central Government for maintenance of cost records, under section 148 (1) of the Companies Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

vii) a) According to the information and explanation given to us and the records examined by us, the Company is generally regular in depositing undisputed statutory dues, including dues pertaining to Provident Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Duty of Customs, Duty of Excise , Value Added Tax, Cess and any other statutory dues with the appropriate authorities. We have been informed that there are no undisputed dues which have remained outstanding as at the end of the financial year, for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us, there are no dues of Sales tax, Income tax, Custom duty, Wealth tax, Service tax, Excise duty or Cess which have not been deposited on account of any dispute, except as stated below:

No. Name of the statute Nature of Dues Amount

(Rs. in crores)

1 Income Tax Act, 1961 Income tax 0.03



Income tax 0.02



Income tax 0.13



Income tax 0.26

2 The Customs Act, 1962 Interest on 0.95 customs duty

3 The Central Excise Act, Excise Duty 0.16 1944

Excise Duty 0.56





Excise Duty 0.03





Excise Duty 0.09





Excise Duty 0.02





Service Tax 0.76



Interest on 0.20 excise duty

4 Municipal Corporation of Octroi 2.16 Greater Mumbai Octroi Rules, 1965

No.Name of the statute Period to which Forum where dispute is the amount pending relates

1 Income Tax Act, 1961 2007-08 Deputy Commissioner of Income Tax- TDS, Mumbai

2008-09 Deputy Commissioner of Income Tax- TDS, Mumbai

2009-10 Commissioner of Income Tax (Appeals), Mumbai

2010-11 Commissioner of Income Tax (Appeals), Mumbai

2 The Customs Act, 1962 1995 to Commisioners of 2012 Customs (Appeals), Mumbai

3 The Central Excise Act, 1989-90 to Commissioner of Central 1944 1995-96 Excise (Appeals), Mumbai

1995-96 to Customs, Excise and Service 1996-97 Tax Appellate Tribunal (CESTAT), Mumbai

1997-1998 Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai

2000-2001 Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai

2001-2004 Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai

2003-04 to Commissioner of Service Tax 2005-06 Mumbai Tribunal

2002-2006 Bombay High Court

4 Municipal Corporation of 2007-2008 Deputy Assessor & Collector Greater Mumbai Octroi (Octroi) Rules, 1965

c) According to the information and explanations given to us, the amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules there under has been transferred to such fund within time.

viii) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses during the current financial year and in the immediately preceding financial year.

ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks, financial institutions or debenture holders.

x) In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by its jointly controlled entity from banks or financial institutions are not prima facie prejudicial to the interest of the Company.

xi) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were obtained.

xii) Based upon the audit procedures performed by us, to the best of our knowledge and belief and according to the information and explanations given to us by the Management, no fraud on, or by the company, has been noticed or reported during the year.

For KALYANIWALLA & MISTRY Chartered Accountants Firm Registration No. 104607W

ERMIN K. IRANI Partner Mumbai, May 25, 2015 Membership No.: 35646


Mar 31, 2014

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

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

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

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

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

Emphasis of Matter

1. We draw attention to Note 35 to the financial statements regarding agreements to sell certain apartments in the proposed residential towers being constructed at Island City Centre to SCAL Services Ltd., an associate company, for a consideration of Rs. 1,505.64 crores (2012-13: Rs. 667.07 crores). The Company has during the year recognized net revenues of Rs. 670.13 crores (2012- 13: Rs. 323.11 crores) and resultant profit before tax of Rs. 355.45 crore (2012-13: Rs. 203.96 crore) from sale of apartments to SCAL.

2. We draw attention to Note 39 to the financial statements regarding the remuneration paid to the Managing Director being in excess of the limits prescribed under sections 198 and 309 of the Companies Act 1956 by Rs. 2.92 crore, due to inadequacy of profits. The excess remuneration is subject to the approval of the Central Government for which an application has been made.

Our opinion is not qualified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003, (the "Order") as amended, issued by the Central Government 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 said Order.

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

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

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

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

(d) in our opinion, the Balance Sheet, Statement of Profit and Loss and 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 September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013; and

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

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

1. (a) The Company has maintained records showing particulars, including quantitative details and situation of fixed assets. The records of certain assets need to be assimilated to make identification possible.

(b) The Company has a program for physical verification of fixed assets in a phased manner. In our opinion, the period of verification is reasonable, having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed in respect of the assets physically verified during the year.

(c) In our opinion, the fixed assets disposed off during the year are not substantial and therefore do not affect the going concern assumption.

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

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

(c) The Company is generally maintaining proper records of inventory. The discrepancies noticed on verification between physical stock and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3. (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to Companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 except an interest free shareholders'' deposit of Rs. 15.22 crores to a joint venture company, as stated in Note 15 (a).

(b) As stated above, the said shareholders'' deposit has been given free of interest.

(c) As stated in Note 15 (a), the repayment of the said deposit has been extended up to the year 2015 as permitted by Reserve Bank of India.

(d) No amount is overdue as the terms of repayment have been extended Up to 2015.

(e) According to the information and explanation given to us, the Company has taken secured/unsecured loans aggregating Rs. 130 crores from two companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum principal amount involved during the year was Rs. 130 crores and the balance outstanding as at the year-end is Rs. 40 crores.

(f) In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions on which the loans have been taken from companies listed in the register maintained under section 301 of the Companies Act, 1956 were not prima facie prejudicial to the interest of the Company.

(g) In our opinion and as per the records examined by us, the payment of principal amount and interest thereon is regular.

4. In our opinion and according to the information and explanations given to us, the Company has internal control procedures which are generally adequate, commensurate with the size of the Company and nature of its business, with regard to purchases of inventory, fixed assets, and for the sale of goods and services. On the basis of our examination of the books and records and the information and explanations given to us, we have not come across any continuing failure to correct major weakness in the internal control system.

5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have generally been so entered.

(b) According to the information and explanation given to us, transactions in pursuance of such contracts or arrangements entered into the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party have been made at prices which are reasonable having regard to the prevailing market prices or at prices for which similar transactions have been made with other parties, except for the transactions where a comparison of prices could not be made since there was no similar transactions with other parties or transactions of a special nature where comparable alternative quotations were not available.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provision of sections 58A, 58AA or any other applicable provisions of the Companies Act,1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal.

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

8. We have broadly reviewed the cost records maintained by the company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under section 209 (1) (d) of the Companies Act, 1956 in respect of Textile division and Polyester Staple Fibre division of the Company and are of the opinion that prima facie, the prescribed records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete. To the best of our knowledge and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of records for any other product or services of the Company.

9. (a) According to the records of the Company, undisputed statutory dues including Provident fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Excise duty, Customs duty, Cess and other material statutory dues applicable to it have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts were in arrears, as on 31st March 2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Sales tax, Income tax, Custom duty, Wealth tax, Service tax, Excise duty or Cess which have not been deposited on account of any dispute, except as stated below:

No. Name of the statute Nature of dues Amount (Rs. In crores)

1 Income Tax Act, 1961 Income tax 0.03

Income tax 0.02

Income tax 0.13

2 The Customs Act, 1962 Interest on customs 0.95 duty

3 The Central Excise Act, 1944 Excise Duty 0.16

Excise Duty 0.70

Service Tax 0.76

Excise Duty 0.08

Excise Duty 9.85 *

Interest on excise 0.20 duty

4 Municipal Corporation of Octroi 2.16 Greater Mumbai Octroi Rules, 1965

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

Income Tax Act, 1961 2007-08 Deputy Commissioner of Income Tax- TDS, Mumbai

2008-09 Deputy Commissioner of Income Tax- TDS, Mumbai

2009-10 Commissioner of Income Tax (Appeals), Mumbai

The Customs Act, 1962 1995 to 2012 Commisioners of Customs (Appeals), Mumbai

The Central Excise Act, 1944 1989-90 to 1995-96 Commisioners of Central Excise (Appeals), Mumbai

1995-96 to 1997-98, Customs, Excise and Service Tax 2000-01 to 2003-04 Appellate Tribunal (CESTAT), Mumbai

2003-04 to 2005-06 Commissioner of Service Tax, Mumbai Tribunal

2008-2010 Commissioner of Central Excise, Customs & Service Tax, Raigad

2010-2012 Commissioner of Central Excise, Customs & Service Tax, Raigad

2002-2006 Bombay High Court

Municipal Corporation 2007-2008 Deputy Assessor & Collector of Greater Mumbai Octroi Rules, 1965 (Octroi)

* The company has obtained a stay against the said demand from CESTAT

10. The Company does not have accumulated losses at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks, financial institution or debenture holders.

12. In our opinion and according to the information and explanations given to us, the Company has maintained adequate records where the company has granted loans and advances on the basis of security by way of pledge of shares.

13. The company is not a chit fund or a nidhi/mutual benefit fund/ society. Therefore, the provision of clause 4 (xiii) of the said Order are not applicable to the Company.

14. According to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein where the Company is dealing or trading in shares, securities, debentures and other investments and such securities are held by the Company in it''s own name except to the extent of the exemption granted under section 49 of the Companies Act, 1956.

15. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given any guarantees for loans taken by others from banks or financial institutions are not prima facie prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were obtained.

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

18. The Company has not made any preferential allotment of shares to any parties or Companies covered in the register maintained under section 301 of the Act.

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

20. The Company has not raised any money by public issues during the year. Accordingly, the question of disclosure of end use of such monies does not arise.

21. Based on the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the year.

For Kalyaniwalla & Mistry

Chartered Accountants

Firm Reg No. 104607W



Ermin K. Irani

Place: Mumbai Partner

Date: May 27, 2014 Membership No: 35646


Mar 31, 2013

REPORT ON THE FINANCIAL STATEMENTS

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

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards 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 misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION

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

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 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 for the year ended on that date.

EMPHASIS OF MATTER

We draw attention to Note No. 34 to the financial statements regarding agreements to sell certain apartments in the proposed residential towers being constructed at Island City Centre to SCAL Services Ltd., an associate company, for a consideration of Rs. 701.81 crores (31.03.2012 Rs. 743.83 crores). The Company has recognized revenue of Rs. 339.47 crores (31.03.2012 Rs. 341.32 crores) from the said transactions, including an amount of Rs. 89.38 crores (31.03.2012 Rs. 103.67 crores) released from Revaluation Reserve. Our opinion is not qualified in respect of this matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor''s Report) Order, 2003, (the "Order'') as amended, issued by the Central Government 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 said Order.

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

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

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

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

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

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

ANNEXURE TO THE INDEPENDENT AUDITOR''S REPORT

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

1. (a) The Company has maintained records showing particulars, including quantitative details and situation of fixed assets. The records of certain assets need to be assimilated to make identification possible.

(b) The Company has a program for physical verification of fixed assets in a phased manner. In our opinion, the period of verification is reasonable, having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed in respect of the assets physically verified during the year.

(c) In our opinion, the fixed assets disposed off during the year are not substantial and therefore do not affect the going concern assumption.

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

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

(c) The Company is generally maintaining proper records of inventory. The discrepancies noticed on verification between physical stock and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3. (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 except an interest free shareholders'' deposit of Rs. 15.22 crores to a joint venture company, as stated in Note 14 (a).

(b) As stated above, the said shareholders'' deposit has been given free of interest.

(c) As stated in Note 14 (a), the repayment of the said deposit has been extended upto the year 2015 as permitted by Reserve Bank of India.

(d) No amount is overdue as the terms of repayment have been extended upto 2015.

(e) According to the information and explanation given to us, the Company has taken unsecured loans aggregating Rs. 210 crores from three companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum principal amount involved during the year is Rs. 210 crores and the balance outstanding as at the year end was Rs. 80 crores.

(f) In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions on which the loans have been taken from companies listed in the register maintained under section 301 of the Companies Act, 1956 were not prima facie prejudicial to the interest of the Company.

(g) In our opinion and as per the records examined by us, the payment of principal amount and interest thereon is regular.

4. In our opinion and according to the information and explanations given to us, the Company has internal control procedures which are generally adequate, commensurate with the size of the Company and nature of its business, with regard to purchases of inventory, fixed assets, and for the sale of goods and services. On the basis of our examination of the books and records and the information and explanations given to us, we have not come across any continuing failure to correct major weakness in the internal control system.

5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have generally been so entered.

(b) According to the information and explanation given to us, transactions in pursuance of such contracts or arrangements entered into the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party have been made at prices which are reasonable having regard to the prevailing market prices or at prices for which similar transactions have been made with other parties, except for the transactions where a comparison of prices could not be made since there was no similar transactions with other parties or transactions of a special nature where comparable alternative quotations were not available.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provision of sections 58A, 58AA or any other applicable provisions of the Companies Act,1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal.

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

8. We have broadly reviewed the cost records maintained by the company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under section 209 (1) (d) of the Companies Act, 1956 in respect of Textile division and Polyster Staple Fibre division of the Company and are of the opinion that prima facie, the prescribed records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete. To the best of our knowledge and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of records for any other product or services of the Company.

9. (a) According to the records of the Company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Excise duty, Customs duty, Cess and other material statutory dues applicable to it have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts were in arrears, as on 31st March 2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Sales tax, Income tax, Custom duty, Wealth tax, Service tax, Excise duty or cess which have not been deposited on account of any dispute, except as stated below :

No. Name of the statute Nature of Dues Amount (Rs. in crores)

1 Income Tax Act, 1961 Income tax 0.03

Income tax 0.02

2 The Customs Act, 1962 Interest on customs 0.95 duty

3 The Central Excise Act, 1944 Excise Duty 0.16

Excise Duty 0.56

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

Income Tax Act 1961 2007-08 Commissioner of Income Tax-TDS (Appeals)

2008-09 Commissioner of Income Tax- TDS (Appeals)

The Customs Act 1962 1995 to 2012 Commisioners of Customs (Appeals), Mumbai

The Central Excise Act 1944 1989-90 to Commisioners of Central Excise 1995-96 (Appeals), Mumbai

1995-96 to Customs, Excise and Service Tax 1996-97 Appellate Tribunal (CESTAT), Mumbai

10. The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks, financial institution or debenture holders.

12. In our opinion and according to the information and explanations given to us, the Company has maintained adequate records where the company has granted loans and advances on the basis of security by way of pledge of shares.

13. The company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provision of clause 4 (xiii) of the said Order are not applicable to the Company.

14. According to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein where the Company is dealing or trading in shares, securities, debentures and other investments and such securities are held by the Company in it''s own name except to the extent of the exemption granted under section 49 of the Companies Act, 1956.

15. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given any guarantees for loans taken by others from banks or financial institutions are not prima facie prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanations given to us, the term loans have/are being applied for the purpose for which they were obtained.

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

18. The Company has not made any preferential allotment of shares to any parties or Companies covered in the register maintained under section 301 of the Act.

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

20. The Company has not raised any money by public issues during the year. Accordingly, the question of disclosure of end use of such monies does not arise.

21. Based on the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the year.

For and on behalf of

Kalyaniwalla & Mistry

Chartered Accountants

Firm Reg No. 104607W

Viraf R. Mehta

Place: Mumbai Partner

Date: May 28, 2013 Membership No: 32083


Mar 31, 2012

1) We have audited the attached Balance Sheet of The Bombay Dyeing and Manufacturing Company Limited as at March 31, 2012, the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, both 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. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3) As required by the Companies (Auditor's Report) Order, 2003, issued by the Central Government of India in terms of section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4) Without qualifying our opinion, we draw attention to the following:

i) Note 32 regarding change in accounting policy for recognition of revenue from real estate activity. Up to the previous year, revenue arising from sale of undivided interest in underlying freehold land relating to flats / office premises was accounted when the agreement for sale of such flats / office premises was entered into. Effective April 1, 2011, the entire revenue from real estate activity is recognized on the percentage of completion method. Had the Company continued to follow the earlier accounting policy, revenue from real estate activity and construction costs would have been lower by Rs 146.22 crore and Rs13.92 crore respectively, the release from Revaluation Reserve would have been higher by Rs 205.81 crore and the net profit before tax would have been higher by Rs 73.51 crore.

ii) Note 33 regarding an agreement to sell certain apartments in the proposed residential towers being constructed at Island City Centre, pursuant to a Memorandum of Understanding entered into during the year with SCAL Services Ltd., an associate company, for a consideration of Rs 743.83 crores. The Company has recognized net revenue of Rs 341.32 crores from the said transaction, including an amount of Rs 103.67 crores released from Revaluation Reserve.

5) Further to our comments in the Annexure referred to in paragraph (3) above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

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

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

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

e) In our opinion and to the best of our information and according to the explanations given to us, they said accounts read with the significant accounting policies and notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

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

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

6) On the basis of written representations received from the Directors of the Company as on March 31, 2012, and taken on record by the Board of Directors, we report that none of the Directors of the Company 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 Companies Act, 1956.

Annexure to the report of the Auditors to the members of The Bombay Dyeing and Manufacturing Company Limited on the accounts for the year ended March 31, 2012 (referred to in paragraph 3 of our report of even date)

1. (a) The Company has maintained records showing particulars, including quantitative details and situation of fixed assets. The records of certain assets need to be assimilated to make identification possible.

(b) The Company has a program for physical verification of fixed assets in a phased manner. In our opinion the period of verification is reasonable, having regards to the size of the Company and the nature of its assets. No material discrepancies were noticed in respect of the assets physically verified during the year.

(c) In our opinion, the fixed assets disposed off during the year are not substantial and therefore do not affect the going concern assumption.

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

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

(c) The Company is generally maintaining proper records of inventory. The discrepancies noticed on verification between physical stock and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3. (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 except an interest free shareholders' deposit of Rs 15.22 crore to a joint venture company, as stated in Note 14 (a).

(b) As stated above, the said shareholders' deposit has been given free of interest.

(c) As stated in Note 14 (a), the repayment of the said deposit has been extended upto the year 2015 as permitted by Reserve Bank of India.

(d) No amount is overdue as the terms of repayment have been extended upto 2015.

(e) According to the information and explanation given to us, the Company has taken unsecured loans aggregating Rs 300 crore from three companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum principal amount involved during the year is Rs 180.29 crore and the balance outstanding as at the year end was Rs 100 crore.

(f) In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions on which the loans have been taken from companies listed in the register maintained under section 301 of the Companies Act, 1956 were not prima facie prejudicial to the interest of the company.

(g) In our opinion and as per the records examined by us, the payment of principal amount and interest thereon is regular.

4. In our opinion and according to the information and explanations given to us, the Company has internal control procedures which are generally adequate, commensurate with the size of the Company and nature of its business, with regard to purchases of inventory, fixed assets, and for the sale of goods and services. The Company is also implementing steps for further strengthening of the same. On the basis of our examination of the books and records and the information and explanations given to us, we have not come across any continuing failure to correct major weakness in the internal control system.

5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have generally been so entered.

(b) According to the information and explanation given to us, transactions in pursuance of such contracts or arrangements entered into the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party have been made at prices which are reasonable having regard to the prevailing market prices or at prices for which similar transactions have been made with other parties, except for the transactions where a comparison of prices could not be made since there was no similar transactions with other parties or transactions of a special nature where comparable alternative quotation were not available.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provision of sections 58A, 58AA or any other applicable provisions of the Companies Act,1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

8. We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of Textile division and Polyester Staple Fibre division of the Company and are of the opinion that prima facie the prescribed records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete. To the best of our knowledge and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of records for any other product or services of the Company.

9. (a) According to the records of the Company, undisputed statutory dues including Provident fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Excise duty, Customs duty, Cess and other material statutory dues applicable to it have been regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts were in arrears, as on 31st March 2012 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Sales tax, Income tax, Custom duty, Wealth tax, Service tax, Excise duty or cess which have not been deposited on account of any dispute, except as stated below :

No. Name of the statute Nature of Dues Amount Period to which Forum where dispute is pending (Rs.in crores) the amount relates

1 Income Tax Act, 1961 Tax Deducted at Source 0.03 2007-08 Commissioner of Income Tax - 0.02 2008-09 TDS (Appeals)

2 The Customs Act, 1962 Customs Duty 0.25 1997 Commissio ner of Customs (Appeals), Mumbai

3 The Central Excise Act, 1944 Excise Duty 0.10 1989-90 to Commissioners of Central Excise, 1995-96 Mumbai

Excise Duty 0.68 1997-98 to Customs, Excise and Service Tax 2000-01 Appellate Tribunal (CESTAT), Mumbai

Excise Duty 0.01 1999-00 to Customs, Excise and Service Tax 2000-01 Appellate Tribunal (CESTAT), Mumbai

Service Tax 0.77 April, 2003 to Customs, Excise and Service Tax March, 2006 Appellate Tribunal (CESTAT), Mumbai

10. The Company does not have any accumulated losses at the end of the financial year. Also, the Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks, financial institution or debenture holders.

12. In our opinion and according to the information and explanations given to us, the Company has maintained adequate records where the company has granted loans and advances on the basis of security by way of pledge of shares.

13. The company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provision of clause 4 (xiii) of the said Order are not applicable to the Company.

14. According to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein where the Company is dealing or trading in shares, securities, debentures and other investments and such securities are held by the Company in its own name except to the extent of the exemption granted under section 49 of the Companies Act, 1956.

15. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given any guarantees for loans taken by others from banks or financial institutions are not prima facie prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanations given to us, the term loans have/are being applied for the purpose for which they were obtained.

17. In our opinion and according to the information and explanations given to us and on an overall examination of the balance sheet of the Company, in our opinion, no funds raised on short term basis have been used for long term investment.

18. According to the information and explanations given to us, the company has made preferential allotment of shares to a company covered in the register maintained under section 301 of the Act. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the company.

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

20. The Company has not raised any money by public issues during the year. Accordingly, the question of disclosure of end use of such monies does not arise.

21. Based on the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the year.

For and on behalf of

Kalyaniwalla & Mistry

Chartered Accountants

Firm Reg No. 104607W

Viraf R. Mehta

Partner

Membership No: 32083

Place: Mumbai

Date: May 28, 2012


Mar 31, 2011

1) We have audited the attached Balance Sheet of The Bombay Dyeing and Manufacturing Company Limited as at March 31, 2011 and also the Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date, both 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. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial 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 signifi cant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3) As required by the Companies (Auditor's Report) Order, 2003, issued by the Central Government of India in terms of section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.

4) Without qualifying our report, we draw attention to the following:

i) Note 7 of Schedule 19 Notes to Accounts, regarding the sale of a portion of the proposed residential tower (2009-10: commercial building) under construction and recognition of revenue arising from sale of the undivided interest in the underlying freehold land amounting to Rs. 70.57 crore (2009-10: Rs. 256.29 crore) in the Profit and Loss Account with a corresponding release from revaluation reserve.

ii) Note 14 of Schedule 19 Notes to Accounts, regarding the managerial remuneration paid to one of the Jt. Managing Directors being in excess of the minimum remuneration under Schedule XIII to the Companies Act, 1956 and subject to the approval of the Central Government. The Company has made an application to the Central Government for such approval, which is pending.

5) Further to our comments in the Annexure referred to in paragraph (3) above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

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

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

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

e) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011;

ii) in the case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.

6) On the basis of written representations received from the Directors of the Company as on March 31, 2011, and taken on record by the Board of Directors, we report that none of the Directors of the Company is disqualifi ed as on March 31, 2011, from being appointed as a Director in terms of clause (g) of sub- section (1) of section 274 of the Companies Act, 1956.

Annexure to the Auditor's Report

Annexure to the report of the Auditors to the members of The Bombay Dyeing and Manufacturing Company Limited on the accounts for the year ended March 31, 2011 (referred to in paragraph 3 of our report of even date)

1. (a) The Company has maintained records showing particulars, including quantitative details and situation of fixed assets. The records of certain assets need to be assimilated to make identifi cation possible.

(b) The Company has a program for physical verifi cation of fixed assets at periodic intervals. In our opinion the period of verifi cation is reasonable, having regards to the size of the Company and the nature of its assets. The reconciliation in respect of the fixed assets verifi ed during the year is in progress; discrepancies, if any, will be adjusted on completion of reconciliation.

(c) The fixed assets disposed off during the year are not substantial and therefore do not affect the going concern assumption.

2. (a) The inventory has been physically verifi ed by the management during the year. In our opinion, the frequency of verifi cation is reasonable.

(b) The procedures of physical verifi cation of inventories followed by the management are generally reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The Company is generally maintaining proper records of inventory. The discrepancies noticed on verifi cation between physical stock and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3. (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to Companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 except an interest free shareholders' deposit of Rs.15.22 crore with a joint venture company, as stated in Note 10 of Schedule 19. Sub-clauses (b), (c) and (d) of cause 4 (iii) of the Order are not applicable to the Company.

(b) According to the information and explanation given to us, the Company has taken unsecured loans aggregating Rs. 190 crore from three companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum principal amount involved during the year is Rs. 190 crore and the balance outstanding as at the year end was Rs. 10 crore.

(c) In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions on which the loans have been taken from companies listed in the register maintained under section 301 of the Companies Act, 1956 were not prima facie prejudicial to the interest of the company.

(d) In our opinion and as per the records examined by us, the payment of principal amount and interest thereon is regular.

4. In our opinion and according to the information and explanations given to us, the Company has internal control procedures which are generally adequate, commensurate with the size of the Company and nature of its business, with regard to purchases of inventory, fixed assets, and for the sale of goods and services. The Company is also implementing steps for further strengthening of the same. On the basis of our examination of the books and records and the information and explanations given to us, we have not come across any continuing failure to correct major weakness in the internal control system.

5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have generally been so entered.

(b) According to the information and explanation given to us, transactions in pursuance of such contracts or arrangements entered into the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees fi ve lakhs in respect of any party have been made at prices which are reasonable having regard to the prevailing market prices or at prices for which similar transactions have been made with other parties, except for the transactions where a comparison of prices could not be made since there was no similar transactions with other parties or transactions of a special nature where comparable alternative quotation were not available.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provision of sections 58A, 58AA or any other applicable provisions of the Companies Act,1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

8. We have broadly reviewed, without carrying out a detailed examination, the books of account maintained by the company pursuant to the Notifi cation issued /order made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of the Textile and Polyester Staple Fibre divisions of the Company and are of the opinion that prima facie the prescribed records have been maintained and the prescribed accounts are in the process of being made up.

9. (a) According to the records of the Company, undisputed statutory dues including Provident fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Excise duty, Customs duty, Cess and other material statutory dues applicable to it have been regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts were in arrears, as on 31st March 2011 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Sales tax, Income tax, Custom duty, Wealth tax, Service tax, Excise duty or cess which have not been deposited on account of any dispute, except as stated below :

No. Name of the statute Nature of Dues Amount Period to which Forum where dispute is pending (Rs. in crores) the amount relates

1 Income Tax Act, 1961 Tax Deducted at 3.21 2007-08 Commissioner of Income Tax - TDS Source 3.86 2008-09 (Appeals)

2 Bombay Sales Tax Act, Sales Tax 4.95 2004-05 Maharashtra Sales Tax Tribunal, 1959. Mumbai

3 Central Sales Tax Act, Sales Tax 0.67 2004-05 Maharashtra Sales Tax Tribunal, 1956. Mumbai

4 The Customs Act, 1962 Customs Duty 0.64 1989 Deputy Commissioner of Customs, Nhava Sheva Customs Duty 0.25 1997 Commissioner of Customs(Appeals), Mumbai

5 The Central Excise Act, Excise Duty 0.10 1989-90 to 1995-96 Commissioners of Central Excise, 1944 Mumbai

Excise Duty 0.68 1997-98 to 2000-01 Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai

Excise Duty 0.01 1999-00 to 2000-01 Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai

Service Tax 0.77 April, 2003 to Customs, Excise and Service Tax March, 2006 Appellate Tribunal (CESTAT), Mumbai

10. The Company does not have any accumulated losses at the end of the financial year. Also, the Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks, financial institution or debenture holders.

12. In our opinion and according to the information and explanations given to us, the Company has maintained adequate records where the company has granted loans and advances on the basis of security by way of pledge of shares.

13. The company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provision of clause 4 (xiii) of the said Order are not applicable to the Company.

14. According to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein where the Company is dealing or trading in shares, securities, debentures and other investments and such securities are held by the Company in it's own name except to the extent of the exemption granted under section 49 of the Companies Act, 1956.

15. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given any guarantees for loans taken by others from banks or financial institutions are not prima facie prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanations given to us, the term loans have/are being applied for the purpose for which they were obtained.

17. In our opinion and according to the information and explanations given to us and on an overall examination of the balance sheet of the Company, in our opinion, no funds raised on short term basis have been used for long term investment.

18. According to the information and explanations given to us, the company has made preferential allotment of shares to a company covered in the register maintained under section 301 of the Act. In our opinion, the price at which shares have been issued is not prejudicial to the interest of the company.

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

20. The Company has not raised any money by public issues during the year. Accordingly, the question of disclosure of end use of such monies does not arise.

21. Based on the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the year.

For and on behalf of

Kalyaniwalla & Mistry

Chartered Accountants

Firm Reg. No. 104607W

Viraf R. Mehta

Partner

Membership No: 32083

Place: Mumbai

Date: May 24, 2011










Mar 31, 2010

1) We have audited the attached Balance Sheet of The Bombay Dyeing and Manufacturing Company Limited as at March 31, 2010 and also the Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date, both 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. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3) As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government of India in terms of section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4) Without qualifying our report, we draw attention to the following:

Note 7 of Schedule 19 Notes to Accounts, regarding the sale of the commercial building under construction to its wholly owned subsidiary (up to March 16, 2010)/ associate and recognition of revenue there against of Rs. 423.54 crores (including revenue from the undivided interest in the underlying freehold land therein amounting to Rs. 256.29 crores in line with the companys stated accounting policy) in the Profit and Loss Account. The Company has partly divested its investment in the subsidiary company in March 2010 and it has ceased to be a subsidiary from that date. The said subsidiary has been excluded from consolidation, based on managements representation that control over it was temporary, i.e. being held exclusively with a view to its subsequent divestment in the near future.

5) Furtherto ourcomments in the Annexure referred to in paragraph (3) above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

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

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

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

e) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and

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

6) On the basis of written representations received from the Directors of the Company as on March 31, 2010, and taken on record by the Board of Directors, we report that none of the Directors of the Company 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.

ANNEXURE TO THE AUDITORS REPORT

Annexure to the report of the Auditors to the members of The Bombay Dyeing and Manufacturing Company Limited on the accounts for the year ended March 31, 2010 (referred to in paragraph 3 of our report of even date)

1. (a) The Company has maintained records showing particulars,

including quantitative details and situation of fixed assets. The records of certain assets need to be assimilated to make identification possible.

(b) The Company has a program for physical verification of fixed assets at periodic intervals. In our opinion the period of verification is reasonable, having regard to the size of the Company and the nature of its assets. The discrepancies noticed on such verification were not material and the same have been properly dealt with in the books of account.

(c) The fixed assets disposed off during the year are not substantial and therefore do not affect the going concern assumption.

2. (a) The inventory has been physically verified by the

management during the year. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the management are generally reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The Company is generally maintaining proper records of inventory. The discrepancies noticed on verification between physical stock and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3. (a) The Company had given unsecured loan to a company

covered in the register maintained under section 301 of the Companies Act, 1956. The maximum principal amount involved during the year is Rs. 0.50 crore. The loan has been repaid and there is no balance outstanding at the year end. The company has also placed an interest free shareholders deposit of Rs. 15.22 crore with a joint venture company, as stated in Note 10 of Schedule 19.

(b) In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions on which the loans have been granted to companies listed in the register maintained under section 301 of the Companies Act, 1956 were not prima facie prejudicial to the interest of the company, at the time when loans were granted.

(c) In our opinion and as per the records examined by us the receipt of the principal amount and interest thereon has been regular.

(d) According to the information and explanation given to us, there is no overdue amount for more than rupees one lakh.

(e) According to the information and explanation given to us, the Company has taken unsecured loans aggregating Rs. 117.50 crores from a company covered in the register maintained under section 301 of the Companies Act, 1956. The loans have been repaid and there is no balance outstanding at the year end.

(f) In our opinion and according to the information and explanation given to us, the rate of interest and other terms and conditions on which the loans have been taken from companies listed in the register maintained under section 301 of the Companies Act, 1956 were not prima facie prejudicial to the interest of the company.

(g) In our opinion and as per the records examined by us, the payment of principal amount and interest thereon is regular.

4. In our opinion and according to the information and explanations given to us, the Company has internal control procedures which are generally adequate, commensurate with the size of the Company and nature of its business, with regard to purchases of inventory, fixed assets, and for the sale of goods and services. The Company is also implementing steps for further strengthening of the same. Further, on the basis of our examination of the books and records and the information and explanations given to us, we have not come across any continuing failure to correct major weakness in the internal control system.

5. (a) According to the information and explanations given to

us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have generally been so entered.

(b) According to the information and explanation given to us, transactions in pursuance of such contracts or arrangements entered into the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party have been made at prices which are reasonable having regard to the prevailing market prices or at prices for which similar transactions have been made with other parties, except for the transactions where a comparison of prices could not be made since there was no similar transactions with other parties or transactions of a special nature where comparable alternative quotation were not available.

6. In our opinion and according to the information and explanations given to us, the Company has complied with the provision of sections 58A, 58AA or any other applicable provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

8. We have broadly reviewed, without carrying out a detailed examination, the books of accounts maintained by the company pursuant to the Notification issued /order made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of Textile division of the Company and are of the opinion that prima facie the prescribed records have been maintained and the prescribed accounts are in the process of being made up.

9. (a) According to the records of the Company, undisputed

statutory dues including Provident fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Excise duty, Customs duty, Cess, and other material statutory dues applicable to it have been regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts were in arrears, as on 31st March 2010 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Sales tax, Income tax, Custom duty, Wealth tax, Service tax, Excise duty or cess which have not been deposited on account of any dispute, except as stated below :

No. Name of the statute Nature of Dues Amount (Rs. In crores) 1 The Customs Act, 1962 Customs Duty 0.64 Customs Duty 0.25 Customs Duty 0.13 2 The Centra! Excise Act, Excise Duty 0.31 1944 Excise Duty 0.16 Excise Duty 0.68 Excise Duty 0.08

No. Name of the statute Period to which the Forum where dispute is amount relates Pending 1 The Customs Act, 1962 1989 Deputy Commissioner of Customs, Nhava Sheva 1997 Commissioner of Customs (Appeals), Mumbai 1992-93 Commissioner of Customs Bond Department, Mumbai 2 The Centra! Excise Act, 1985-86 to 2003-04 Customs, Excise and Service Tax 1944 Appellate Tribunal (CESTAT), Mumbai 1989-90 to 1995-96 Commissioners of Central Excise, Mumbai 1997-98 to 2000-01 Customs, Excise and Service Tax Appellate Tribunal(CESTAT), Mumbai 1999-00 to 2000-01 Customs, Excise and Service Tax Appellate Tribunal(CESTAT), Mumbai

10. The Company does not have any accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by our audit however, a cash loss of Rs. 138.89 crores was incurred during the immediately preceding financial year,

11. In our opinion and according to the information and explanations given to us. the Company has no; defaulted in repayment of dues to banks, financial institution or debenture holders.

12. In our opinion and according to the information and explanations given to us, the Company has maintained adequate records where the company has granted loans and advances on the basis of security by way of pledge of shares.

13. The company is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the provision of clause 4 (xiii) of the said Order are not applicable to the Company.

14. According to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein where the Company is dealing or trading in shares, securities, debentures and other investments and such securities are held by the Company in its own name except to the extent of the exemption granted under section 49 of the Companies Act, 1956.

15. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given any guarantees for loans taken by others from banks or financial institutions are not prima facie prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanations given to us, the term loans have/are being applied for the purpose for which they were obtained.

17. In our opinion and according to the information and explanations given to us and on an overall examination of the balance sheet of the Company, in our opinion, no funds raised on short term basis have been used for long term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act, 1956.

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

20. The Company has not raised any money by public issues during the year. Accordingly, the question of disclosure of end use of such monies does not arise.

21. Based on the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the year.



For and on behalf of Kaiyaniwalla & Mistry Chartered Accountants Firm Reg. No. 104607W Viraf R. Merita Partner Membership No: 32083 Place: Mumbai Date: May 24, 2010

 
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