Auditor Report of Bombay Rayon Fashions Ltd.

Mar 31, 2021

Bombay Rayon Fashions Limited

Report on the Standalone Ind AS Financial Statements Opinion

1. We have audited the accompanying standalone Ind AS financial statements of Bombay Rayon Fashions Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2021, and the Statement of Profit and Loss (including other comprehensive income), the statement of Cash Flows and the statement of changes in equity for the year then ended, and notes to the financial statement including a summary of significant accounting policies and other explanatory information (herein after referred to as "standalone Ind AS financial statements").

2. In our opinion and to the best of our information and according to the explanation given to us, the aforesaid Ind AS 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 including the Ind AS, of the state of affairs of the Company as at 31 March 2021, and its financial performance including comprehensive income, its cash flows and the change in equity for the year ended on that.

Basis for Qualified Opinion

a) As per Indian Accounting Standard 36 on Impairment of Assets, the Company is required to determine impairment in respect of fixed assets as per the methodology prescribed under the said Standard. However, the Management of the Company has not done impairment testing. In the absence of any working for impairment of the fixed assets, as per Ind AS 36, the impact of impairment, if any, on these Standalone Financial Statements is not ascertainable.

b) As mentioned in the note no. 34 (b) of the standalone financial statements, the Redemption Procedures of Investment in Debentures of the wholly owned subsidiary, STI India Limited is not carried out. Therefore impairment of the investment in the debentures is not ascertainable.

c) A mention is made in the note no. 48 (b & c) of the standalone financial statements, regarding non-provision of trade receivables/payables, trade advances, capital advances, deposits and loans are subject to reconciliation, confirmation and consequential adjustments that may arise on reconciliation which may have major impact for the year ended March 31, 2021. Had this provision been made, the current assets would have been lower and the net worth would have also been eroded to that extent. These conditions, along with absence of clear indications or plans for revival, in our opinion, indicate that there is significant uncertainty about realisation of the carrying amount of the assets as on March 31, 2021. We are unable to ascertain the consequent effect on the balances held by the company and loss for the year.

3. We have conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.

Key Audit Matters

4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the financial year ended March 31, 2021. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

5. We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the standalone financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone financial statements.

Description of Key Audit Matters

Key Audit Matters		How our audit addressed the key audit matter
Taxation and Legal Matters
Refer Note 40 of the standalone financial statements There are a number of legal, and tax cases against the Company. There is a high level of judgment required in estimating the level of provisioning required.		Principal Audit Procedures: We used our expertise to gain an understanding of the current status of the cases and tracked changes in the disputes by reading relevant documents received by the Company, to establish that the provisions had been appropriately adjusted to reflect the latest external developments. For legal, regulatory and tax matters our procedures included the following: • testing key controls surrounding litigation, regulatory and tax procedures;
		• performing substantive procedures on the underlying calculations supporting the provisions recorded; • where relevant, reading external legal opinions obtained by the management; • discussing open matters with the Companies litigation, regulatory, general counsel and tax teams; • assessing the management''s conclusions through understanding precedents set in similar cases; and Based on the evidence obtained, while noting the inherent uncertainty with such legal and tax matters, we satisfied ourselves that the level of provisioning at March 31, 2021 is appropriate. We validated the completeness and appropriateness of the related disclosures through assessing that the disclosure of the uncertainties in note 40 of the financial statements was sufficient.

Emphasis of Matter

We draw attention to;

a) Slump Sale of Tarapur Division (refer Note 43(B))

In the current year, the company along with its present lender (the J M Financial Assets Reconstruction Co. Ltd. (''JMFARC'')) has formulated to revive the Tarapur division of the Company. Accordingly the company has made a slump sale of the Tarapur division to a newly formed Subsidiary viz. "BRFL Textiles Private Limited." The Company has used the discounted cash flow projection method to determine the valuation of unit for value of its Property, Plant & equipment along with its current assets and liabilities and accordingly the company has recognized a loss of Rs.158.84 crores. The value in use is sensitive to changes in certain inputs/assumptions used for forecasting the discounted cash flow projections due to inherent uncertainty involved in these assumptions.

b) Implementation of SARFAESI ACT, 2002 (refer Note 34(b)

Upon the default of the BRFL (Borrower) and other Guarantors (including STI India Ltd (''STI'')) of terms and conditions of financial obligations and delay in payment of instalments, the J M Financial Assets Reconstruction Co. Ltd JMFARC (present lender), took action under SARFAESI Act and took over the possession of entire mortgage movable and immovable assets of BRFL and its associates/subsidiary companies including STI and initiated the process of sale of assets and has taken over the possession of assets of STI (w.e.f. 14^th September, 2019) and initiated the process of sale of its entire mortgaged assets which include main factory building and plant and machineries of STI in which the Company operated its main business activities, the Company had no option rest except to close down its unit/plant.

c) Reversal of the Interest payable (refer Note 50(3)

d) During the year the group has not made a provision for the interest on the loans payable to M/s. JMFARC as per the company the company is in talks for an OTS with the lender hence no provision of the interest is made by them. Further the group has also reversed the interest payable to the lender provided in the earlier years totalling to Rs.460.05 Crores.

Other Information

6. The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Board of Director''s report, management discussion and analysis section of the annual report, corporate governance report and business responsibility report, but does not include the standalone financial statements and our auditor''s report thereon.

7. Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

8. In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Management''s Responsibility for the Standalone Ind AS Financial Statements

9. 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 Ind AS financial statements, that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind As) specified under Section 133 of the Act, read with relevant rules issued thereunder. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act; for safeguarding the assets of the Company; for preventing and detecting frauds and other irregularities; selection and application of appropriate implementation and maintenance of 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 Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

10. In preparing the financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

11. Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibilities for the Audit of the Standalone Financial Statements

12. Our objective are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatements, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

13. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3) (i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

14. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

15. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

16. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements for the financial year ended March 31, 2021 and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

17. 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 Companies Act 2013, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

18. As required by Section143(3) of the Act, we report that:

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

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

c. The Balance sheet, the statement of profit and loss including other comprehensive income, the statement of cash flow and the statement of changes in equity dealt with by this report are in agreement with the books of account.

d. In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards (Ind As) specified under Section 133 of the Act, read with relevant rule issued thereunder.

e. On the basis of the written representations received from the directors as on 31 March, 2021 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2021 from being appointed as a director in terms of Section 164(2) of the Act;

f. We have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as of 31 March 2021 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date and our report dated 30-11-2021 as per Annexure II expressed.

g. With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended: In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

h. 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 as amended, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - as specified in Note No.40 to the standalone financial statements.

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

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the company.

For P.R. Agarwal & Awasthi

Chartered Accountants Firm Registration No.: 117940W

CA Pawan KR. Agarwal

Partner M No.: 34147

Place: Mumbai UDIN: 21034147AAAAEE4370

Date: 30.11.2021

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Mar 31, 2018

Report on the Standalone Ind AS Financial Statements Opinion

1. We have audited the accompanying standalone Ind AS financial statements of Bombay Rayon Fashions Limited (“the Company”), which comprise the Balance Sheet as at 31^st March 2018, the Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement and the statement of changes in equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (herein after referred to as “Standalone Ind AS financial statements”)

2. In our opinion and to the best of our information and according to the explanation given to us, the aforesaid Ind AS 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 including the Ind AS, of the state of affairs of the Company as at 31 March 2018, and its financial performance including comprehensive income, its cash flows and the change in equity for the year ended on that.

3. Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

4. Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

5. Management’s Responsibility for the Standalone Ind AS 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 Ind AS financial statements, that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind As) specified under Section 133 of the Act, read with relevant rules issued thereunder. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company, for preventing and detecting frauds and other irregularities, selection and application of appropriate implementation and maintenance of 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 Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Company’s financial reporting process.

Auditors Responsibility

Our objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatements, whether due to fraud or error, and to issue an auditor’s report that inclu des our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these 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 Ind AS financial statements.

Report on Other Legal and Regulatory Requirements

6. 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 Companies Act 2013, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

7. As required by Section143(3) of the Act, we report that:

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

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

c. The Balance sheet, the statement of profit and loss including other comprehensive income, the statement of cash flow and the statement of changes in equity dealt with by this report are in agreement with the books of account.

d. In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards (Ind As) specified under Section 133 of the Act, read with relevant rule issued thereunder.

e. On the basis of the written representations received from the directors as on 31 March, 2018 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2018 from being appointed as a director in terms of Section 164(2) of the Act;

f. We have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as of 31 March 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date and our report dated 29/05/2018 as per Annexure II expressed.

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 as amended, in our opinion and to the best of our information and according to the explanations given to us:

i. As detailed in Note 41 to the standalone Ind AS financial statements, the Company has disclosed the impact of pending litigations on its standalone Ind AS financial statements;

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

iii. The Company has transferred the amounts which were required to be transferred to the Investor Education and Protection Fund during the year.

Annexure I to the Auditor’s Report even date CARO 2016:

1. In respect of Fixed Assets:

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

b. As informed by the management the fixed assets have been physically verified by the management at reasonable intervals. We are informed that no material discrepancies were noticed by the management on such verification.

c. The title deeds in respect of all immovable properties are held in the name of the company.

2. In respect of Inventories:

As explained to us physical verification of inventory has been conducted during the year at reasonable intervals by the management and in our opinion and according to the information and explanation given to us, the Company is maintaining proper records of its inventories and no material discrepancies were noticed on physical verification.

3. In respect of loans, secured or unsecured granted by the Company to other Companies, firms, LLP or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

a. The Company has granted interest free advances to a Subsidiary company covered in the register maintained u/s 189 of the Companies Act,2013.

b. In respect of the Long term Loan the principal amount is repayable over a period of 5 to 7 years.

c. In respect of the said Loan, there are no overdue amounts.

4. The Company has complied with the provisions of section 185 and 186 of the Companies Act, 2013 in respect of Loans granted during the year. There are no Investments & Securities made or any guarantees given during the year.

5. During the year the company has not accepted any deposits from public or by any means hence the said clause 3(v) of the said order is not applicable to the Company.

6. As per the information and explanations provided to us, we are of the opinion that in pursuant to the prescribed rules by Central Government, the Company had maintained cost records u/s. 148(1) (d) of the Companies Act, 2013, however we have not done a detailed examination of the same.

7. In respect of Statutory Dues:

(a) According to record of the Company produced before us, the Company has not been regular in depositing the undisputed statutory dues and there have been delays in depositing undisputed statutory dues with the appropriate authorities. According to the information and explanations given, no undisputed amounts payable in respect of income tax, service tax, sales tax, GST, customs duty, excise duty/cess were outstanding as at 31.03.2018 for a period of more than six months from the date they became payable except as given below:

(Rs.in Crores)

Sr. No	Nature of Dues	Amount
1.	Provident Fund	19.03
2.	Employee State Insurance	1.93
3.	Profession Tax	1.23
4.	Property Tax	1.65
5.	Service Tax	1.23
6.	Tax Deducted at Source	1.88
7.	Excise Duty	0.21
8.	Income Tax	12.22
Total		39.38

(b) According to the records of the company there are no dues of Income-Tax, sales tax, GST, service tax, customs duty, excise duty/cess which have not been deposited on account of any dispute except as given below.

(Rs.in Crores)

Nature of the Act	Amount	Period to which the amount relates		Forum where dispute is pending
Income Tax Act,1961	0.02	AY 2004-05		DCIT CC 6(3), Mumbai
Income Tax Act,1961	0.28	AY 2009-10		CIT (A)-54, Mumbai
Income Tax Act,1961	0.06	AY 2011-12		CIT (A)-54, Mumbai
Income Tax Act,1961	33.40	AY 2013-14		CIT(A)-54,Mumbai
Income Tax Act,1961	0.38	AY 2012-13		CIT(A)-54,Mumbai

8. In our opinion and according to the information and explanations given to us, there have been delays in repayment of dues to financial institutions and banks during the year, as on 31.03.2018 the amount due and remaining unpaid on account of principal and interest to Banks and Financial Institutions are given below:

(Rs.in Crores)

Particulars	Overdue in	Overdue in	Total Overdue
	Principal	Interest
Upto 30 days	16.58	7.81	24.39
From 31 days To 60 days	5.04	6.49	11.53
From 61 days To 90 days	4.41	6.87	11.28
Above 91 days	0.73	0.26	0.99
Total	26.76	21.43	48.19

The Company has not defaulted in repayment of dues to debenture holders. The company has not availed any loan or borrowings from the Government.

9. During the year the Company has not raised any fund by way of initial public offer or further public offer (including Debt Instruments) and term loans.

10. Based upon 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 course of our audit.

11. The Company has paid managerial remuneration during the year according to the provisions of section 197 read with Schedule V to the Companies Act, 2013.

12. In our opinion and to the best of our information and according to the explanations provided by the management, we are of the opinion that the company is not a Nidhi Company. Hence, in our opinion the clause does not apply to the company.

13. The Company has disclosed all the transactions with the related parties in the Financial Statements during the year and the transactions are in compliance with sections 177 and 188 of Companies Act, 2013.

14. During the year under Consideration, pursuant to the CDR Scheme, Funded Interest Term Loan, Working Capital Term Loan amounting to Rs 80.15 Crores has been allotted to Lenders on account of conversion into Equity Shares as a Preferential Allotment.

Further the Company has made preferential allotment of Equity Shares to Banks and Financial Institutions for conversion of outstanding unsustainable debt pursuant to S4A scheme amounting to Rs 1838.87 Crores. The company has not made any Private placement of shares during the year.The Company has issued optional convertible debentures during the year to Banks and Financial Institutions for conversion of outstanding unsustainable debt pursuant to S4A scheme amounting to Rs 410.18 Crores.

15. According to the provisions of section 192 of Companies Act, 2013 the company has not entered into any noncash transactions with directors or persons connected with him during the year hence no comments under this clause are called for.

16. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934, hence this clause is not applicable and no comments under this clause are called for.

Annexure II

Independent Auditor’s report on the Internal Financial Controls with reference to financial statements and its operative effectiveness under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

1. In conjunction with our audit of the standalone Ind AS financial statements of Bombay Rayon Fashions Limited (“the Company”) as of and for the year ended 31 March 2018, we have audited the internal financial controls over financial reporting (IFCoFR) of the company of as of that date.

Management’s Responsibility for Internal Financial Controls

2. The Company’s Board of Directors is responsible for establishing and maintaining internal financial controls based on the criteria being specified by management. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of the company’s business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors’ Responsibility

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

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining an understanding of IFCoFR, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

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

Inherent Limitations of Internal Financial Controls over Financial Reporting

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

Opinion

8. In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018, based on the criteria being specified by management.

For P R Agarwal & Awasthi

Chartered Accountants

Firm Registration No 117940W

CA Pawan KR. Agarwal

Place: Mumbai Partner

Date: 29/05/2018 M No-34147

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Mar 31, 2017

Report on the Standalone Ind AS Financial Statements

1. We have audited the accompanying standalone Ind AS financial statements of Bombay Rayon Fashions Limited (“the Company”), which comprise the Balance Sheet as at 31 March 2017, the Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement and the statement of changes in equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (herein after referred to as “standalone Ind AS financial statements”)

Management’s Responsibility for the Standalone Ind AS Financial Statements

2. 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 Ind AS financial statements, that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind As) specified under Section 133 of the Act, read with relevant rules issued thereunder. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act; safeguarding the assets of the Company; 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 Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

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

4. 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.

5. 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 Ind AS financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls relevant to the Company’s preparation of the Standalone Ind AS 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 Ind AS financial statements.

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

Opinion

8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 including the Ind AS, of the state of affairs of the Company as at 31 March 2017, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Report on Other Legal and Regulatory Requirements

9. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.

10. As required by Section143(3) of the Act, we report that:

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

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

c. The Balance sheet, the statement of profit and loss, the statement of cash flow and the statement of changes in equity dealt with by this report are in agreement with the books of account.

d. In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards (Ind As) specified under Section 133 of the Act, read with relevant rule issued thereunder.

e. On the basis of the written representations received from the directors as on 31 March, 2017 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2017 from being appointed as a director in terms of Section164(2) of the Act;

f. We have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as of 31 March 2017 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date and our report dated 30.05.2017 as per Annexure II expressed.

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) Amendment Rules, 2017, in our opinion and to the best of our information and according to the explanations given to us:

i. As detailed in Note 42 to the standalone Ind AS financial statements, the Company has disclosed the impact of pending litigations on its standalone Ind AS financial statements;

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

iii. The Company has not transferred the requisite amount which was required to be transferred to the Investor Education and Protection Fund by the company. The details of which is as under:-

Sr. No.	Financial Year	Amount (Rs.)
1.	2008-09	2,00,658/-

iv. The company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8^th November, 2016 to 30^th December, 2016 and these are in accordance with of books of accounts maintained by the company. Refer Note 45 to the standalone Ind AS financial statements.

Annexure I to the Auditor’s Report even date CARO 2016:

1. In respect of Fixed Assets:

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

b. The fixed assets have been physically verified by the management at reasonable intervals during the year. We are informed that no material discrepancies were noticed by the management on such verification.

c. The title deeds in respect of all immovable properties are held in the name of the company.

2. In respect of Inventories:

As explained to us physical verification of inventory has been conducted during the year at reasonable intervals by the management and in our opinion and according to the information and explanation given to us, the Company is maintaining proper records of its inventories and no material discrepancies were noticed on physical verification.

3. In respect of loans, secured or unsecured granted by the Company to other Companies, firms, LLP or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

a. The Company has granted interest free advances to a Subsidiary company covered in the register maintained u/s 189 of the Companies Act, 2013.

b. In respect of the Long term Loan the principal amount is repayable over a period of 5 to 7 years.

c. In respect of the said Loan, there are no overdue amounts. (in consideration with Note No 46 to the Notes to accounts of the Ind As Standalone Financial Statements).

4. The Company has complied with the provisions of section 185 and 186 of the Companies Act, 2013 in respect of Loans granted during the year. There are no Investments & Securities made or any guarantees given during the year.

5. During the year the company has not accepted any deposits from public or by any means hence the said clause 3(v) of the said order is not applicable to the Company.

6. As per the information and explanations provided to us, we are of the opinion that in pursuant to the prescribed rules by Central Government, the Company had maintained cost records u/s. 148(1) (d) of the Companies Act, 2013, however we have not done a detailed examination of the same.

7. In respect of Statutory Dues:

(a) According to record of the Company produced before us, the Company has not been regular in depositing the undisputed statutory dues and there have been delays in depositing undisputed statutory dues with the appropriate authorities. According to the information and explanations given, no undisputed amounts payable in respect of sales tax, customs duty, excise duty/cess were outstanding as at 31.03.2017 for a period of more than six months from the date they became payable except as given below:

Statement of Arrears of statutory dues outstanding for more than six months as at 31st March 2017:

(Rs.in Crores)

Sr. No		Nature of Dues	Amount
1.	Provident Fund		15.25
2.	Employee State Insurance Contribution		2.70
3.	Profession Tax		1.00
4.	Tax Collected at Source		0.15
5.	Property Tax		2.99
6.	Service Tax		0.67
7.	Tax Deducted at Source		4.82
8.	Excise Duty		0.15
9	Income Tax		11.70
	Total		39.43

(b) According to the records of the company there are no dues of Income-Tax, sales tax, wealth tax, service tax, customs duty, excise duty/cess which have not been deposited on account of any dispute except as given below.

(Rs.in Crores)

Nature of the Act			Amount	Period to which the amount relates	Forum where dispute is pending
	Employees Provident Funds and Miscellaneous Provision Act, 1952		6.27	2000-01 to 2015-16	Employees Provident Funds Appellate Tribunal. New Delhi
	Employee State Insurance Contribution		2.70	2011-12 to 2015-16	ESI. Court, Bangalore
					CIT (A)-54, Mumbai
Income Tax Act,1961			0.38	AY 2012-13
					CIT(A)-54, Mumbai
Income Tax Act,1961			33.39	AY 2013-14
Total			42.74

8. In our opinion and according to the information and explanations given to us, there have been delays in repayment of dues to financial institutes and banks during the year, as on 31.03.2017 the amount due and remaining unpaid on account of principal and interest to lenders is given below:

(Rs.in Crores)

Particulars	Overdue in	Overdue in	Total Overdue
	Principal	Interest
Upto 30 days	21.88	25.67	47.55
From 31 days To 60 days	5.40	21.78	27.18
From 61 days To 90 days	5.40	22.37	27.77
Above 91 days	46.07	86.05	132.12
Total	78.75	155.87	234.62

Total outstanding amount on account of repayment of term loans of Rs. 78.75 Crores and interest of Rs. 155.87 Crores due and unpaid as on 31.03.2017 was considered as part of unsustainable debt and accordingly was cleared in full on 24.05.2017 upon conversion into equity shares under Scheme of Structuring of Stressed Assets. (in consideration with Note No 34 to the Notes to accounts of the Ind As Standalone Financial Statements)

9. During the year the Company has raised fund by way of term loans and utilized for the purpose for which they were obtained. Company has not raised any fund by way of initial public offer or further public offer (including debt instruments).

10. Based upon 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 course of our audit.

11. The Company has paid Managerial remuneration during the year according to the provisions of section 197 read with Schedule V to the Companies Act, 2013.

12. In our opinion and to the best of our information and according to the explanations provided by the management, we are of the opinion that the company is not a Nidhi Company. Hence, in our opinion the clause does not apply to the company.

13. The Company has disclosed all the transactions with the related parties in the Financial Statements during the year and the transactions are in compliance with sections 177 and 188 of Companies Act, 2013.

14. During the year under consideration, pursuant to the CDR Scheme, Funded Interest Term Loan and Working Capital Term Loan amounting to Rs.851.09 crores has been allotted to lenders on account of conversion into equity shares as a preferential allotment of equity shares and term thereof are not prejudicial to the interest of the Company.

15. According to the provisions of section 192 of Companies Act, 2013 the company has not entered into any noncash transactions with directors or persons connected with him during the year hence no comments under this clause are called for.

16. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934, hence this clause is not applicable and no comments under this clause are called for.

For V.K BESWAL & ASSOCIATES

Chartered Accountants

CA VK BESWAL

Partner

Membership Number- 30426

Firm Registration No:101083W

Place: Mumbai

Date: 30.05.2017

---

Mar 31, 2016

To

The Members of

Bombay Rayon Fashions Limited,

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Bombay Rayon Fashions Limited ("the Company"), which comprises the Balance Sheet as at March 31, 2016, 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 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 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 of the assets of the company 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 the 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 misstatements, 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 issued by the Institute of Chartered Accountants of India, as specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the standalone 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 system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the company''s 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:

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2016;

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

d) In our opinion, the aforesaid 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 other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules,2014, in our opinion and to the best of our information and according to the explanations given to us;

i) The company has disclosed the impact of pending litigations on its financial position in its financial statements.

- Refer note 35 to the financial statements;

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

iii) The amount that were required to be transferred to the Investor Education and Protection Fund by the company, have been accordingly transferred.

1. In respect of Fixed Assets:

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

b. The fixed assets have been physically verified by the management at reasonable intervals during the year. We are informed that no material discrepancies were noticed by the management on such verification.

c. The title deeds in respect of all immovable properties are held in the name of the company.

2. In respect of Inventories:

As explained to us physical verification of inventory has been conducted during the year at reasonable intervals by the management and in our opinion and according to the information and explanation given to us, the Company is maintaining proper records of its inventories and no material discrepancies were noticed on physical verification.

3. In respect of loans, secured or unsecured granted by the Company to other Companies, firms, LLP or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

a. During the year Company has granted interest free advances to a Subsidiary company covered in the register maintained u/s 189 of the Companies Act, 2013.

b. In respect of the Long term Loan ,the principal amount is repayable over a period of 5 to 7 years.

c. In respect of the said Loan, there are no overdue amounts.

4. The Company has complied with the provisions of section 185 and 186 of the Companies Act, 2013 in respect of Loans granted during the year. There are no Investments & Securities made or any guarantees given during the year.

5. During the year the company has not accepted any deposits from public or by any means hence the said clause 3(v) of the said order is not applicable to the Company.

6. As per the information and explanations provided to us, we are of the opinion that in pursuant to the prescribed rules by Central Government, the Company had maintained cost records u/s. 148(1) (d) of the Companies Act, 2013, however we have not done a detailed examination of the same.

7. In respect of Statutory Dues:

(a) According to record of the Company produced before us, the Company has not been regular in depositing the undisputed statutory dues and there have been delays in depositing undisputed statutory dues with the appropriate authorities. According to the information and explanations given, no undisputed amounts payable in respect of sales tax, customs duty, excise duty/cess were outstanding as at 31.03.2016 for a period of more than six months from the date they became payable except as given below:

Statement of Arrears of statutory dues outstanding for more than six months as at 31st March 2016:

(Rs.in Crores)

Sr. No	Nature of Dues	Amount
1.	Provident Fund	14.03
2.	Employee State Insurance Contribution	0.96
3.	Profession Tax	0.86
4.	Tax Collected at Source	0.001
5.	Property Tax	2.42
6.	Service Tax	0.39
7.	Tax Deducted at Source	2.48
Total		21.14

Outstanding Interest amount on the above dues (S. No 6 and 7) as on 31st March 2016 is Rs. 0.15Crore.

(b) According to the records of the company there are no dues of Income-Tax, sales tax, wealth tax, service tax, customs duty, excise duty/cess which have not been deposited on account of any dispute except as given below.

Nature of the Act	Amount	Period to which the amount relates	Forum where dispute is pending
Employees Provident Funds and	6.54	2000-01 to 2015-16	Employees Provident Funds
Miscellaneous Provision Act, 1952			Appellate. Tribunal. New Delhi
Employee State Insurance Contribution	2.44	2011-12 to 2015-16	ESI. Court .,Banglore
Income Tax Act,1961	0.82	AY 2009-10	ITAT Mumbai
Income Tax Act,1961	1.22	AY 2010-11	ITAT Mumbai
Income Tax Act,1961	0.02	AY 2011-12	CIT (A)-54 , Mumbai
Income Tax Act,1961	0.38	AY 2012-13	CIT (A)-54 , Mumbai
Income Tax Act,1961	46.11	AY 2013-14	CIT(A)-54,Mumbai
Total	57.03

8. In our opinion and according to the information and explanations given to us, there have been delay in repayment of dues to financial institutes and banks during the year, As on date the amount due and remaining unpaid on account of principal and interest to lenders is given below:

Particulars	Overdue in Principal	Overdue in Interest	Total Overdue
Upton 30 days	32.84	25.48	58.32
From 31 days To 60 days	3.42	21.28	24.70
From 61 days To 90 days	2.81	10.97	13.78
Above 91 days	1.84	2.58	4.42
Total	40.91	60.31	101.22

9. During the year the Company has raised fund by way of term loans and utilized for the purpose for which they were obtained. Company has not raised any fund by way of initial public offer or further public offer (including debt instruments).

10. Based upon 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 course of our audit.

11. According to the provisions of section 197 read with Schedule V to the Companies Act, 2013, the Company has paid Managerial remuneration during the year.

12. In our opinion and to the best of our information and according to the explanations provided by the management, we are of the opinion that the company is not a Nidhi company. Hence, in our opinion the clause does not apply to the company.

13. The Company has disclosed all the transactions with the related parties in the Financial Statements during the year and the transactions are in compliance with sections 177 and 188 of Companies Act, 2013.

14. During the year under consideration, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures, hence comments under this clause are not called for.

15. According to the provisions of section 192 of Companies Act, 2013 the company has not entered into any non-cash transactions with directors or persons connected with him during the year hence no comments under this clause are called for.

16. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934, hence this clause is not applicable and no comments under this clause are called for.

Annexure II

Independent Auditor''s report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

1. In conjunction with our audit of the standalone financial statements of Bombay Rayon Fashions Limited ("the Company") as of and for the year ended 31 March 2016, we have audited the internal financial controls over financial reporting (IFCoFR) of the company of as of that date.

Management''s Responsibility for Internal Financial Controls

2. The Company''s Board of Directors is responsible for establishing and maintaining internal financial controls based on the criteria being specified by management. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of the company''s business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors'' Responsibility

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

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining an understanding of IFCoFR, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

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

Inherent Limitations of Internal Financial Controls over Financial Reporting

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

Opinion

8. In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2016, based on the criteria being specified by management.

FOR V.K. BESWAL & ASSOCIATES

CHARTERED ACCOUNTANTS FIRM REGISTRATION NO.101083W

CA K.V. BESWAL

PARTNER

MEMBERSHIP NO.131054

Place: Mumbai Date: 20/05/2016

---

Mar 31, 2015

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Bombay Rayon Fashions Limited ("the Company"), which comprises the Balance Sheet as at March 31, 2015, 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 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 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 of the assets of the company 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 the 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 misstatements, 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 issued by the Institute of Chartered Accountants of India, as specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the standalone 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 system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the company's 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:

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2015;

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 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 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

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

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

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

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

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

i) The company has disclosed the impact of pending litigations on its financial position in its financial statements.

– Refer note 35 to the 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 were no amounts which were required to be transferred to the Investor Education and Protection Fund by the company.

Annexure to the Auditor's Report even date

(Referred to in paragraph 1 thereof)

1. In respect of Fixed Assets:

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

b) The fixed assets have been physically verified by the management at reasonable intervals during the year. We are informed that no material discrepancies were noticed by the management on such verification.

2. In respect of Inventories:

a) As explained to us physical verification of inventories has been conducted during the year by the management at reasonable intervals.

b) In our opinion, 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) In our opinion and according to the information and explanation given to us, the Company is maintaining proper records of its inventories and no material discrepancies were noticed on physical verification.

3. In respect of loans, secured or unsecured granted by the Company to the companies, firms or other parties covered in the register maintained under Section 189 of the companies Act, 2013:

a) During the year Company has granted interest free advances to 4 subsidiary companies covered in the register maintained u/s 189 of the Companies Act, 2013.

b) In respect of the said loan, the principal amount is repayable over a period of 5 to 7 years.

c) In respect of the said loan, there are no overdue amounts.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and sale of goods and services. Further, on the basis of our examination of the books and records of the company, carried out in accordance with the auditing standards generally accepted in India and according to the information and explanations given to us, we have neither come across nor have we been informed of any continuing failure to correct weaknesses in the aforesaid internal control system.

5. According to the information and explanations given to us, the Company has not accepted any deposits from public.

6. As per the information and explanations provided to us, we are of the opinion that in pursuant to the prescribed rules by Central Government, the company had maintained cost records u/s. 148(1) (d) of the Companies Act, 2013; however we have not done a detailed examination of the same.

7. In respect of Statutory Dues:

(a) Undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, custom duty, excise duty, cess and other material statutory dues have not been regularly deposited with the appropriate authorities,

(b) According to the information and explanations given, undisputed amounts payable in respect of TDS, TCS, Provident fund, Employee state insurance, service tax, customs duty, excise duty, cess and other statutory dues applicable to it which were outstanding as at 31.03.2015 for a period of more than six months from the date they became payable are as under :- Statement of Arrears of statutory dues outstanding for more than six months as at 31st March 2015:

Sr. No. Nature of the Dues Amount (Rs. In crores)

1 Tax Deducted at Source 4.49

2 Provident Fund 7.89

3 Professional Tax 0.79

4 Employee State insurance Corporation 0.46

5 Service Tax 1.26

6 Property Tax 2.05

TOTAL 16.94

(c) According to the records of the company there are no dues of Income-Tax, sales tax, wealth tax, service tax, customs duty, excise duty / cess which have not been deposited on account of any dispute except as given below.

Nature of the Act Amount (Rs. In Crores) Period to which the Forum where dispute is amount relates pending

Income Tax Act, 1961 0.02 2004-05 CIT (A) - 54, Mumbai

Income Tax Act, 1961 0.82 2009-10 ITAT Mumbai

Income Tax Act, 1961 1.22 2010-11 ITAT Mumbai

Income Tax Act, 1961 0.21 2011-12 CIT (A) - 54, Mumbai

(d) According to the records of the company there are no amounts that are to be transferred to Investor Education & Protection Fund.

8. The company has no accumulated losses at the end of the year. The company has not incurred any cash loss during the current year. However, it has incurred cash losses ofRs. 344.02 Crores (After considering extra ordinary items ofRs. 349.28 Crores) in the immediately preceding financial year covered by our audit.

9. In our opinion and according to the information and explanations given to us, there have been delay in repayment of dues to financial of dues to financial institutes and banks during the year, As on date the amount due and remaining unpaid on account of principal and interest to lenders was Rs. 31.98 crore.

10. The company has not given any corporate guarantees for loans taken by others from banks and financial Institutions.

11. According to the records of the company, the company has applied the term loans for the purpose of which it was taken during the year.

12. Based upon the audit procedure 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 course of our audit.

For V. K. BESWAL & ASSOCIATES

CHARTERED ACCOUNTANTS

FIRM REGN NO 101083W

CA K. V. BESWAL

PARTNER

Place : Mumbai Membership Number: 131054

Dated : 22/05/2015 Firm Regn. No.: 101083W

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Bombay Rayon Fashions Limited, which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and summary of significant accounting policies and other explanatory information.

Management 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 principles generally accepted in India including 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 Profit and Loss Account, of the Profit for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

iii. 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;

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

v. On the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure to the Auditor''s Report of Even Date

(Referred to in paragraph 1 thereof)

1. In respect of fixed assets:

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

b) The fixed assets have been physically verified by the management at reasonable intervals during the year. We are informed that no material discrepancies were noticed by the management on such verification.

c) Based on our scrutiny of the records of the company and the information & explanation received by us, we report that there were sale of fixed assets during the year but the fixed assets disposed off did not constitute a substantial part of the fixed assets of the company.

2. In respect of inventories

a) As explained to us physical verification of inventories has been conducted during the year by the management at reasonable intervals.

b) In our opinion, 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) In our opinion and according to the information and explanation given to us, the Company is maintaining proper records of its inventories and no material discrepancies were noticed on physical verification.

3. In respect of loans, unsecured, granted and taken.

a) The company has granted interest free advances to five companies including four subsidiaries covered in the register maintained under section 301 of the companies Act, 1956, the maximum amount outstanding at any time during the year is Rs. 587.52 Crores and the year balance is Rs. 545.40 Crores .

b) In our opinion and according to the information and explanations given to us, other terms and conditions are not prima facie prejudicial to the interest of the Company.

c) In respect of the said advances amounting to Rs. 210 Crores is repayable within the period of one year and remaining over a period of 5 to 7 years.

d) In respect of the said loans, there are no overdue amounts

e) During the year the company has not taken any loans from parties covered in the registered maintained under section 301 of the Companies Act, 1956.

f) In view of our comments above, clause (iii) (f) and (g) of the said order is not applicable to the company.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and fixed assets. Further, on the basis of our examination of the books and records of the company, carried out in accordance with the auditing standards generally accepted in India and according to the information and explanations given to us, we have neither come across nor have we been informed of any continuing failure to correct weaknesses in the aforesaid internal control system.

5. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) In our opinion and according to the information and explanations given to us the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in to the register required to be maintained under that section.

b) In our opinion and according to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Act and exceeding the value of Rupees five lakhs in respect of any party during the year, have been made at prices, which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

6. According to the information and explanations given to us, the Company has not accepted any deposits from public.

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

8. As per the information and explanations provided to us, we are of the opinion that in pursuant to prescribed rules by the central government, the company has maintained cost records u/s. 209(1) (d) of the Companies Act, 1956 however we have not done a detailed examination of the same.

9. In respect of statutory dues:

a) According to the records of the company produced before us, the Company has been regular in depositing with appropriate authorities undisputed statutory dues in respect of , Investor Education Protection Fund, Sales Tax, Wealth Tax, Custom Duty and Excise Duty, however the Company has been irregular in depositing with appropriate authorities undisputed statutory dues in respect of Provident Fund, Employees State Insurance, Income Tax.

b) Accordingly to the information and explanation given undisputed amounts payable in respect of TDS, TCS, Provident Fund, Employees State Insurance, Service Tax and other statutory dues applicable to it which were outstanding as at the last day of the financial year for a period of more than six months from the date they became payable is as under:-

S. No. Name of Head Amount (Rs.)

1 Tax Deducted at Source 5,68,05,312

2 Tax Collected at Source 66,718

3 Employee State Insurance Corporation 89,39,810

4 Service Tax 8,75,200

5 Professional Tax 23,05,488

6 Provident Fund 3,35,98,929

7 Property tax 70,23,956

TOTAL 10,96,15,413

c) According to the records of the company, there are no disputed dues of Income Tax, sales tax, customs duty, wealth tax, service tax and excise duty / cess except as under:

Name of the Statute Amount (Rs. In Crores) Period for which it Forum where dispute is relates pending

Income Tax Act, 1961 0.02 AY 2004-05 Commissioner of Income Tax (Appeals 41), Mumbai

Income Tax Act, 1961 0.02 A Y 2006-07 Income Tax Appellate Tribunal, Mumbai

Income Tax Act, 1961 0.72 AY 2006-07 Commissioner of Income Tax (Appeals 14), Mumbai

Income Tax Act, 1961 0.28 AY 2007-08 Commissioner of Income Tax (Appeals 41), Mumbai

Income Tax Act, 1961 35.98 AY 2008-09 Commissioner of Income Tax (Appeals 41), Mumbai

Income Tax Act, 1961 0.14 AY 2008-09 Commissioner of Income Tax (Appeals 14), Mumbai

Income Tax Act, 1961 0.12 AY 2009-10 Commissioner of Income Tax (Appeals 14), Mumbai

Income Tax Act, 1961 1.30 AY 2009-10 Commissioner of Income Tax (Appeals 41), Mumbai

Income Tax Act, 1961 21.44 AY 2010-11 Commissioner of Income Tax (Appeals 41), Mumbai

10. The company has no accumulated losses at the end of the financial year. The company has not incurred any cash loss during the financial year covered by our audit and in the immediately preceding financial year.

11. Based on our audit procedures and as per the information and explanations given by the management, the company was not regular in repayment of the dues to the banks. As at 31st March 2013 the unpaid overdue installments and interest to the banks were Rs. 95.85 Crores, out of which since unpaid Rs. 64.43 crores.

12. The Company has not borrowed from any financial institutions and issued debentures.

13. According to the information and explanations given to us the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

14. In our opinion, and to the best of our information and according to the explanations provided by the management, we are of the opinion that the company is neither a Chit Fund nor a nidhi/mutual benefit society. Hence, in our opinion, the requirements of para 4 (xiii) of the Order do not apply to the company.

15. As per records of the company and information and explanations given to us by the management, company is not dealing or trading in shares, securities, debentures and other investments.

16. According to the information and explanations given to us the company has not given any guarantee for loans taken by others from banks or financial institutions.

17. According to the records of the Company, the Company has applied the term loans for the purposes of which it was taken during the year.

18. According to the information and explanations given to us and, on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis has been used for long-term investment by the company.

19. According to the records of the company and the information provided by the management, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

20. During the period covered by audit report the company has not issued any debentures.

21. During the year the company has not raised any money by way of public issue.

22. Based upon 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 course of our audit.

For V.K. BESWAL & ASSOCIATES

CHARTERED ACCOUNTANTS

C.A. R.P. LADDHA

PARTNER

Membership Number - 48195

Firm Regn. No.: 101083W

Place - Mumbai

Dated: June 7th, 2013

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Mar 31, 2012

We have audited the attached Balance Sheet of BOMBAY RAYON FASHIONS LIMITED as at March 31, 2012 and the Profit and Loss Account & Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure 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.

1. As required by the Companies (Auditor's Report) Order, 2003(as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956. We enclose the annexure statement on the matters specified in paragraphs 4 and 5 of the Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

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

b) In our opinion, the Company has kept proper books of accounts as required by law so far as appears from our examination of those books.

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

d) In our opinion and to the best of our information and according to the explanations given to us, the Balance Sheet, Profit & Loss Account & Cash Flow Statement are prepared in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1961.

e) On the basis of written representations received from directors as on March 31, 2012 and taken on record by the Board of Directors, we report that none of the Directors are 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.

f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with notes thereon and attached thereto give in the prescribed manner the information required by the Companies Act, 1956, required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. In so far as it relates to the Balance Sheet of the state of affairs of the Company as at March 31, 2012,

ii. In so far as it relates to the Profit & Loss Account of the PROFIT of the company for the year ended on that date, and

iii. In so far as it related to the Cash Flow Statement, of the Cash Flows for the year ended on that date.

Annexure to the Auditor's Report of even date

(Referred to in paragraph 1 thereof)

1. In respect of fixed assets:

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

b) The fixed assets have been physically verified by the management at reasonable intervals during the year. We are informed that no material discrepancies were noticed by the management on such verification.

c) Based on our scrutiny of the records of the company and the information & explanation received by us, we report that there were sale of fixed assets during the year but the fixed assets disposed off did not constitute a substantial part of the fixed assets of the company.

2. In respect of inventories:

a) As explained to us physical verification of inventories has been conducted during the year by the management at reasonable intervals.

b) In our opinion, 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) in our opinion and according to the information and explanation given to us, the Company is maintaining proper records of its inventories and no material discrepancies were noticed on physical verification.

3. In respect of loans, unsecured, granted and taken:

a) The company has granted interest free advances to five companies including four subsidiaries covered in the register maintained under section 301 of the companies Act, 1956, the maximum amount outstanding at any time during the year is Rs. 578.42 Crores and the year balance is Rs. 569.77 Crores.

b) In our opinion and according to the information and explanations given to us, other terms and conditions are not prima facie prejudicial to the interest of the Company,

c) In respect of the said advances amounting to Rs. 210.00 Crores is repayable within the period of one year and remaining over a period of 5 to 7 years.

d) in respect of the said loans, there are no overdue amounts.

e) During the year the company has not taken any loans from parties covered in the registered maintained under section 301 of the Companies Act, 1956.

f) In view of our comments above, clause (iii) (f) and (g) of the said order is not applicable to the company.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and fixed assets. Further, on the basis of our examination of the books and records of the company, carried out in accordance with the auditing standards generally accepted in India and according to the information and explanations given to us, we have neither come across nor have we been informed of any continuing failure to correct weaknesses in the aforesaid internal control system.

5. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) In our opinion and according to the information and explanations given to us the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in to the register required to be maintained under that section.

b) In our opinion and according to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Act and exceeding the value of Rupees five iakhs in respect of any party during the year, have been made at prices, which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

6. According to the information and explanations given to us, the Company has not accepted any deposits from public.

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

8. As per the information and explanations provided to us, we are of the opinion that in pursuant to prescribed rules by the central government, the company has maintained cost records u/s. 209(1) (d) of the Companies Act, 1956 however we have not done a detailed examination of the same.

9. In respect of statutory dues:

a) According to the records of the company produced before us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues, including Provident Fund, Employees State Insurance, Income Tax, Wealth Tax, Custom Duty, Excise Duty, Service Tax, Cess and other statutory dues applicable to it.

Accordingly to the information and explanation given no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income Tax, Wealth Tax, Custom Duty, Excise Duty, Service Tax, Cess and other statutory dues applicable to it which were outstanding as at the last day of the financial year for a period of more than six months from the date they became payable.

b) According to the records of the company, there are no disputed dues of Income Tax, sales tax, customs duty, wealth tax, service tax and excise duty / cess except as under:

Amount Rs. In Period for Name of the Statute Forum where dispute is pending Crores which it relates

Income Tax Act, 1961 0.53 AY 2009-10 Commissioner of Income Tax (Appeals 14), Mumbai

Income Tax Act, 1961 0.14 AY 2008-09 Commissioner of Income Tax (Appeals 14), Mumbai

Income Tax Act, 1961 0.10 AY 2008-09 Commissioner of Income Tax (Appeals) 16, Mumbai

Income Tax Act, 1961 0.72 AY 2006-07 Commissioner of income Tax (Appeals 14), Mumbai

Income Tax Act, 1961 0.06 AY 2005-06 Commissioner of income Tax (Appeals 41), Mumbai

Income Tax Act, 1961 0.06 AY 2004-05 Income Tax Appellate Tribunal, Mumbai

Income Tax Act, 1961 0.09 AY 2004-05 Commissioner of Income Tax (Appeals 41), Mumbai

Income Tax Act, 1961 0.27 AY 2003-04 income Tax Appellate Tribunal, Mumbai

10. The company has no accumulated losses at the end of the financial year. The company has not incurred any cash loss during the financial year covered by our audit and in the immediately preceding financial year.

11. As per the information and explanations given to us the company is generally regular in repayment of dues to banks, however in some cases an amount of Rs. 28.75 crores remained to be unpaid.

12. According to the information and explanations given to us the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

13. In our opinion, and to the best of our information and according to the explanations provided by the management, we are of the opinion that the company is neither a Chit Fund nor a nidhi/mutuai benefit society. Hence, in our opinion, the requirements of para 4 (xiii) of the Order do not apply to the company.

14. As per records of the company and information and explanations given to us by the management, company is not dealing or trading in shares, securities, debentures and other investments.

15. According to the information and explanations given to us the company has not given any guarantee for loans taken by others from banks or financial institutions.

16. According to the records of the Company, the Company has applied the term loans for the purposes of which it was taken during the year.

17. According to the information and explanations given to us and, on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis has been used for long-term investment by the company.

18. The company has made preferential allotment of shares to companies covered in the register maintained under section 301 of the Act. In our opinion the prices at which the shares have been issued is not prejudicial to the interest of the company.

19. During the period covered by audit report the company has not issued any debentures.

20. During the year the company has not raised any money by way of public issue.

21. Based upon 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 course of our audit.

For V.K.BESWAL & ASSOCIATES

CHARTERED ACCOUNTANTS

C.A. R.P. LADDHA

[PARTNER]

Place - Mumbai Membership Number - 48195

Date: May 29, 2012 Firm Regn. No.: 101083W

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Mar 31, 2011

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

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure 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.

1. As required by the Companies (Auditor's Report) Order, 2003(as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956. We enclose the annexure statement on the matters specified in paragraphs 4 and 5 of the Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

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

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

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

d) In our opinion and to the best of our information and according to the explanations given to us, the Balance Sheet, Profit & Loss Account & Cash Flow Statement are prepared in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

e) On the basis of written representations received from directors as on March 31, 2011 and taken on record by the Board of Directors, we report that none of the Directors are disqualified 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.

f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with notes thereon and attached thereto give in the prescribed manner the information required by the Companies Act, 1956, required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. In so far as it relates to the Balance Sheet of the state of affairs of the Company as at March 31, 2011

ii. In so far as it relates to the Profit & Loss Account of the profit of the company for the year ended on that date, and

iii. In so far as it related to the Cash Flow Statement, of the Cash Flows for the year ended on that date.

ANNEXURE TO THE AUDITOR'S REPORT OF EVEN DATE (Referred to in paragraph 1 thereof)

1. In respect of fixed assets:

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

b) The fixed assets have been physically verified by the management at reasonable intervals during the year. We are informed that no material discrepancies were noticed by the management on such verification.

c) Based on our scrutiny of the records of the company and the information & explanation received by us, we report that there were sale of fixed assets during the year but the fixed assets disposed off did not constitute a substantial part of the fixed assets of the company.

2. In respect of inventories

a) As explained to us physical verification of inventories has been conducted during the year by the management at reasonable intervals.

b) In our opinion, 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) In our opinion and according to the information and explanation given to us, the Company is maintaining proper records of its inventories and no material discrepancies were noticed on physical verification.

3. In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under section 301 of the companies Act, 1956:

a) The company has granted interest free advances to its wholly owned subsidiaries. The maximum amount outstanding at any time during the year is Rs. 540.94 crores and the year-end balance is Rs. 512.50 crores.

b) In our opinion and according to the information and explanations given to us, other terms and conditions are not prima facie prejudicial to the interest of the Company.

c) In respect of the said loans, the same are repayable on demand and there is no repayment schedule.

d) In respect of the said loans, the same are repayable on demand and therefore the question of overdue amounts does not arise.

e) During the year the company has not taken any loans from parties covered in the registered maintained under section 3)1 of the Companies Act, 1956.

f) In view of our comments above, clause (iii) (f) and (g) of the said order is not applicable to the company.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and fixed assets. Further, on the basis of our examination of the books and records of the company, carried out in accordance with the auditing standards generally accepted in India and according to the information and explanations given to us, we have neither come across nor have we been informed of any continuing failure to correct weaknesses in the aforesaid internal control system.

5. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) In our opinion and according to the information and explanations given to us the particulars of contracts or arrangemerts referred to in section 301 of the Act have been entered in to the register required to be maintained under that section.

b) In our opinion and according to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Act and exceeding the value of Rupees five lakhs in respect of any party during the year, have been made at prices, which are prima facie reasonable having regard o the prevailing market prices at the relevant time.

6. According to the information and explanations given to us, the Company has not accepted any deposits from public.

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

8. As per the information and explanations provided to us, we are of the opinion that in pursuant to prescribed rules by the central government, the company has maintained cost records u/s. 209(1) (d) of the Companies Act, 1956 however we have not dore a detailed examination of the same.

9. In respect of statutory dues:

a) According to the records of the company produced before us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues, including Provident Fund, Employees State Insurance, Income Tax, Wealth Tax, Custom Duty, Excise Duty, Service Tax, Cess and other statutory dues applicable to it, which were outstanding as at the last day of the financial year for a period of more than six months from the date they became payable.

b) According to the records of the company, there are no disputed dues of sales tax, customs duty, wealth tax, service tax and excise duty/ cess except as under:

Name of the Statute Amount (Rs. In Lacs) Period for which it relates Forum where dispute is pending

Income Tax Act, 1961 9.96 AY 2008-09 Commissioner of Income Tax (Appeals 8), Mumbai

Income Tax Act, 1961 12.21 AY 2004-05 Commissioner of Income Tax (Appeals 32), Mumbai

Income Tax Act, 1961 27.38 AY 2003-04 Commissioner of Income Tax (Appeals 32), Mumbai

Total 49.55

10. The company has no accumulated losses at the end of the financial year. The company has not incurred any cash loss during the financial year covered by our audit and in the immediately preceding financial year.

11. As per the information and explanations given to us the company is generally regular in making the repayments due to the banks & financial institution and as at 31.03.2011 there are no overdue amounts.

12. According to the information and explanations given to us the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

13 In our opinion, and to the best of our information and according to the explanations provided by the management, we are of the opinion that the company is neither a Chit Fund nor a nidhi/mutual benefit society. Hence, in our opinion, the requirements of para 4 (xiii) of the Order do not apply to the company.

14. As per records of the company and information and explanations given to us by the management, company is not dealing or trading in shares, securities, debentures and other investments.

15. According to the information and explanations given to us the company has not given any guarantee for loans taken by others from banks or financial institutions.

16. According to the records of the Company, the Company has applied the term loans for the purposes of which it was taken during the year.

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

18. The company has not made preferential allotment of shares to a company covered in the register maintained under section 301 of the Act.

19. During the period covered by audit report the company has not issued any debentures.

20. During the year the company has not raised any money by way of public issue.

21. Based upon 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 course of our audit.

For V. K. Beswal & Associates

Chartered Accountants

CA R. P. Laddha

Partner

Place : Mumbai M. No. 48195

Dated : June 04, 2011 Firm Reg. No. 101083W

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Mar 31, 2010

We have audited the attached Balance Sheet of BOMBAY RAYON FASHIONS LIMITED as at March 31, 2010 and also the Profit and Loss Account & Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure 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.

1. As required by the Companies (Auditors Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-Section (4A) of Section 227 of the Companies Act, 1956. We enclose the annexure statement on the matters specified in paragraphs 4 and 5 of the Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

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

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

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

d) In our opinion and to the best of our information and according to the explanations given to us, the Balance Sheet, Profit & Loss Account & Cash Flow Statement are prepared in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1961.

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

f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with notes thereon and attached thereto give in the prescribed manner the information required by the Companies Act, 1956, required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) In so far as it relates to the Balance Sheet of the state of affairs of the Company as at March 31, 2010,

ii) In so far as it relates to the Profit & Loss Account of the PROFIT of the company for the year ended on that date, and

iii) In so far as it related to the Cash Flow Statement, of the Cash Flows for the year ended on that date. Annexure to the Auditors Report of even date (Referred to in paragraph 1 thereof)

1. In respect of Fixed Assets:

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

b) The fixed assets have been physically verified by the management at reasonable intervals during the year. We are informed that no material discrepancies were noticed by the management on such verification.

c) Based on our scrutiny of the records of the company and the information & explanation received by us, we report that there were sale of fixed assets during the year but the fixed assets disposed off did not constitute a substantial part of the fixed assets of the company.

2. In respect of Inventories:

a) As explained to us physical verification of inventories has been conducted during the year by the management at reasonable intervals.

b) In our opinion, 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) In our opinion and according to the information and explanation given to us, the Company is maintaining proper records of its inventories and no material discrepancies were noticed on physical verification.

3. In respect of loans, secured or unsecured, granted or taken by the Company to/ from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a) The Company has granted loans to companies and the maximum amount outstanding at any time during the year is Rs. 445.53 crores and the year-end balance is Rs. 440.31 crores.

b) In our opinion and according to the information and explanations given to us, the rate of interest, where applicable and other terms and conditions, are not prima facie prejudicial to the interest of the Company.

c) In respect of the said loans, the same are repayable on demand and there is no repayments schedule.

d) In respect of said loans, the same are repayable on demand and therefore the question of overdue amounts does not arise. In respect of interest, where applicable there are no overdue amounts.

e) During the year the Company has not taken any loans from parties covered in the register maintained under Section 301 of the Companies Act, 1956.

f) In view of our comments above, clause (iii) (e) (f) and (g) of the said order is not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and fixed assets. Further, on the basis of our examination of the books and records of the company, carried out in accordance with the auditing standards generally accepted in India and according to the information and explanations given to us, we have neither come across nor have we been informed of any continuing failure to correct weaknesses in the aforesaid internal control system.

5. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) In our opinion and according to the information and explanations given to us the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in to the register required to be maintained under that section.

b) In our opinion and according to the information and explanations given to us, transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Act and exceeding the value of Rupees Five Lakhs in respect of any party during the year, have been made at prices, which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

6. According to the information and explanations given to us, the Company has not accepted any deposits from public.

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

8. As per the information and explanations provided to us, we are of the opinion that in pursuant to prescribed rules by the central government, the company has maintained cost records u/s. 209(1) (d) of the Companies Act, 1956 however we have not done a detailed examination of the same.

9. In respect of Statutory Dues:

a) According to the records of the company produced before us, the Company is generally regular in

depositing with appropriate authorities undisputed statutory dues, including Provident Fund, Employees State Insurance, Income Tax, Wealth Tax, Custom Duty, Excise Duty, Service Tax, Cess and other statutory dues applicable to it, which were outstanding as at the last day of the financial year for a period of more than six months from the date they became payable .

b) According to the records of the company, there are no disputed dues of Sales Tax, Customs Duty, Wealth Tax, Service Tax and Excise Duty / Cess except as under:

Name of Amount Period for Forum where the (Rs.) which it dispute is Statute relates pending

Income Tax 9,95,922 A.Y. 2008-09 Income Tax Appellate Act, 1961 Tribunal Mumbai

Income Tax 1,70,000 A.Y. 2008-09 Commissioner of Act, 1961 Income Tax (Appeals) (TDS), Mumbai

Income Tax 1,72,800 A.Y. 2007-08 Commissioner of Act, 1961 Income Tax (Appeals) (TDS), Mumbai

Income Tax 2,06,600 A.Y. 2006-07 Commissioner of Act, 1961 Income Tax (Appeals) (TDS), Mumbai

TOTAL 15,45,322

10. The company has no accumulated losses at the end of the financial year. The company has not incurred any cash loss during the financial year covered by our audit and in the immediately preceding financial year.

11. As per the information and explanations given to us the company is generally regular in making the repayments due to the banks & financial institution and as at March 31, 2010 there are no overdue amounts.

12. According to the information and explanations given to us the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures or o ther securities.

13. In our opinion, and to the best of our information and according to the explanations provided by the

management, we are of the opinion that the company is neither a Chit Fund nor a nidhi/mutual benefit society. Hence, in our opinion, the requirements of para 4 (xiii) of the Order do not apply to the company.

14. As per records of the company and information and explanations given to us by the management, company is not dealing or trading in shares, securities, debentures and other investments.

15. According to the information and explanations given to us the company has not given any guarantee for loans taken by others from banks or financial institutions.

16. According to the records of the Company, the Company has applied the term loans for the purposes of which it was taken during the year.

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

18. 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, prices as which shares have been issued are not prejudicial to the interest of the Company.

19. During the period covered by audit report the company has not issued any debentures.

20. During the year the company has not raised any money by way of public issue.

21. Based upon 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 course of our audit.

For V. K. BESWAL & ASSOCIATES

Chartered Accountants

R. P. Laddha

Partner

Membership Number - 48195 Firm Regn. No.: 101083W

Place : Mumbai

Date : May 18, 2010