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Auditor Report of Flexituff International Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of M/s Flexituff International Limited ('the Company'), which comprise the Balance Sheet as at March 31, 2015, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The company's Board of Directors is responsible for the matters stated in Section 134 (5) of the Companies Act, 2013("the Act") with respect to the preparation and presentation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Principle Generally Accepted in India including Accounting Standards referred to in Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 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 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 31,2015;

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

c) In the case of the Cash Flow Statement, of the cash flows for 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 I India in terms of section (11) of Section 143 of the Act, we enclose in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Company (Accounts) Rules, 2014;

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

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

i) the Company has no pending litigations on its financial position in its financial statements.

ii) the Company has made provision, as required under the applicable accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts (refer note 27 (A) (i)).

iii) there has been no delay in transferring amounts, required to be transferred, to the Investor 8j Protections by the Company.

ANNEXURE

TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in Paragraph 1 under the heading of "report on other legal and regulatory requirements" of our report of even date

i. (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 during the year and there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

ii. (a) As explained to us, the management has conducted physical verification of inventory at reasonable intervals during the year other than those lying with Job Workers.

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

iii. According to the information and explanation given to us, Company has, during the year, not granted any loans, security or unsecured, to companies, firm and other parties covered in the register maintained under Section 189 of the Companies Act, 2013 ('the Act). Accordingly, paragraph 3(iii)(a)(b) of the Order is not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures 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..

v. The Company has not accepted any deposits from public. Thus, paragraph 3(ii) of the Order is not applicable.

vi. According to information and explanation given to us, the Companies is not required to maintain cost records under (Cost Records 8j Audit) Rules, 2014, prescribed by the Central Government under Section 148 (1) of the Act,

vii. (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income- tax, sales-tax, wealth-tax, custom duty, excise duty, VAT, cess and other material statutory dues applicable to it.

(b) According to the records of the Company, the dues outstanding of taxes on account of any dispute are as follows:

S. Name of Nature of dues Demand Amount Paid No. the statute (Rs. in Millions) (Rs. in Millions)

1 Income Tax Assessment made 16.05 3.98 Act by A.O. is further enhanced by CIT (A) in respect of Share application money received SEZ Loss u/s 10A&80HHC deduction_

2 Income Tax Disallowances 10.13 10.13 Act in respect of Share Capital Subscribed during the year, SEZ Loss u/s 10A&80HHC deduction.

3 Income Tax Disallowances 9.88 1.33 Act in respect of Share Capital Subscribed during the year.

4 Income Tax Disallowances 12.73 12.73 Act in respect of Share Capital Subscribed during the year.

5 Income Tax Disallowances in 6.03 Nil Act respect of SEZ Loss u/s 10 A.

6 Income Tax Departmental 6.57 -NA- Act Appeal against appeal allowed by IT AT in case of Investment made by certain companies in Equity Capital of Company and also against deduction allowed under Section 80 IB in Company's favor by ITAT

7 Income Tax Non Deduction 0.71 0.35 TDS of TDS on payment of Lease Rent to MPAKVN and Interest thereon.

8 M.P. Entry tax levied 2.41 1.35 Entry Tax on job work done Act, 1976 for SEZ unit (U/s 21 Re- open)

9 M.P. Assessing Office 3.83 1.53 commercial has levied the tax Tax Act, on sale by SEZ 1994 unit in Domestic (U/s 21 Re- Area open)

10 Central Sales Assessing Office 0.02 0.008 Tax Act, has levied the tax (U/s 21 Re- on sale by SEZ open) unit inDomestic Area

11 M.P. Entry Entry tax levied 1.68 1.61 Tax Act, on job work done 1976 for SEZ unit

12 M.P. Entry tax levied 1.09 0.31 Entry Tax on job work done Act, 1976 for SEZ unit (U/s 21 Re- open)

13 M.P. Assessing Office 1.96 1.96 commercial has levied the tax Tax Act, on sale by SEZ unit 1994 in Domestic Area





14 M.P. Entry Entry tax levied 2.89 0.88 Tax Act, on job work done 1976 for SEZ unit

15 M.P. Assessing Office 1.73 0.43 Entry Tax has levied the tax Act, 1976 on sale by SEZ (U/s 21 Re- unit in Domestic open) Area

16 M.P. Assessing Office 1.05 1.05 commercial has levied the tax Tax Act, on sale by SEZ 1994 unit in Domestic Area

17 M.P. Entry Entry tax levied 3.72 1.04 Tax Act, on job work done 1976 for SEZ unit

18 Central Sales Tax imposed on 0.08 0.08 Tax Act, non receipts of Form -H

19 M.P. VAT ITR Reversal 0.61 0.61 commercial on Job Work & Tax Act, Stock Transfer 1994

20 M.P. Entry Entry tax levied 0.37 0.09 Tax Act, on job work done 1976 for SEZ unit

21 Central Sales Tax imposed on 0.31 0.31 Tax Act, non receipts of Form -H

22 Central Sales Tax imposed on 0.20 0.20 Tax Act, non receipts of Form -H

23 M.P. Tax imposed on 0.45 0.45 commercial non receipts of Tax Act, Form -H 1994

24 Central Sales Tax imposed on 0.97 0.97 Tax Act, non receipts of Form -H

25 M.P. Tax imposed on 0.02 0.02 commercial non receipts of Tax Act, Form -H 1994

26 Uttarakhand Tax imposed on 1.71 Nil VAT Tax Free Item Act,2005

27 Central Sales Tax imposed on 26.75 Nil Tax Act on non receipts of Form C and Tax Free Item

28 Central Sales Appeal for 7.81 2.23 Tax Act Chargeability of tax on sale of narrow woven fabric

29 Uttarakhand Assessment under 6.00 2.00 VAT Act,2005 Section 25(7) of the Uttarakhand Vat ACt for claim of Vat Input not paid by selling party

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

Income Tax ACt A.Y. 2004-05 ITAT

Income Tax Act A.Y. 2004-05 CIT (A)

Income Tax acT A.Y.2005-06 ITAT

Income Tax Act A.Y.2005-06 CIT (A)

Income Tax Act A.Y.2006-07 CIT (A)

iNCOME tAX A.Y.2003-04 M.P.HIGH COURT

Income Tax Act A.Y.2005-06 to A.Y. CIT(A) TDS 2007-08

M.P. F.Y. 2006-07 The Appellate Board, Entry Tax M.P. Tax Tribunal Act 1976 Bhopal / Indore (u/s) 21 Re- open)

M.P.Commercial F.Y. 2006-07 The Appellate tax Act 1994 (U/s 21 Reopen) Authority and Additional Commissioner of Commercial Tax, Indore Division

Central Sales F.Y. 2006-07 The Appellate Tax Act Authority and Additional (U/s 21 Reopen Commissioner of Commercial Tax, Indore Division

M.P.Entry F.Y. 2007-08 The Appellate Board, TAX Act 1976 M.P. Tax Tribunal Bhopal / Indore

M.P Entry Tax F.Y. 2007-08 The Appellate aCT,1976 Authority and (u/S 21Reopen) Additional Commissioner of Commercial Tax, Indore Division

M.P.Commercial F.Y. 2007-08 The Appellate Board, Tax Act 1994 M.P. Tax Tribunal Bhopal / Indore

M.P Entry F.Y. 2008-09 The Appellate Board, Tax Act,1976 M.P. Tax Tribunal Bhopal / Indore

M.P Entry Tax F.Y. 2008-09 The Appellate Act, 1976 Authority and (U/s 21 Reopen) Additional Commissioner of Commercial Tax, Indore Division

M.P Commercial F.Y. 2008-09 The Appellate Board, TAX Act,1999 M.P. Tax Tribunal Bhopal / Indore

M.P.Entry F.Y. 2009-10 The Appellate Board, Tax Act,1994 M.P Commercial M.P. Tax Tribunal Bhopal / Indore

Central Sales F.Y. 2009-10 The Appellate Board, Tax Act, M.P. Tax Tribunal Bhopal Indore

M.P Commercial F.Y. 2010-11 The Appellate Tax Act,1994 Authority and Additional Commissioner of Commercial Tax, Indore Division

M.P Entry F.Y. 2010-11 The Appellate TAx Act,1976 Authority and Additional Commissioner of Commercial Tax, Indore Division

Central Sales F.Y. 2010-11 The Appellate Tax Act Authority and Additional Commissioner of Commercial Tax, Indore Division

Central sales F.Y. 2012-13 The Appellate Tax Act, Authority and Additional Commissioner of Commercial Tax, Indore Division

M.P. Commer- cial Tax F.Y. 2012-13 The Appellate Act 1994 Authority and Additional Commissioner of Commercial Tax, Indore Division

Central Sales F.Y. 2012-13 The Appellate Tax ACT Authority and Additional Commissioner of Commercial Tax, Indore Division

M.P. Commer F.Y. 2012-13 The Appellate cial Tax Act Authority and Additional 1994 Commissioner of Commercial Tax, Indore Division

Uttarakhand F.Y. 2010-11, VAT Act,2005 2011-12 The Deputy Commissioner Appeal Uttarakhand

Central Sales F.Y. 2010-11 $ The Deputy Tax Act 2012-13 Commissioner Appeal Uttarakhand

Central Sales F.Y.2011-12 The Deputy Tax Act Commissioner Appeal Uttarakhand

Uttarakhand F.Y.2013-14 The Deputy VAT 2014-15 Commissioner Range aCT,2005 -1 Uttarakhand

(c) According to the information and explanation given to us the amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act,1956 (1 of 1956) and rules there

under has been transferred to such fund within time.

viii. The Company neither has accumulated losses at the end of the financial year nor has incurred cash losses during the year and in the immediately preceding year.

ix. Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution or bank or debenture holders.

x. According to the information and explanations given to us, the Company has given corporate guarantee on behalf

of Nanofil Technologies Private Limited for Rs.0.2 million to Governor of Uttarakhand, which is not prima facie prejudicial to the interest of the company.

xi. Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

xii. According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For L.K MAHESHWARI & CO.

Chartered Accountants

FRN No. 000780C

(Abhay Singi)

Indore, Partner

Dated: 28th May 2015 Membership No 079873


Mar 31, 2014

1. We have audited the accompanying financial statements of M/s Flexituff International Limited, which comprise the Balance Sheet as at March 31, 2014, and 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

2. 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 Principle Generally Accepted in India including Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of interna 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.

3. Our responsibility is to express an opinion on these financia

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 financia 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

4. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion In our opinion and to the best of our information and according to the explanations given to us, the financia statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India

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

b) In the case of the Statement of Profit and Loss, of the profit 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.

As required by the Companies (Auditor''s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order. As required by section 227(3) of the Act, we report that:

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

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

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

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

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

ANNEXURE TO THE AUDITORS REPORT

Annexure to the Auditors report of even date to the Members of Flexituff International Ltd.

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details except the location of fixed assets, item-wise depreciation and accumulated depreciation. The management is in the process to comply the requirement as prescribed.

(b) The fixed assets have been physically verified by the management during the year and there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) In our opinion, there was no disposal of substantial part of fixed assets during the year, therefore, does not affect the going concern assumption.

(ii) (a) As explained to us, the management has conducted physical verification of inventory at reasonable intervals during the year other than those kept with third parties.

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) The company has not taken Inter Corporate Deposit from companies covered in the register maintained under section 301 of the Act.

(b) According to the information and explanation given to us, Company has, during the year, not granted any bans, security or unsecured, to companies, firm and other parties covered in the register maintained under Section 301 of the Act.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures 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. However as observed during the course of audit, the internal control and procedures in relation to trading of goods, purchase of fixed assets and receivables needs to be strengthen

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Act have been so entered

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

(vi) The Company has not accepted any deposits from public. Therefore, the provision of Clause of (vi) of paragraph 4 of the Order are not applicable to the company.

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

(viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1 )(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained We have however not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employee''s state insurance, income- tax, sales-tax, wealth-tax, custom duty, excise duty, VAT, cess and other material statutory dues applicable to it. (b) According to the records of the Company, the dues outstanding of taxes on account of any dispute are as follows:

Name of the statute Nature of dues Demand Amount (Rs. in million) Paid (Rs. in million)

IncomeTax Act Disallowances in respect of Share 7.00 3.00 Capital Subscribed during the year.

IncomeTax Act Disallowances in respect of Share 10.13 3.90 Capital Subscribed during the year, SEZ Loss u/s 10A & 80HHC deduction.

IncomeTax Act Disallowances in respect of Share 2.66 1.33 Capital Subscribed during the year.

IncomeTax Act Disallowances in respect of Share 12.73 Nil Capital Subscribed during the year.

IncomeTax Act Disallowances in respect of SEZ Loss 6.03 Nil u/s 10 A.

IncomeTax Act Departmental Appeal against penalty 1.45 -NA- order decided in Company''s favor by ITAT

IncomeTax Act Departmental Appeal against appeal 6.58 -NA- allowed by ITAT in case of Investment made by certain companies in Equity Capital of Company and also against deduction allowed under Section 80 IB in Company''s favor by ITAT

IncomeTax TDS Non Deduction of TDS on payment of 0.71 NIL Lease Rent to MPAKVN and Interest thereon.

M.P. Entry Tax Act, Entry tax levied on job work done for 2.41 1.35 1976 SEZ unit (U/s 21 Re-open)

M.P. commercial Tax Assessing Office has levied the tax on 3.83 0.98 Act, 1994 sale by SEZ unit in Domestic Area (U/s 21 Re-open)

Central Sales Tax Act, Assessing Office has levied the tax on 0.0002 0.00 (U/s 21 Re-open) sale by SEZ unit in Domestic Area

M.P. Entry Tax Act, Entry tax levied on job work done for 1.68 1.61 1976 SEZ unit

M.P. Entry Tax Act, Entry tax levied on job work done for 1.09 0.11 1976 (U/s 21 Re- SEZ unit open)

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

Income Tax Act A.Y. 2004-05 CIT (A)

Income Tax Act A.Y. 2004-05 CIT (A)

Income Tax Act A.Y. 2005-06 CIT (A)

Income Tax Act A.Y. 2005-06 CIT (A)

Income Tax Act A.Y. 2006-07 CIT (A)

Income Tax Act A.Y. 2003-04 M.P.HIGH COURT

Income Tax Act A.Y. 2003-04 M.P.HIGH COURT

Income Tax TDS A.Y. 2005-06 to CIT(A) A.Y. 2007-08

M.P. Entry Tax Act, 1976 F.Y. 2006-07 The Appellate Board, M.P. Tax Tribunal Bhopal / (U/s 21 Re-open) Indore

M.P. commercial Tax Act, 1994 F.Y. 2006-07 The Appellate Authority and Additiona Commissioner (U/s 21 Re-open) of Commercial Tax, Indore Division

Central Sales Tax Act, F.Y. 2006-07 The Appellate Authority and Additiona Commissioner of (U/s 21 Re-open) Commercial Tax, Indore Division

M.P. Entry Tax Act, 1976 F.Y. 2007-08 The Appellate Board, M.P. Tax Tribunal Bhopal / Indore

M.P. Entry Tax Act, 1976 F.Y. 2007-08 The Appellate Authority and Additiona Commissioner (U/s 21 Re- open) of Commercial Tax, Indore Division

Name of the statute Nature of dues Demand Amount (Rs. in million) Paid (Rs. in million)

M.P. commercial Tax Assessing Office has levied the tax on 1.96 1.96 Act, 1994 sale by SEZ unit in Domestic Area

M.P. Entry Tax Act, Entry tax levied on job work done for 2.89 0.88 1976 SEZ unit

M.P. Entry Tax Act, Assessing Office has levied the tax on 1.73 0.43 1976 (U/s 21 Re- sale by SEZ unit in open) Domestic Area

M.P. commercial Tax Assessing Office has levied the tax on 1.06 1.06 Act, 1994 sale by SEZ unit in Domestic Area

M.P. Entry Tax Act, Entry tax levied on job work done for 3.72 1.04 1976 SEZ unit

M.P. commercial Tax Tax Imposed on (a) sale by SEZ unit 4.30 1.20 Act, 1994 in Domestic Area Rs.18.17 mln (b) Assessing Officer has not given the benefit of VAT out put Rs.1.58 million (c) ITR Amt. Disallowed Rs.0.07 mln (d) Tax Imposed on non receipts of form "H"Rs.1.60mln

Central Sales Tax Act, Tax imposed on non receipts of Form 0.08 0.08 -H

M.P. commercial Tax VAT ITR Reversal on Job Work & Stock 0.61 0.61 Act, 1994 Transfer

M.P. Entry Tax Act, Entry tax levied on job work done for 0.37 0.09 1976 SEZ unit

Central Sales Tax Act, Tax imposed on non receipts of Form 0.31 0.31 -H

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

M.P. commercial Tax Act, 1994 F.Y. 2007-08 The Appellate Board, M.P. Tax Tribunal Bhopal / Indore

M.P. Entry Tax Act, 1976 F.Y. 2008-09 The Appellate Board, M.P. Tax Tribunal Bhopal / Indore

M.P. Entry Tax Act, 1976 F.Y. 2008-09 The Appellate Authority and Additiona Commissioner (U/s 21 Re- open) of Commercial Tax, Indore Division

M.P. commercial Tax Act, 1994 F.Y. 2008-09 The Appellate Board, M.P. Tax Tribunal Bhopal / Indore

M.P. Entry Tax Act, 1976 F.Y. 2009-10 The Appellate Board, M.P. Tax Tribunal Bhopal / Indore

M.P. commercial Tax Act, 1994 F.Y. 2009-10 The Appellate Board, M.P. Tax Tribunal Bhopal / Indore

Central Sales Tax Act, F.Y. 2009-10 The Appellate Board, M.P. Tax Tribunal Bhopal

M.P. commercial Tax Act, 1994 F.Y. 2010-11 The Appellate Authority and Additiona Commissioner of Commercial Tax, Indore Division

M.P. Entry Tax Act, 1976 F.Y. 2010-11 The Appellate Authority and Additiona Commissioner of Commercial Tax, Indore Division

Central Sales Tax Act, F.Y. 2010-11 The Appellate Authority and Additiona Commissioner of Commercial Tax, Indore Division

Name of the statute Nature of dues Demand Amount (Rs. in million) Paid (Rs. in million)

Uttarakhand VAT Tax imposed on non receipts of C form 22.19 NIL Act, 2005

Uttarakhand VAT Demand u/s 10(A)/ 10(B)/10(D)/ & 10.66 3.33 Act, 2005 24(3)



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



Uttarakhand VAT Act, 2005 F.Y. 2009-10, The Joint Commissioner 2010-11 Appeal-1 Uttarakhand

Uttarakhand VAT Act, 2005 F.Y. 2009-10, The Joint Commissioner 2010-11& 2011- Appeal-1 Uttarakhand 12

(x) The Company neither has accumulated losses at the end of the financial year nor has incurred cash losses during the year and in the immediately preceding year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution or bank.

(xii) Based on our examination and 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 and other securities.

(xiii) The Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

(xiv) The company is not dealing or trading in shares, securities, debentures and other investments

(xv) According to the information and explanations given to us, the Company has given corporate guarantee on behalf of M/s Satguru Polyfab Private Limited for Rs.60.00 million to State Bank of Patiala, Indore, and on behalf of Nanofil Technologies Private Limited for Rs.0.02 million to Governor of Uttarakhand, which are not prima facie prejudicial to the interest of the company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained

(xvii) On the examination of books of accounts and the information and explanations given to us, in our opinion the funds raised on short term basis have not been used for long term investment and vice versa,

(xviii) During the year, the Company has not made any allotment of preferential shares to parties or Companies covered in the register maintained under section 301 of the Companies Act, 1956

(xix) The Company has not issued any Debenture therefore the provision of clause 4(xix) of the companies (Auditor''s Report) Order, 2003 are not applicable

(xx) The company has not raised any money by way of public issue during the year.

(xxi) We have been informed that the one of the staff of the company had misappropriated funds amounting to Rs.4.67 million during the year under audit. Investigations are in progress and the staff has been dismissed, arrested and matter is under prejudice. The company has provided for the amount involved in books of account. Apart from above, as per the information and explanation given to us and examination of books of accounts carried by us in accordance in the generally accepted audit practices in India, no other fraud on or by the company has been noticed or reported during the course of our audit.

For L.K.Maheshwari & Co. Chartered Accountants FRN No. 000780C

(Abhay Singi) Place: Indore Partner Dated : 27th May 2014 Membership No 079873


Mar 31, 2013

We have audited the accompanying financial statements of M/s Flexituff International 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 a summary of significant accounting policies and other explanatory information.

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 Principle 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.

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.

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

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

b) In the case of the Statement of Profit and Loss, of the profit 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.

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

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

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

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

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

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

e) On the basis of 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 Act.

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

(b) The fixed assets have been physically verified by the management during the year and there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) In our opinion, there was no disposal of substantial part of fixed assets during the year, therefore, does not affect the going concern assumption.

(ii) (a) As explained to us, the management has conducted physical verification of inventory at reasonable intervals during the year other than those kept with third parties.

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) The company has not taken Inter Corporate Deposit from companies covered in the register maintained under section 301 of the Act.

(b) According to the information and explanation given to us, Company has, during the year, not granted any loans, security or unsecured, to companies, firm and other parties covered in the register maintained under Section 301 of the Act.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods.

During the course of our audit, no major weakness has been noticed in the internal controls in respect of these areas.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Act have been so entered.

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

(vi) The Company has not accepted any deposits from public. Therefore, the provision of Clause of (vi) of paragraph 4 of the Order are not applicable to the company.

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

(viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act , 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have however not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees'' state insurance, income- tax, sales-tax, wealth-tax, custom duty, excise duty, VAT, cess and other material statutory dues applicable to it.

(b) According to the records of the Company, the dues outstanding of taxes on account of any dispute are as follows:

Name of the Nature of dues Demand statute (Rs. in Million)

Income Tax Act Disallowances in respect of Share 7.00 Capital Subscribed during the year.

Income Tax Act Disallowances in respect of Share 10.13 Capital Subscribed during the year, SEZ Loss u/s 10A & 80HHC deduction.

Income Tax Act Disallowances in respect of Share 2.66 Capital Subscribed during the year.

Income Tax Act Disallowances in respect of Share 12.73 Capital Subscribed during the year.

Income Tax Act Disallowances in respect of SEZ 6.03 Loss u/s 10 A.

Income Tax Act Departmental Appeal against 1.45 penalty order decided in Company''s favor by ITAT

Income Tax Act Departmental Appeal against 6.58 appeal allowed by ITAT in case of Investment made by certain companies in Equity Capital of Company and also against deduction allowed under Section 80 IB in Company''s favor by ITAT

Income Tax Non Deduction of TDS on 0.71 TDS payment of Lease Rent to MPAKVN and Interest thereon.

M.P. Entry Tax Entry Tax levied on Job Work for 1.68 Act, 1976 SEZ unit

M.P. Entry Tax Entry Tax levied on Job Work for 2.89 Act, 1976 SEZ unit

Name Amount Period to which Forum where Paid the Amount dispute is (Rs. in Million) relates pending

Income Tax Act 3.00 A.Y. 2004-05 CIT (A)

Income Tax Act 3.90 A.Y. 2004-05 CIT (A)

Income Tax Act 1.33 A.Y.2005-06 CIT (A)

Income Tax Act NIL A.Y.2005-06 CIT (A)

Income Tax Act NIL A.Y.2006-07 CIT (A)

Income Tax Act -NA- A.Y.2003-04 M.P.HIGH COURT

Income Tax Act -NA- A.Y.2003-04 M.P.HIGH COURT

Income Tax Act NIL A.Y.2005-06 to CIT(A) A.Y. 2007-08

Income Tax Act 1.61 F.Y. 2007-08 M.P.Commercial Tax Tribunal, Bhopal

Income Tax Act 0.88 F.Y. 2008-09 M.P.Commercial Tax Tribunal, Bhopal

Name of the Nature of dues Demand statute (Rs. in Million) M.P.VAT Act, Assessing Officer has levied 1.96 2002 the tax on sale by SEZ unit in Domestic Area

M.P.VAT Act, Assessing Officer has levied 1.06 2002 the tax on sale by SEZ unit in Domestic Area

M.P.VAT Act, Tax Imposed on 4.30 2002 (a) sale by SEZ unit in Domestic Area Rs.181.70 Lacs

(b) Assessing Officer has not given the benefit of VAT out put Rs.15.82 Lacs

(c) ITR Amt.Disallowed Rs.0.75 Lacs

(d) Tax Imposed on non receipts of form "H" Rs.16.06 Lacs

M.P. Entry Tax Entry tax levied on job work 3.51 Act, 1976 done for SEZ unit

M.P. Entry Tax Entry tax levied on Job work 10.86 Act, 1976 done for SEZ unit

Uttarakhand Demand u/s 10(A)/ 10(B)/10(D)/ 10.66 VAT Act,2005 & 24(3)

Name Amount Period to which Forum where Paid the Amount dispute is (Rs. in Million) relates pending

M.P.VAT Act, 1.96 F.Y. 2007-08 M.P.Commercial Tax Tribunal, Bhopal

M.P.VAT Act, 1.06 F.Y. 2008-09 M.P.Commercial Tax Tribunal, Bhopal

M.P.VAT Act, 0.43 F.Y. 2009-10 Additional Commissioner (Appeals) of Commercial Taxes, Zone Indore

M.P.VAT Act, 0.37 F.Y. 2009-10 Additional Commissioner (Appeals) of Commercial Taxes, Zone Indore

M.P.VAT Act, 1.09 F.Y. 2006-07 Additional Commissioner (Appeals) of Commercial Taxes, Zone Indore

M.P.VAT Act, 3.33 F.Y. 2009- The Joint 10,2010-11& Commissioner 2011-12 Appeal -1 Uttarakhand

(x) The Company neither has accumulated losses at the end of the financial year nor has incurred cash losses during the year and in the immediately preceding year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution or bank.

(xii) Based on our examination and 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 and other securities.

(xiii) The Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

(xiv) The company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has given corporate guarantee on behalf of Entertainment World Developers Limited, Mumbai for Rs.4.55 million to State Bank of India, Commercial Branch, Indore., and on behalf of M/s Satguru Polyfab Private Limited, Gandhidham for Rs.60.00 million to State Bank of Patiala, Indore, and on behalf of Nanofil Technologies Pvt.Ltd., Kashipur for Rs.0.20 million to Governor of Uttarakhand, which are not prima facie prejudicial to the interest of the company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) On the examination of books of accounts and the information and explanations given to us, in our opinion the funds raised on short term basis have not been used for long term investment and vice versa;

(xviii) During the year, the Company has not made any allotment of preferential shares to parties or Companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company has not issued any Debenture therefore the provision of clause 4(xix) of the companies (Auditor''s Report) Order, 2003 are not applicable.

(xx) The company has not raised any money by way of public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the 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 L.K.Maheshwari & Co.

Chartered Accountants

FRN No. 000780C

(Abhay Singi)

Place : Indore Partner

Dated : 27th May 2013 Membership No 079873


Mar 31, 2012

We have audited the attached Balance Sheet of M/s Flexituff International Limited as at March 31, 2012 and also the Profit and Loss account for the year ended on March 31, 2012 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 disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

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

ii. In our opinion, proper books of 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 and Profit and Loss account statement dealt with by this report are in agreement with the books of account;

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

v. On the basis of the written representations received from the directors, as on March 31, 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub- section (1) of section 274 of the Companies Act, 1956.

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

a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2012.

b) in the case of the profit and loss account, of the profit for the year ended March 31, 2012.

ANNEXURE TO THE AUDITORS' REPORT of even date to the Members of Flexituff International Ltd.

i) 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 during the year and there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

c) There was no disposal of fixed assets during the year and therefore does not affect the going concern assumption.

ii) a) The management has conducted physical verification of inventory at reasonable intervals during the year other than those kept with third parties.

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

c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

iii) a) The company has not taken Inter Corporate Deposit from companies covered in the register maintained under section 301 of the Companies Act, 1956

b) According to the information and explanation given to us, Company has, during the year, not granted any loans, security or unsecured, to companies, firm and other parties covered in the register maintained under Section 301 of the Companies Act 1956.

iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls in respect of these areas.

v) a) According to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 have been so entered.

b) In our opinion and according to information and explanations given to us, the register is maintained the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956, an exceeding the value of Rupees Five Lacs in respect of any one party during the year have been made at prices which are reasonable having regard to the prevailing market at relevant time.

vi) The Company has not accepted any deposits from public. Therefore, the provision of Clause of (vi) of paragraph 4 of the Order are not applicable to the company.

vii) In our opinion, the Company has an Internal Audit System commensurate with the size and nature of its business.

viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act , 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

ix) a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, ESI, Income-Tax, Sales-Tax, Wealth-Tax, Custom Duty, Service Tax, Excise Duty, VAT, Cess and other statutory dues applicable to it.

b) According to the records of the Company, the dues outstanding of taxes on account of any dispute are as follows:

Name of the statute Nature of dues Demand Amount paid (Rs. In million) (Rs. In million)

Income Tax Act Disallowances in respect of 7.00 3.00 Share Capital Subscribed during the year.

Income Tax Act Disallowances in respect of 10.13 3.00 Share Capital Subscribed during the year, SEZ Loss u/s 10A & 80HHC deduction.

Income Tax Act Disallowances in respect of 2.66 1.33 Share Capital Subscribed during the year.

Income Tax Act Disallowances in respect of 12.73 NIL Share Capital Subscribed during the year.

Income Tax Act Disallowances in respect of SEZ Loss u/s 10 A. 6.03 NIL

Income Tax Act Departmental Appeal against penalty order 1.45 -NA- decided in Company's favor by ITAT



Name of the Statue Period to which Forum where the Amount dispute is relates pending.

Income Tax Act A.Y. 2004-05 CIT (A)

Income Tax Act A.Y. 2004-05 CIT (A)

Income Tax Act A.Y.2005-06 CIT (A)

Income Tax Act A.Y.2005-06 CIT (A)

Income Tax Act A.Y.2006-07 CIT (A)

Income Tax Act A.Y.2003-04 M.P. HIGH COURT

Name of the statute Nature of dues Demand Amount paid (Rs. In million) (Rs. In million)

Income Tax Act Departmental Appeal against appeal allowed 6.58 -NA- by ITAT in case of Investment made by certain companies in Equity Capital of Company and also against deduction allowed under Section 80 IB in Company's favor by ITAT

Income Tax TDS Non Deduction of TDS on payment of 0.71 NIL Lease Rent to MPAKVN and Interest thereon.

M.P. Commercial Difference in Sales tax exemption .02 .004

Tax Act, 1994 Caping calculation

Central Sales Difference in Sales tax exemption 1.96 1.54

Tax Act, 1956 Caping calculation

M.P. Entry Tax Act, 1976 Entry Tax levied on Job Work for SEZ unit 1.68 1.61

M.P. Entry Tax Act, 1976 Entry Tax levied on Job Work for SEZ unit 2.89 0.88

Utarakhand Assessment FY 2010-11 u/s 10(A)/ 10(B) and 10(D) 1.56 NIL Commercial Tax



Name of the Statue Period to which Forum where the Amount dispute is relates pending.



Income Tax Act A.Y.2003-04 M.P. HIGH COURT

Income Tax TDS A.Y.2005-06 to CIT(A) A.Y. 2007-08

M.P. Commercial Tax Act, 1994 F.Y. 2005-06 The Appellate Board, M.P.Tax Tribunal Bhopal Central Sales Tax Act, 1956 F.Y. 2005-06 The Appellate Board, M.P. Tax Tribunal Bhopal M.P. Entry Tax Act, 1976 F.Y. 2007-08 The Appellat Board, M.P. Tax Tribunal Bhopal M.P. Entry Tax Act, 1976 F.Y. 2008-09 The Appellate Board, M.P. Tax Tribunal Bhopal Utarakhand Commercial Tax F.Y. 2010-11 The Joint Commissioner (Appeal)-I

x) The Company neither has accumulated losses at the end of the financial year nor has incurred cash losses during the year and in the immediately preceding year.

xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution or bank.

xii) Based on our examination and 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 and other securities.

xiii) The Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

xiv) The company is not dealing or trading in shares, securities, debentures and other investments.

xv) According to the information and explanations given to us, the Company has given corporate guarantee on behalf of EWDPL for Rs.4.55 million to State Bank of India, and on behalf of M/s Satguru Polyfab Private Limited, for Rs.60.00 million to State Bank of Patiala, and on behalf of Nanofil Technologies Pvt.Ltd. for Rs. 0.2 million to Governor of Uttarakhand, which are not prima facie prejudicial to the interest of the company.

xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

xvii) On the examination of books of accounts and the

information and explanations given to us, in our opinion the funds raised on short term basis have not been used for long term investment and vice versa;

xviii)During the year, the Company has not made any allotment of preferential shares to parties or Companies covered in the register maintained under section 301 of the Companies Act, 1956.

xix) The Company has not issued any Debenture therefore the provision of clause 4(xix) of the companies (Auditor's Report) Order, 2003 are not applicable.

xx) During the year the Company has issued 4500000 Equity share of Rs. 10/- each at a premium of Rs. 145/- each through IPO and an Offer for sale of 2250000 equity share by Clearwater Capital Partners (Cyprus) Ltd. & 19700 Equity Shares of Rs. 10/- each at a premium of Rs. 85/- per Share under ESOP Scheme. The end use of money raised by IPO has been disclosed in Financial Statements and the same has been verified.

xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the 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 L.K. Maheshwari & Co.

Chartered Accountants

FRN No. 000780C

Abhay Singi Place : Indore Partner

Dated : 30th May 2012 Membership No 079873


Mar 31, 2011

We have audited the attached Balance Sheet of M/s Flexituff International Limited as at March 31,2011 and also the Profit and Loss account for the year ended on March 31,2011 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 disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

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

ii. In our opinion, proper books of 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 and Profit and Loss account statement dealt with by this report are in agreement with the books of account;

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

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

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

a) in case of the balance sheet, of the state of affairs of the Company as at March 31,2011.

b) in case of the profit and loss account, of the profit for the year ended March 31,2011.

Annexure to the Auditors report of even date to the Members of Flexituff International Ltd.

(i) (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 during the year and there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) There was no disposal of fixed assets during the year and therefore does not affect the going concern assumption.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year other than those kept with third parties.

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

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) The company has not taken Inter Corporate Deposit from companies covered in the register maintained under section 301 of the Companies Act, 1956

(b) According to the information and explanation given to us, Company has, during the year, not granted any loans, security or unsecured, to companies, firm and other parties covered in the register maintained under Section 301 of the Companies Act 1956.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls in respect of these areas.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to information and explanations given to us, the register is maintained the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956, an exceeding the value of Rupees Five Lacs in respect of any one party during the year have been made at prices which are reasonable having regard to the prevailing market at relevant time.

(vi) The Company has not accepted any deposits from public

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

(viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for the products of the Company.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth-tax, custom duty, excise duty, VAT, cess and other material statutory dues applicable to it.

(b) According to the records of the Company, the dues outstanding of taxes on account of any dispute are as follows:

Name of the statute Nature of dues Demand (Rs. in million)

Income Tax Act Disallowances in respect of 7.00 Share Capital Subscribed during the year.

Income Tax Act Disallowances in respect of 2.66 Share Capital Subscribed during the year.

Income Tax Act Departmental Appeal against -NA- penalty order decided in Company's favor by 1TAT

Income Tax Act Departmental Appeal against -NA- deduction allowed under Section 80 IB in Company's favor by ITAT

Income Tax Act Departmental Appeal against -NA- appeal allowed by ITAT in case of Investment made by certain companies in Equity Capital of Company

Income Tax TDS Non Deduction of TDS on 0.71 payment of Lease Rent to MPAKVN and Interest thereon

Income Tax TDS Short Deduction of TDS and 1.58 Interest thereon

M.P Commercial Tax Difference in sales tax 0.02 Act 1994 exemption caping calculation

Central Sales Tax Difference in sales tax 1.96 Act 1956 exemption caping calculation

M.P. Entry Tax Act, 1976 Tax imposed on Job Work for 1.68 SEZ unit

Name of the statute Amount Paid Period to Forum where (Rs. in which the dispute is million) Amount pending. relates

Income Tax Act 3.00 A.Y. 2004-05 CIT (A)

Income Tax Act 1.33 A.Y.2005-06 CIT (A)

Income Tax Act -NA- A.Y.2003-04 M.P. HIGH COURT

Income Tax Act -NA- A.Y.2003-04 M.P.HIGH COURT

Income Tax Act -NA- A.Y.2003-04 M.P.HIGH COURT

Income Tax TDS Nil A.Y.2005-06 to CIT (A) A.Y.2007-08

Income Tax TDS Nil A.Y.2009-10 CIT (A)

M.P.Commercial Tax 0.00 F.Y. 2005-06 The Appellate Act,1956 Board, M.P. Tax Tribunal Bhopal

Central Sales Tax 0.55 F.Y. 2005-06 The Appellate Act,1956 Board, M.P Tax Tribunal Bhopal

M.P. Entry Tax Act,1976 0.47 F.Y. 2007-08 The Appellate Board, M.P. Tax Tribunal Bhopal

(x) The Company neither has accumulated losses at the end of the financial year nor has incurred cash losses during the year and in the immediately preceding year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion thatthe Company has not defaulted in repayment of dues to a financial institution or bank.

(xii) Based on our examination and according to the information and explanations given to us, the company has not granted any loans and advances on the basis of security byway of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund or a nidhi / mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xiv) The company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has given corporate guarantee on behalf of Entertainment World Developers Limited, Mumbai for Rs.4.55 million to State bank of India, Commercial Branch, , Indore., and on behalf of M/s Satguru Polyfab Private Limited, Gandhidham for Rs.60.00 million to State Bank of Patiala,' Orbit Mall Branch, A.B.Road, Indore, and on behaif of Nanofil Technologies Pvt.Ltd., Kashipur for Rs.0.20 million to Governor of Uttarakhand, which are not prima facie prejudicial to the interest of the company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) On the examination of books of accounts and the information and explanations given to us, in our opinion the funds raised on short term basis have not been used for long term investment and vice versa;

(xviii) During the year, the Company has not made any allotment of preferential shares to parties or Companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) 92 Nos. of Zero Percent Fully Convertible Debentures of Rs. 5.00 million each issued to M/s Clearwater Capital Partners (Cyprus) Limited, Cyprus are converted into 44,86,492 equity shares during the year;

(xx) The company has not raised any money by public issues during the year;

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the 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 L.K.Maheshwari & Co.

Chartered Accountants

FRN No. 000780C

Place : Indore

Partner

Dated : 18.6.2011 Membership No 079873

 
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