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Auditor Report of Gangotri Textile Ltd.

Mar 31, 2015

1. We have audited the accompanying financial statements of M/s Gangotri Textiles Limited (the Company), which comprise 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 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 financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014.. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITORS' RESPONSIBILITY

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

4. We have taken in to account the provisions of the Act and the Rules made there under including the accounting standardsand matters which are required to be included in the audit report.

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards and pronouncements 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.

6. 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.

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

Basis for Qualified Opinion

1. In our opinion, there prevails material uncertainty related to events /conditions which individually / collectively cast significant doubts on going concern assumption.

2. The Debtors and Loans & Advances are subject to confirmation. As at advance of Rs.423 lakhs continues to be doubtful of recovery, the same has been provided for in the accounts of the company during year ended 31.03.2014. However, repeated reminders are being received from lenders for the recovery of the same.

3. The interest provisions for all loans from Banks have been worked based on the then prevailing CDR Package and not on the original sanction/revised floating rates. Consequent to the company's non compliance with CDR package and reverting back to the original sanction, the differentials interest that ought to have been provided for in the accounts is estimated at Rs 103.00 Crores (from 01.07.2008 to 31.03.2015) cumulatively for the above periods. The estimated loss due to the above is understated to the extent of Rs. 18 crores for the year ended 31.3.2015.

4. On examination of the books of accounts and the information and explanations given to us, the internal control system continue to be not commensurate considering the nature of company's business.

5. The Company has been adopting the method of Accounting for also NETTING of balance when transactions are made with the same party. For the year ended 31.03.2015 the company has NETTED the debit and credit balances of the same party. Hence, Debtors and Creditors have got reduced by Rs. 37.59 Crores each as on 31.03.2015.

6. The State Bank of India vide its letter dated the 24.04.15 has declared company as willful defaulters and has given an opportunity to the company to submit its representation.

7. The balances shown under Secured Loans and Balances with bank, conlirmation of balance is yet to be given by the Bankers. Hence, the balances reflected under these two heads are as per the books of account of the company.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for qualified opinion paragragh, 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:

(i) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2015;

(ii) in the case of the statement of profit and loss, of the loss for the year ended on that date; and

(iii) in the case of the cash flow statement, of the cash flows for the year ended on that date.

Other Matters

The Ministry of Corporate Affairs had on 1st April 2014, vide its General Circular No.07/2014, Dissemination of Information with Regards to the Provisions of the Companies Act, 2013, as Notified Till date vis a vis corresponding Provisions of the Companies Act, 1956, identified such sections of the Companies Act, 1956 that would cease/continue to have effect from 1st April 2014. Accordingly, in terms of the aforesaid Circular, our reporting in respect of Section 227 (3)(f) of the Companies Act, 1956, and clauses (iii), (v)(a) and (b), (vi), (viii), (xiv), (xviii) of the Companies (Auditor's Report) Order, 2003 (dealing with Sections 49, 58A, 58AA, 209(1)(d) and 301 of the Companies Act, 1956) is only for the period beginning from 1.4.2004 till 31st March 2015 since as per the aforementioned MCA Circular these Sections have ceased to have effect from 1st April 2014.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act (hereinafter referred to as the 'Order') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

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

b. in our opinion proper books of account as required by law have been kept by the Company so far as 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 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 31 March 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015, from being appointed as a director in terms of section 164 (2) Act..

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

i. The Company has disclosed the impact of pending litigations as at March 31,2015 on its financial position in its financial statements.

ii. The Company has made provision as at March 31,2015 as required under the applicable law or accounting standards for material foreseeable losses, if any, on long term contracts including derivative contracts.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31 March 2015.

Annexure to the Auditors' Report

Referred to In paragraph 9 of the Independent Auditors Report of even date to the members of M/s Gangotri Textiles Limited on the financial statements as of and for the year ended 31 March 2015.

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

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

II) (a) As explained to us, inventories of the company at all its location have been physically verified at reasonable intervals by the management during the year.

(b) In our opinion, 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 material discrepancies, noticed on physical verification have been properly dealt with in the books of account.

III) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the registered maintained under section 189 of the Companies Act, 2013.

IV) On examination of the books of accounts and the information and explanation given to us, the internal control systems continous to be not commensurate considering the nature of its business.

(V) The company has not accepted any deposit from the public during the year.

(VI) We have broadly reviewed the regards maintained by the company pursuant the Rules made by the Central Government for the maintenance of the cost records under 148(1) of the Companies Act. We are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view of determining whether they are accurate or complete.

(VII) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income-tax, Sales-tax, Wealth tax, Service tax and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of Employees' State Insurance, Customs duty and Excise duty except the following.

Particulars 31.03.2015 (in Rs.Lakhs) 31.03.2014 (in Rs. Lakhs)

Name of the Amount Statue Year Nature of Dues in lakhs

TamilNadu Additional 1996-97 Additional Sales Tax Act, 1970 Sales Tax 20 07

CST Acts 2002-03 TNGST,Surcharge 1.82 AST, Penalty

TNGST, CST Acts 2003-04 TNGST, Surcharge 13.54 AST, Penalty

Income Tax Act, 2004-05 Interest U/S 5.85 1961 234B/234C

Name of the Forum Provided in the Amount Statue where dispute books of in lakhs

TamilNadu Additional Supreme Court of yes 20 07 Sales Tax Act, 1970 India

CST Acts STAT Coimbatore No 1.82

TNGST, CST Acts STAT Coimbatore No 13.54

Income Tax Act, ITAT Chennai No 5.85 1961

(b) According to the records of the Company, there are no Statutory dues, which have not been deposited in account of any disputes.

c) There has been no delay in transfering unpaid divident amount, required to be trasnsfer to the Investor's Education and Protection Fund by the Company.

(viii) The units of the company has acumulated losses at the end of financial year. The company has incurred cash losses during the financial year and also the during the immediately preceding financial year

(ix) The company has defaulted in repayment of interest and principal to bank and financial institutions.

(x) During the year the company has not given any guarantee for loan taken from others rom bank or financial institution

(xi) The company has not optained any term loan during this year.

(xii) To the best of our knowledge and belief and according to the information explanation given to us, no fraud or by the company was noticed or reported during the year.

For THAKKER & SANGHANI Firm Registration No:004351S Coimbatore Chartered Accountants 28-5-2015 Aswin.C Partner Membership No:22204




Mar 31, 2014

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

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (the Act) read with the General Circular 15/2013 dated 13th September. 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITORS'' RESPONSIBILITY

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

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

Basis for Qualified Opinion

1. The exceptional item of Rs.423.00 lakhs represents an advance given to one party in 2006 remains doubtful and, now provided lor.

2. The interest provisions for all terms loans have been worked out based on the then prevailing CDR package rates, and not on the original sanction/revised floating rates. Consequent to the company being out of CDR package and reverting back to the original sanction, the differential interest that ought to have been provided for in the accounts is estimated at Rs.85 Crores (from 1.7.2008 to 31.03.2014). Since the same has not been provided for the loss has been understated to the above extent.

3. Notices to treat the Company as willful defaulter from certain lenders have been served on the Company and the management.

4. The Company has changed the method of Accounting for NETTING of balance when transactions are made with the same party. Hitherto the company was not netting the debit and credit balances of the same party. However, for the year ended 31.03.2014 the company has NETTED the debit and credit balances of the same party. Hence, Debtors and Creditors have got reduced by Rs. 60.45 Crores each as on 31.03.2014.

OPINION

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

(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, Loss of the Company for the year ended on that date; and

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

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

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

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 Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

e. On the basis of the written representations received from the directors as on March 31,2014, 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 Section 274(1 )(g) of the Act.

ANNEXURE TO THE AUDITORS'' REPORT

The Annexure referred to in our report to the members of Gangotri Textiles Limited (''the Company'') for the year ended 31 March 2014. We report that:

(I) (a) The Company is in the process of updating the records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) Fixed assets disposed off during the year were not substantial and therefore, do not affect the going concern assumption. And, it is noted that according to the management, these assets will not be replaced in the foreseeable future The Company has provided for impairment of all its assets during the year under review.

(d) As explained to us, inventories of the company at all its location have been physically verified at reasonable intervals

(II) (a) by the management during the year.

In our opinion, the Procedures of physical verification of inventory followed by the management are reasonable and

(b) adequate in relation to the size of the Company and the nature of its business

The Company is maintaining proper records of inventory and material discrepancies, noticed on physical

(c) verification have been properly dealt with in the books of account.

According to the information and explanations given to us, The Company has not granted any loans, secured or unsecured

(III) (a) to the companies firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.Accordingly, the provisions stated in para 4 (iii) (b) (c) and (d) of the order are not applicable.

(b) The Company has taken unsecured interest free loan from two parties involving an amount of Rs.11.50 crores, and the transaction during the year is Nil and accordingly year end balance remain the same.

The terms and conditions in respect of the above loan taken by the Company are, prima facie, not prejudicial to the interest

(c) of the Company.

(iv) In our opinion and according to the information and explanations given to us, the internal control system is not commensurate with the size of the Company and the nature of its business with regard to purchase and sale of goods and services.

(v) (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 the register required to be maintained under that section.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (v)(a) above and exceeding the value of Rs 5 lakh with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the explanations given to us, the company has complied with the directives issued by the Reserve Bank of India, and also provisions of the Section 58A and Section 58AA of the Companies Act, 1956 and the rules framed there under, in respect of deposits accepted by it. No order has been passed by the Company Law Board and the Company has not accepted any deposit under 58A and 58AA of the Companies Act, 1956.

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

(viii) We have broadly reviewed the records maintained by the company pursuant to the rules made by the Central Government for the maintenance of the cost records u/s 209 (1) (d), of the Act. We are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view of determining whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income-tax, Sales - tax, Wealth tax, Service tax and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of Employees'' State Insurance, Customs duty and Excise duty.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Income - tax, Sales - tax, Wealth tax, Service tax and other material statutory dues were in arrears as at 31 March 2014 for a period of more than six months from the date they became payable.

(b) At the end of the Financial year there were no dues of Sales Tax, Customs Duty, Wealth Tax, Excise Duty, Cess which have not been paid for a period of more than 6 months from the date they become payable except as detailed below:

Name of the Year Amount Statute Nature of Dues in Lakhs

TamilNadu Additional 1996-97 Additional Sales Tax Act, 1970 Sales Tax 20.07

CST Acts 2002-03 TNGST Surcharge ASt Penalty 1.82

TNGST, CSTActs 2003-04 TNGST, Surcharge 13.54 AST, Penalty

Income Tax Act, 2004-05 Interest U/S 5.85 1961 234B/234C



Name of the Statute Forum Provided in the where dispute books of is pending accounts

Tamil Nadu Additional Sales Tax Supreme Court of Yes Act, 1970 India

CST Acts TNGST, CSTActs STAT Coimbatore No

Income Tax Act, 1961 STAT Coimbatore No

Income Tax Act 1961 ITAT Chennai No



x) There are accumulated losses at the end of the financial year ended 31.03.2014. In our opinion the accumulated losses of the Company as on 31.03.2014 are more than 100% of its networth and the company has become a sick company within the definition of Section 3(1) (0) of the SICA (Special Provisions) Act, 1905. The Company has incurred cash loss during the financial year covered by our audit.

xi) The Company has defaulted in repayment of dues, both principal and interest to lenders. The principal default of Rs. 266.65 crores is from April 2011 and interest default of Rs. 71.24 crores from October 2011, based on CDR Package.

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

xiii) In our opinion, the provisions of special statue applicable to Chit Fund, N id hi/Mutual Benefit Fund / societies are not applicable to the company.

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

xv) In our opinion and according to the information an explanations given to us, the company has not given any guarantee for loans taken by offers from banks or financial institutions.

xvi) According to the information and explanations given to us, the company has utilized term loans for the purpose for which the loans were obtained.

xvii) On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on short-term basis, which have been used for long - term investments by the Company.

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

xix) During the year the Company has not issued any debentures.

xx) According to the information and explanations given to us, during the year the Company has not raised money by public issue.

xxi) To the best of our knowledge the belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the year.

For THAKKER & sanghani Firm Registration no:004351S Coimbatore Chartered Accountants 28-5-2014 Aswin C Partner Membership No:22204


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Gangotri Textiles Limited (''the Company'') which comprise the balance sheet as at 31 March 2013, the statement of profit and loss and the cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

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

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

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

BASIS FOR QUALIFIED OPINION

1. The Debtors and Loans and advances are subject to confirmation and an advance of Rs.423 lakhs is doubtful of recovery which has not been provided for in the accounts of the company.

2. The Management has not obtained concurrence of the lenders with regard to transactions related to job work at Unit,3,4 and 9 for the year ended 31.03.2013 which has resulted in a loss of Rs.133 lakhs. In the event of the denial of concurrence by the lenders, the loss would have been overstated to the above extent. Further, the management has not complied with the advice of the lenders to make good the above loss.

3. The interest provisions for all terms loans have been worked based on the then prevailing CDR package rates, and not on the original sanction/revised floating rates. Consequent to the company being out of CDR package and reverting back to the original sanction, the differential interest that ought to have been provided for in the accounts is estimated at Rs.5700 lakhs (from 1.7.2008 to 31.03.2013). Since the same has not been provided for the loss has been understated to the above extent.

4. Notices to treat the Company as willful defaulter from certain lenders have been served on the Company and the management.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for qualified opinion paragraph, 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:

(i) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2013;

(ii) in the case of the statement of profit and loss, of the loss for the year ended on that date; and

(iii) in the case of the cash flow statement, of the cash flows for the year ended on that date.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

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

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

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

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

e. on the basis of written representations received from the directors as on 31 March 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 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 AUDITORS'' REPORT

The Annexure referred to in our report to the members of Gangotri Textiles Limited (''the Company'') for the year ended 31 March 2013. We report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) Fixed assets disposed off during the year were not substantial but for some non-core assets (Sulaikal Land), and therefore, do not affect the going concern assumption. And, it is noted that according to the management, these assets will not be replaced in the foreseeable future

(d) The Company has provided for impairment of all its assets during the year under review.

(ii) (a) As explained to us, inventories of the company at all its location have been physically verified at reasonable intervals by the management during the year.

(b) In our opinion, 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 material discrepancies, noticed on physical verification have been properly dealt with in the books of account.

(iii) (a) According to the information and explanations given to us, The Company has not granted any loans, secured or unsecured to the companies firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.Accordingly, the provisions stated in para 4 (iii) (b) (c) and (d) of the order are not applicable.

(b) The Company has taken unsecured interest free loan from two parties involving an amount of Rs.11.50 crores, and the transaction during the year is Nil and accordingly yearend balance remain the same.

(c) The terms and conditions in respect of the above loan taken by the Company are, prima facie, not prejudicial to the interest of the Company.

(iv) In our opinion and according to the information and explanations given to us, the internal control system is not commensurate with the size of the Company and the nature of its business with regard to purchase and sale of goods and services.

(v) (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 the register required to be maintained under that section.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (v)(a) above and exceeding the value of Rs 5 lakh with any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the explanations given to us, the company has complied with the directives issued by the Reserve Bank of India, and also provisions of the Section 58A and Section 58AA of the Companies Act, 1956 and the rules framed there under, in respect of deposits accepted by it. No order has been passed by the Company Law Board and the Company has not accepted any deposit under 58A and 58AA of the Companies Act, 1956.

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

(viii) We have broadly reviewed the records maintained by the company pursuant to the rules made by the Central Government for the maintenance of the cost records u/s 209 (1) (d), of the Act. We are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view of determining whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income-tax, Sales - tax, Wealth tax, Service tax and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of Employees'' State Insurance, Customs duty and Excise duty.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Income - tax, Sales - tax, Wealth tax, Service tax and other material statutory dues were in arrears as at 31 March 2013 for a period of more than six months from the date they became payable.

(b) At the end of the Financial year there were no dues of Sales Tax, Customs Duty, Wealth Tax, Excise Duty, Cess which have not been paid for a period of more than 6 months from the date they become payable except as detailed below:

Name of the Amount Forum provided Statute Year Nature of in the Dues in Lakhs where books of is pen ding accounts

Tamil Nadu Additional 1996 97 Additional 20.07 Supreme Court of yes

Sales Tax Act, 1970 1996-97 Sales Tax India

CST Acts 2002-03 TNGST, Surcharge 1.82 STAT Coim batore No AST, Penalty

TNGST, CST Acts 2003-04 TNGST Surcharge 13.54 STAT Coim batore No AST, Penalty

Income Tax Act, 2004-05 Interest U/S 5.35 ITAT Chennai No 1961 234B /234C

x) There are accumulated losses at the end of the financial year ended 31.03.2013. In our opinion the accumulated losses of the Company as on 31.03.2013 are more than 100% of its net worth and the company has become a sick company within the definition of Section 3(1) (o) of the SICA (Special Provisions) Act, 1985. The Company has incurred cash loss during the financial year covered by our audit but has not incurred cash loss in the immediately preceding financial year.

xi) The Company has defaulted in repayment of dues, both principal and interest to lenders. The principal default of Rs. 256.64 crores is from April 2011 and interest default of Rs. 44.16 crores from October 2011, based on CDR Package.

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

xiii) In our opinion, the provisions of special statue applicable to Chit Fund, Nidhi/Mutual Benefit Fund / societies are not applicable to the company.

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

xv) In our opinion and according to the information an explanations given to us, the company has not given any guarantee for loans taken by offers from banks or financial institutions.

xvi) According to the information and explanations given to us, the company has utilized term loans for the purpose for which the loans were obtained.

xvii) On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on short-term basis, which have been used for long - term investments by the Company.

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

xix) During the year the Company has not issued any debentures.

xx) According to the information and explanations given to us, during the year the Company has not raised money by public issue.

xxi) To the best of our knowledge the belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the year.

For THAKKER & SANGHANI

Firm Registration No:004351S

Chartered Accountants

Coimbatore AswinC

23.05.2013 Partner

23-05-2013 Membership No:22204


Mar 31, 2010

1. We have audited the attached Balance Sheet of M/s. GANGOTRI TEXTILES LIMITED, Coimbatore, as at 31st March 2010 and also the Profit and Loss Account and the 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.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. We report that -

3. As required by the Companies (Auditors Report) Order, 2003, as amended, issued by the Government of India in terms of Section 227(4A) of the Companies Act, 1956 and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said order to the extent applicable.

4. Further to our comments in the Annexure referred to in paragraph 3 above;

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, Profit and Loss Account and Cash Flow Statement referred to in this report are in agreement with the books of Accounts.

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in compliance with the Accounting standards referred to in Section 211 (3C) of the Companies Act, 1956.

e) On the basis of the written representations received from all the directors as on March 31,2010 and taken on record by the Board of Directors, we report that none of the Directors of the Company are disqualified as on March 31, 2010 from being appointed as a director under 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 Balance Sheet and Profit and Loss Account together with the notes thereon, and attached thereto given in the prescribed manner the information required by the Companies Act, 1956 and together with the Cash Flow Statement also give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of Balance Sheet, of the state of Companys affairs as on 31st March 2010 (ii) In the case of Profit and Loss Account, of the Loss for the year ended on that date, and (iii) In case of the Cash flow statement, of the cash flow for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our report of even date)

On the basis of such checks as we considered appropriate in terms of information and explanations given to us, we state that:-

1. a) The Company has maintained proper records showing full particulars, including Quantitative details and situation of fixed assets;

b) The Fixed assets of the Company have been physically verified by the management at reasonable intervals. No material discrepancies were noticed on such verification;

c) No substantial part of fixed assets of the company has been disposed off during the year affecting the status of the company as a going concern.

2. a) As explained to us, inventories of the Company at all its locations have been Physically verified at reasonable intervals by the management during the year.

b) In our opinion, 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 material discrepancies, if any, noticed on physical verification have been properly dealt with in the books of account;

3. a) According to the information and explanations given to us, The company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956, where the rate of interest and other terms and conditions are prima facie prejudicial to the interest of the Company. b) The company has not taken any loans secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956, except for unsecured loan from a relative of a Director/Shareholder at a rate of interest and terms & conditions which are not prima facie prejudice to the interest of the Company.Therefore the clauses (f) and (g) of para (iii) of the Companies (Auditors Report) Order 2003 are not applicable, except to the extent stated above

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. In our opinion and according to information and explanations given to us, there has been no continuing failure to correct major weakness in internal control system during the year.

5. a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the contracts and agreements that need to be entered in the register maintained u/s 301 of the Companies Act, 1956 have been so entered; b) In our opinion and according to the explanations given to us, the transactions made in pursuance of contract or arrangements to be entered in the Register maintained under Section 301 of the Companies Act 1956, and exceeding the value of Rs. 5 lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the market prices prevailing at that time.

6. In our opinion and according to the explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India, and also provision of the Section 58A and Section 58AA of the Companies Act, 1956 and the rules framed there under, in respect of deposits accepted by it.

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

8. We have broadly reviewed the records maintained by the Company pursuant to the rules made by the Central Government for the maintenance of the cost records u/s 209(1) (d), of the Act. We are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

9. a) According to the records of the Company, it has been

regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities during the year.

b) At the end of the Financial year there were no dues of Sales Tax, Customs Duty, Wealth Tax, Excise Duty, Cess which have not been paid for a period of more than 6 months from the date they become payable except as detailed below:

Name of the Amount

Statute Year Nature of Dues in Lacs Rs.

TamilNadu

Additional Sales 1996-97 Additional 20.07

Tax Act, 1970 sales Tax

TNGST,CST TNGST, Surcharge 3.88

Acts 2003-04 AST, Penalty

Income Tax Act, Interest u/s

1961 2004-05 234B/234C 5.85



Name of the

Statute Forum Provided in the

where dispute books of

is pending accounts

TamilNadu

Additional Sales

Tax Act, 1970 Supreme Court Yes

of India

TNGST, CST

Acts STAT No

Coimbatore

Income Tax Act,

1961 ITAT

Chennai No

10. There are accumulated losses at the end of the financial year ending 31.03.2010. In our opinion, the accumulated losses of the Company as on 31.03.2010 are not more than fifty percent of its net worth. As on 31.03.2010 the Company has incurred cash loss during the financial year covered by our Audit and had also incurred cash loss in the immediately preceding financial year;

11. The Company has not defaulted in repayment of dues to financial institution or bank considering the reliefs in the CDR package sanctioned.

12. During the year the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, according to the information and explanation given to us.

13. In our opinion, the provisions of special statue applicable to Chit Fund, Nidhi/ Mutual Benefit Fund/ Societies are not applicable to the company;

14. The Company is not dealing or trading in shares, securities, debentures and other investments.

15. In our opinion and according to the information and explanation given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions.

16. According to the information and explanation given to us, the company has utilized term loans for the purpose for which the loans were obtained.

17. On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to information and explanations given to us, there are no funds raised on short-term basis, which have been used for any long-term investments by the Company.

18. According to the information and explanation given to us, 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.

19. During the year the Company has not issued any debentures.

20. According to the information and explanation given to us, during the year the Company has not raised money by public issue.

21. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.



ForTHAKKER & SANGHANI

Firm Registration No. 004351S

Chartered Accountants

Aswin C

Coimbatore

Partner

19.5.2010 Membership No.22204



 
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