Auditor Report of Garden Silk Mills Ltd.

Mar 31, 2018

Report on the Standalone Indian Accounting Standards (Ind AS) Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Garden Silk Mills Limited (“the Company”), which comprise the balance sheet as at 31st March, 2018, the statement of profit and loss (including other comprehensive income), the cash flow statement and the statement of changes in equity for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Ind AS Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015 and amendments thereof.

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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under and the Order issued under section 143(11) of the Act. We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the state of affairs (financial position) of the Company as at 31stMarch 2018, and its loss (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Emphasis of matter

We draw attention to note no.12.2 to standalone Ind AS financial statements. Since the conditions mentioned in the said note indicate existence of a material uncertainty, the ability of the Company to function as a going-concern for a foreseeable future depends upon successful closure of mitigating measures/conditions mentioned in said note.

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

Other matters

The financial statements of the Company for the year ended 31st March 2017, were audited by another auditor whose report dated 30th May 2017 expressed an unmodified opinion on those statements.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”), issued byte Central Government of India in terms of sub-section (11) of Section 143 of the Companies Act, 2013, we give in the Annexure A, 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 purposes of our audit.

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

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

(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015 and amendments thereof.

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

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure B.

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

i. The Company has disclosed pending litigations and the impact on its financial position - refer note 27 to the standalone Ind AS financial statements.

ii. The Company has made provision, as required under the applicable law or accounting standard, for material foreseeable losses, if any, on long term contracts including derivative contracts; and

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

Annexure A to the Independent Auditor’s Report

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

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

(b) The fixed assets have been physically verified by the management at regular intervals based on the phased programme of verification which in our opinion is reasonable. No material discrepancies were identified during such physical verification conducted by the Company during the year.

(c) According to the information and explanation provided to us and records examined by us, all title deeds of immovable properties are held in the name of the Company.

(ii) Physical verification of inventory has been conducted by the management at reasonable intervals. In our opinion, the interval of such verification is reasonable. Discrepancies noticed on physical verification were not material and the same have been properly dealt with in the books of account.

(iii) The Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly reporting on para 3(iii) is not applicable.

(iv) According to information and explanation provided to us, for the transaction covered under the sections 185 and section 186 of the Companies Act, 2013, the Company has complied with the provisions of the said sections, to the extent applicable.

(v) According to information and explanation provided to us, the Company has not accepted deposits, hence the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 of the Companies Act and the rules framed there under, are not applicable to it. According to information and explanation provided to us; No order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal in the current year. Accordingly, reporting on para 3(v) is not applicable.

(vi) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under sub-section (I) of Section 148 of the Companies Act, 2013 and 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 records with a view to determine whether they are accurate and complete.

(vii) (a) The Company is generally regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income-tax, Goods and Service Tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities. According to the information and explanation provided to us, no undisputed amounts payable in respect of statutory dues were in arrears as at 31st March 2018, for a period of more than six months from the date they became payable.

(b) Details of dues of income tax, sales tax including value added tax, service tax, duty of customs, duty of excise to the extent which have not been deposited as on 31st March 2018 on account of dispute are as follows:

Name of Statute	Nature of dues	Forum where Dispute is Pending	Period to which amount Relates	Amount Involved (Rs. in Lakhs)	Amount Unpaid (Rs. in Lakhs)
Central Excise Act, 1944	Excise Duty / Service Tax	Mumbai high Court	1994-95	35.00	25.00
		Customs Excise and Service Tax Appellate Tribunal (Ahmedabad)	2008-09	114.72	114.72
		Gujarat High Court (Ahmedabad)	2008-09	2610.00	1960.00
		Commissioner Surat	2006-11	523.07	458.07
		Customs Excise and Service Tax Appellate Tribunal (Ahmedabad)	2012-13	96.61	96.61
		Customs Excise and Service Tax Appellate Tribunal (Ahmedabad)	2011-12	40.55	40.55
		Customs Excise and Service Tax Appellate Tribunal (Ahmedabad)	1993-98	168.94	162.61
		Customs Excise and Service Tax Appellate Tribunal (Ahmedabad)	2009-10	3.00	3.00
		Gujarat High Court (Ahmedabad)	2000-01	336.17	Nil
		Customs Excise and Service Tax Appellate Tribunal (Ahmedabad)	2012-16	505.80	486.83
		Customs Excise and Service Tax Appellate Tribunal (Ahmedabad)	2008-13	77.75	74.84
		Customs Excise and Service Tax Appellate Tribunal (Ahmedabad)	2010-14	37.40	36.00
		Customs Excise and Service Tax Appellate Tribunal (Ahmedabad)	2014-15	3.49	3.24
		Customs Excise and Service Tax Appellate Tribunal (Ahmedabad)	2011-16	27.12	25.76
		Customs Excise and Service Tax Appellate Tribunal (Ahmedabad)	2012-16	160.51	154.49
		Customs Excise and Service Tax Appellate Tribunal (Ahmedabad)	2011-16	398.14	383.21
		Customs Excise and Service Tax Appellate Tribunal (Ahmedabad) Gujarat High Court (Ahmedabad)	2012-16 1994-95	286.16 4238.00	275.43 4238.00
Customs Act, 1962	Customs Duty	Customs Excise and Service Tax Appellate Tribunal (Ahmedabad)	2012-13	126.93	Nil
		Customs Excise and Service Tax Appellate Tribunal (Ahmedabad)	2012-13	36.43	33.26
		Customs Excise and Service Tax Appellate Tribunal (Ahmedabad)	2012-13	33.84	29.34
		Total		9904.63	8645.96

(viii) Based on our audit procedures and according to the information and explanation provided to us, the Company has defaulted in repayment of dues to financial institution and bank, details of which are mentioned below. The Company does not have any debenture holders and has not borrowed from government.

Category of the Lender	Name of the Lender	Amount of Default in Rs. in Lakhs **		Amount of Default Rs. in Lakhs		Period of default
		Up to 31-03-2018		Up to 31-03-2017
		Principal	Interest	Principal	Interest
	Allahabad Bank	-	184.91	233.39	430.25	2016-17 & 2017-18
	Bank of Baroda	4,965.11	5652.71	1035.49	1088.19	2016-17 & 2017-18
	Bank of India	1009.64	1946.71	778.10	813.82	2016-17 & 2017-18
	Corporation Bank	1508.51	2661.75	1009.20	1026.22	2016-17 & 2017-18
Banks	Exim Bank	503.24	787.89	427.35	382.30	2016-17 & 2017-18
	ICICI Bank	91.99	224.25	135.93	126.85	2016-17 & 2017-18
	IDBI Bank	117.26	894.64	767.76	388.87	2016-17 & 2017-18
	Indian Bank	145.48	117.67	97.95	83.38	2016-17 & 2017-18
	Indian Overseas Bank	429.52	395.12	281.40	275.89	2016-17 & 2017-18
	State Bank of India*	1686.70	3091.35	1230.14	1231.13	2016-17 & 2017-18
	Union Bank of India	1611.28	1777.15	1040.92	1018.96	2016-17 & 2017-18
Financial Institution
	LIC of India	163.32	279.86	174.64	151.15	2016-17 & 2017-18

*State Bank of Patiala & State Bank of Travancore have merged with State Bank of India.

** As per books of accounts of the company and subject to reconciliation

(ix) According to information and explanation provided to us, the Company has not raised moneys by way of initial public offer or further public offer (including debt instruments). According to the information and explanations provided to us, term loans availed by the Company were, prima facie; applied for the purpose for which the loans were obtained.

(x) Based upon the audit procedures performed by us and according to the information and explanations provided to us, no fraud by the Company or any fraud on the Company by its officers or employees has been noticed or reported during the year.

(xi) According to the information and explanation provided to us, the managerial remuneration has been paid and provided in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act.

(xii) The Company is not a Nidhi Company. Accordingly, reporting on para 3(xii) is not applicable.

(xiii) According to the information and explanation provided to us, all transactions with the related parties are in compliance with Sections 177 and 188 of Companies Act, 2013 wherever applicable and the details have been disclosed in the standalone Ind AS financial statements as required by the applicable Indian Accounting Standards.

(xiv) According to the information and explanation provided to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

(xv) According to the information and explanation provided to us, the Company has not entered into any non-cash transactions with directors or persons connected with him.

(xvi) According to the information and explanation provided to us, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

Annexure B to the Independent Auditor’s Report

Referred to in paragraph 2(f) under the heading, “Report on Other legal and Regulatory Requirements of our report on even date:

Report on the Internal Financial Controls [under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)]

We have audited the internal financial controls over financial reporting of Garden Silk Mills Limited (“the Company”) as of 31st March 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

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

Inherent Limitations of Internal Financial Controls Over Financial Reporting

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

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Sharp & Tannan Associates,

Chartered Accountants

Firm’s Registration No.: 109983W

Tirtharaj Khot

Partner

Membership No.: 037457

Mumbai: 30th May 2018

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Mar 31, 2016

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Garden Silk Mills Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2016, 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

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

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the Audit Report under the provisions of the Act and the Rules made there under.

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

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

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

Opinion

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 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, a statement on the matters specified in the paragraphs 3 and 4 of the order to the extent applicable.

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

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

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

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

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

e. On the basis of the written representations received from the directors as on 31st March, 2016 and taken on record by the Board of Directors, none of the directors is disqualified as on31stMarch, 2016 from being appointed as a director in terms of Section 164 (2) of the Act.

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure B; and

g. With respect to the other matters to be included in the Auditor''s Report in accordance with Rule ll 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 according to the explanations given to us:

i. The Company has, in accordance with the generally accepted accounting practice, disclosed the impact of pending litigations on its financial position in its financial statements- Refer Note 32(1) to the financial statements.

ii. The Company did not have any long-term contracts including derivatives contracts as at 31st March, 2016, hence the question of commenting on any material foreseeable losses thereon does not arise.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31st March, 2016.

Referred to in paragraph 1 under the heading "Report on other legal and other regulatory requirements" of our Report of even date to the members of Garden Silk Mills Limited on the financial statements for the year ended 31st March, 2016.

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

b. As per the information and explanations given to us, the fixed assets of the Company have been physically verified by the management at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

c. According to the information and explanations given to us, the original title deeds of immovable properties are mortgaged with banks as securities, who has confirmed the same. On the basis of our examination of the records of the Company as available with jurisdictional revenue authority, the title deeds of immovable properties are held in the name of the Company.

(ii) As per the information and explanations given to us, the inventories have been physically verified by the management at reasonable intervals during the year. In our opinion, the frequency of verification is reasonable and discrepancies noticed on physical verification of inventories were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

(iii) As per the information and explanations given to us, the company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Act. Therefore, the provisions of clause 3(iii), (iii)(a) and (iii)(b) of the said Order are not applicable to the Company.

(iv) The Company has neither granted any loans nor provided any guarantees or security to the party covered under section 185 of the Act nor made any investment covered under section 186 of the Act.

(v) The Company has not accepted any deposits from the public within the meaning of sections 73, 74, 75 and 76 of the Act and the Rules framed there under to the extent notified.

(vi) To the best of our knowledge and explanation given to us, the provisions of maintenance of cost records under subsection (1) of Section 148 of the Act are not applicable to the Company for the financial year 2015-16.

(vii) a) According to the information and explanations given to us and the records examined by us, the Company has generally been regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales tax, value added tax, wealth tax, customs duty, excise duty, service tax, cess and any other statutory dues wherever applicable.

There were no undisputed amounts payable in respect of provident fund, employees'' state insurance, sales tax, value added tax, customs duty, cess and other material statutory dues in arrears as at 31st March, 2016, for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us, details of dues of Income-tax and excise duty / service tax, sales tax and cess which have not been deposited as on 31st March, 2016 on account of disputes are given below

(Rs. In Lacs)

Name of Statute	Nature of dues	Amount	Period to	Forum where dispute is	Amount
		under	which the	pending	deposited
		dispute*	amount relates		against the dispute
The Income Tax	Income Tax	0.48	2011-12	Income Tax Appellate Tribunal	-
Act, 1961				(Ahmedabad)
The Income Tax	Income Tax	132.65	2012-13	Commissioner of Income Tax	-
Act, 1961				(Appeals)
Central Excise Act,	Excise Duty/	25.00	1994-95	Mumbai High Court	10.00
1944	Service Tax
Central Excise Act,	Excise Duty/	114.72	2012-13	Central Excise and Service	-
1944	Service Tax			Tax Appellate Tribunal (Ahmedabad)
Central Excise Act,	Excise Duty/	2610.00	2013-14	Central Excise and Service	-
1944	Service Tax			Tax Appellate Tribunal (Ahmedabad)
Central Excise Act,	Excise Duty/	523.07	2013-14	Central Excise and Service	-
1944	Service Tax			Tax Appellate Tribunal (Ahmedabad)
Central Excise Act,	Excise Duty/	96.61	2012-13	Central Excise and Service	-
1944	Service Tax			Tax Appellate Tribunal (Ahmedabad)
Central Excise Act,	Excise Duty/	77.75	2008-09 to	Central Excise and Service	2.92
1944	Service Tax		2012-13	Tax Appellate Tribunal (Ahmedabad)
Central Excise Act,	Excise Duty/	37.40	2010-11 to	Central Excise and Service	1.40
1944	Service Tax		2013-14	Tax Appellate Tribunal (Ahmedabad)
Gujarat Sales Tax	Gujarat Sales	80.51	2004-05	The Joint Commissioner of	10.00
Act, 1969	Tax			Commercial Tax, Appeal (2), Baroda

* Including penalty, wherever applicable

(viii) Based on our audit procedure and as per the information and explanation 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.

(ix) The Company did not raise any monies by way of initial public offer, further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3 (ix) of the Order is not applicable to the Company.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud on or by the officers and employees of the Company has been noticed or reported during the course of our audit

(xi) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 of The Act, read with Schedule V to the Act.

(xii) As the Company is not a Nidhi company and the Nidhi Rules, 2014 are not applicable to it, the provisions of paragraph 3(xii) of the Order is not applicable to the Company.

(xiii) The Company has entered into transactions with related parties in compliance with the provisions of sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Accounting Standard 18, Related Party Disclosures specified under section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules, 2014.According to the information and explanations give to us and based on our examination of the records of the Company.

(xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of clause 3(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given by the management, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934. Accordingly the provisions of clause 3(xvi) of the Order are not applicable to the Company.

For NATVARLAL VEPARI & CO.

Chartered Accountants

Firm Registration Number: 123626W

R. N. VEPARI

Partner

Surat, 28th May, 2016 Membership No.: 6728

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Mar 31, 2015

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

Management''s Responsibility forthe Standalone Financial Statements

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

Auditor''s Responsibility

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

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

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

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

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

Opinion

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section143 of the Act, we give 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 ofthose 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 aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 ofthe Act, read with Rule 7 ofthe Companies (Accounts) Rules, 2014

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

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

(i) The Company has, in accordance with the generally accepted accounting practice, disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 31(1) to the financial statements.

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

(iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund bythe Company. Annexure to the Independent Auditors'' Report (Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our Independent Auditors'' Report of even date on the standalone financial statements of Garden Silk Mills Limited ("the Company") for the year ended March 31, 2015)

Having regard to the nature of the Company''s business / activities / result, clauses (v) and (viii) to the Order are not applicable to the Company for the year.

(i) In respect to first fixed assets:

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

(b) the fixed assets were physically verified during the year by the Management in accordance with a phased programme of verification, which, in our opinion, provides for physical verification of fixed assets at reasonable intervals having regard to the size of the Company nature and value of its assets. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(ii) In respect of its inventories:

(a) As explained to us the inventories were physically verified during the year by the Management at reasonable intervals.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories. In our opinion, discrepancies noticed on physical verification of inventories were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account;

(iii) As per 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 189 of the Companies Act, 2013 and accordingly, the provisions of Clause (iii) of paragraph 3 of the Order are not applicable to the Company.

(iv) 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 inventories and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weaknesses in such internal control system.

(v) According to the information and explanations given to us, the Company has not accepted any deposits and accordingly, the provisions of clause V of paragraph 3 of the Order are not applicable to the Company.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 specified by the Central Government under Section 148 of the Companies Act, 2013. We 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.

(vii) According to the information and explanations given to us and the books of accounts examined by us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues applicable to it with the appropriate authorities during the year. There were no undisputed amounts payable in respect of the aforesaid statutory dues outstanding as at March 31, 2015 for a period of more than six months from the date they became payable.

(b) There are no dues of Wealth Tax, Income Tax and custom duty which have not been deposited on account of any dispute with the relevant authorities. Details of dues towards Excise Duty, Service Tax and Sales Tax and Cess that have not been deposited as at March 31, 2015 on account of disputes are as stated below:

(Rs in Lacs)

Name of Statute Nature of Dues Amount Period to which the Under amount relates to/ Dispute Order / Apperal Year

Central Excise Penalty 25.00 1994-95 Act, 1944

Central Excise Excise Duty/ 143.13 2005-06 Act, 1944 Service Tax*

Central Excise Excise Duty/ 43.65 2009-11 Act, 1944 Service Tax*

Central Excise Excise Duty/ 114.72 2012-13 Act, 1944 ServiceTax*

Central Excise Excise Duty/ 6,038.37 2013-14 Act, 1944 ServiceTax*

Central Excise Excise Duty/ 3,300.00 2013-14 Act, 1944 ServiceTax*

Central Excise Excise Duty/ 523.07 2013-14 Act, 1944 ServiceTax*

Central Excise Excise Duty/ 157.79 2012-13 Act, 1944 ServiceTax*

Central Excise Excise Duty/ 349.49 2012-13 Act, 1944 ServiceTax*

Central Excise Excise Duty/ 96.61 2012-13 Act, 1944 ServiceTax*

Central Excise Excise Duty/ 8345.57 2006-13 Act, 1944 ServiceTax

GujaratSales Gujarat 80.51 2004-05 Tax Act, 1969 Sales Tax

Name of Statute Forum where the dispute Amount deposited is pending against (Rs In lacs )

Central Excise Act, 1944 Mumbai High Court. 10.00

Central Excise Act, 1944 CESTAT, Ahmadabad --

Central Excise Act, 1944 CESTAT, Ahmadabad 43.65

Central Excise Act, 1944 CESTAT, Ahmadabad --

Central Excise Act, 1944 CESTAT, Ahmadabad --

Central Excise Act, 1944 CESTAT, Ahmadabad --

Central Excise Act, 1944 CESTAT, Ahmadabad --

Central Excise Act, 1944 CESTAT, Ahmadabad --

Central Excise Act, 1944 CESTAT, Ahmadabad --

Central Excise Act, 1944 CESTAT, Ahmadabad 96.61

Central Excise Act, 1944 CESTAT, Ahmadabad --

Gujarat Sales Tax Act 1969 The Joint Commissioner 10.00 of Commercial Tax, Appeal (2), Baroda.

including penalty, wherever applicable.

(c) The amounts required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under, have been transferred to such fund within time.

(viii) The Company''s accumulated losses at the end of the financial year are less than fifty per cent of its net worth. However, the Company has incurred cash losses both in the current year as well as in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations furnished to us, read with Note No 4.1(c) to the financial statements, the defaults existed in repayment of dues (towards interest) to Banks at the date of Balance Sheet amounting to Rs. 777.33 lacs. The Company does not have any borrowing by way of debenture.

(x) According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from bank or financial institutions.

(xi) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained, other than temporary deployment pending application.

(xii) To the best of knowledge and belief, and according to the information and explanations given to us by the Management, no fraud on, or by the Company, has been noticed or reported during the year.

For NATVARLAL VEPARI & CO. Chartered Accountants Firm Registration Number: 123626W

R. N. VEPARI Partner Surat, 5th June, 2015 Membership No.: 6728

---

Mar 31, 2014

We have audited the accompanying financial statements of Garden Silk Mills Limited (the"Company"), which comprise the Balance Sheet as at 31st March, 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 16/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with 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.

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 reguire that we comply with ethical reguirements 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 our 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 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.

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 reguired by the Act in the manner so reguired 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 31st March, 2014;

(b) in the case of the Statements of Profit and Loss, of the 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 reguired by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of Section 227(4A)ofthe Act, we give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As reguired 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 reguired 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 notified under 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 31st March, 2014, taken on record by the Board of Directors, none of the directors is disgualified as on 31st March, 2014, from being appointed as a director in terms Section 274(l)(g)ofthe Act.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under Section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

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

1. (a) The Company has maintained proper records

showing full particulars including guantitative details and situation of the fixed assets.

(b) As explained to us, all the fixed assets have been physically verified by the management at reasonable Intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, the Company has not disposed off a substantial part of its fixed assets during the year, and as such going concern status of the Company is not affected.

2. (a) Theinventory has been physically verified by the

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

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

(c) The Company is maintaining proper records of inventories. Discrepancies noted on physical verification of inventories were not material, and have been properly dealt with in the books of account.

3. According to the information and explanations given to us, the Company has not taken or granted any loans, secured or unsecured, from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. In our opinion, the other Clauses (iii)(b) to (iii)(d) of the Order are not applicable in the case of the Company for the current year.

4. In our opinion and according to the information and explanations given to us, there is an adeguate internal control system commensurate with the size of the Company and the nature of its business for the purchases of inventories and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness in the internal control system of the Company.

5. (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into, have been so entered in the Register maintained under the said Section 301.

(b) In respect of the transaction made in pursuance of such contract or arrangements exceeding the value of Rupees Five Lacs entered into during the financial year, in respect of any party, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. According to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed thereunder. Therefore, the provisions of Clause (vi) of paragraph 4 of the Order are not applicable to the Company.

7. In our opinion and on the basis of the internal audit reports broadly reviewed by us, the Company has an internal audit system, commensurate with the size and nature of its business.

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1 )(d) of the Companies Act, 1956. We are of the opinion that prima fac/ethe 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.

9. (a) According to the information and explanations

given to us, and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues, including Provident Fund, Investors Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax/VAT, Wealth Tax, Service Tax, Customs Duty, Excise Duty and other material statutory dues, as applicable, with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investors Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax/VAT, Wealth Tax, Service Tax, Customs Duty, Excise Duty and other material statutory dues were outstanding at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the details of dues of Sales Tax/VAT and Excise Duty which have not been deposited as on 31st March, 2014 on account of disputes are given below:

Name of the Nature of Amount under Period to which the amount statute the Dispute(Rs in relates to/Order/Appeal dues lacs) year

Central Excise Penalty 35.00 1994-95 Act, 1944

Central Excise Excise Duty/ 11562.90 2005-09 Act, 1944 Service Tax*

Central Excise Excise Duty/ 143.13 2005-06 Act, 1944 Service Tax*

Central Excise Excise Duty/ 87.30 2009-11 Act, 1944 Service Tax*

Central Excise Excise Duty/ 114.72 2012-13 Act, 1944 Service Tax*

Central Excise Excise Duty/ 6038.37 2013-14 Act, 1944 Service Tax*

Central Excise Excise Duty/ 3300.00 2013-14 Act, 1944 Service Tax*

Central Excise Excise Duty/ 523.07 2013-14 Act, 1944 Service Tax*

Central Excise Excise Duty/ 1448.98 2012-13 Act, 1944 Service Tax*

Central Excise Excise Duty/ 157.79 2012-13 Act, 1944 Service Tax*

Central Excise Excise Duty/ 12.88 1994-95 Act, 1944 Service Tax*

Central Excise Excise Duty/ 7.04 2010-11 Act, 1944 Service Tax

Central Excise Excise Duty/ 8341.19 2012-13 Act, 1944 Service Tax*

Central Excise Excise Duty/ 349.49 2012-13 Act, 1944 Service Tax*

Central Excise Excise Duty/ 99.26 2012-13 Act, 1944 Service Tax*

Central Excise Excise Duty/ 112.67 2012-13 Act, 1944 Service Tax*

Central Excise Excise Duty/ 193.22 2012-13 Act, 1944 Service Tax*

Central Excise Excise Duty/ 4434.31 2012-13 Act, 1944 Service Tax*

Central Excise Excise Duty/ 2008.44 2012-13 Act, 1944 Service Tax*

Central Excise Excise Duty/ 11318.04 2012-13 Act, 1944 Service Tax*

Gujarat Sales Gujarat 80.51 2004-05 Tax Act, 1969 Sales Tax

Name of the statute Forum where Amount dispute is deposited pending against (Rs. in lacs)

Central Excise Act, 1944 Mumbai 10.00 High Court.

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, 6.44 Ahmedabad

Central Excise Act, 1944 Commissioner of 7.04 Appeals, Surat

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, - Ahmedabad

Central Excise Act, 1944 CESTAT, - Ahmedabad

Gujarat Sales Tax Act, 1969 The Joint 10.00 Commissioner of Commercial Tax, Appeal (2), Baroda.

* including penalty, wherever applicable.

10. The Company''s accumulated losses at the end of the financial year are less than fifty per cent of its net worth. However, it has incurred cash losses both in current year as well as in the immediately preceding financial year.

11. In our opinion and according to the information and explanations furnished to us, read with Note No 6.1(d) to the financial statements, the defaults existed in payment of interest to lender banks / institutions at the Balance Sheet date amounting to Rs. 1371.77 lacs. The Company does not have any borrowing by way of debenture.

12. In our opinion and according to the explanations given to us and based on the information available, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, paragraph 4(xiii) of the Order is not applicable.

13. In our opinion, the Company is notachitfund/nidhi/ mutual benefit fund / society. Therefore, the provisions of Clause 4(xiii) of the Order, are not applicable to the Company.

14. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. The Company has invested surplus funds in marketable securities and mutual funds. The Company has maintained proper records of the transactions and contracts in respect of dealing or trading in shares, securities, debentures and other investments and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the Company in its own name.

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

16. Based on the information and explanations given to us, term loans availed by the Company during the year were applied for the purpose for which they were obtained, however, amounts remained temporarily invested, pending utilisation of the funds for the intended use.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment.

18. The Company has made preferential allotment of Share Warrants to the parties covered in the Register maintained under Section 301 of the Companies Act, 1956, based on the valuation of shares by the management, which in our opinion, is prima facie not prejudicial to the interest of the Company.

19. The Company did not have any outstanding debentures during the year.

20. The Company has not raised any monies by way of public issues during the year.

21. During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

For Natvarlal Vepari & Co.

Chartered Accountants (Registration No. 123626W)

R.N. Vepari

Partner Surat, 28th May, 2014 Membership No. 6728

---

Mar 31, 2013

1. Report on the Financial Statements

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

2. 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 principles generally accepted in India including Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. 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 reguire that we comply with ethical reguirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

Our audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financia statements, whether due to fraud or error. In making those risk assessments, we consider 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. Our 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 overal 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.

4. 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 reguired by the Act in the manner so reguired 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 st March, 2013;

ii) in the case of the Profit and Loss Account, 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. 5. Report on Other Legal and Regulatory Requirements

(i) As reguired by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Centra 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.

(ii) Further to our comments in the Annexure referred to in Paragraph 5(i) above, as reguired 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 reguired by law have been kept by the Company so far as appears from ourexa mi nation 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 Cash Flow Statement dealt herewith comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e) On the basis of the written representations received from the Directors and taken on record by the Board of Directors, we report that none of the directors is disqualified, as at the balance sheet date, from being appointed as a Director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

f) Since the Central Government has neither issued any notification as to the rate at which the cess is to be paid under Section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

(Referred to in paragraph 6 of the Auditors'' report of even date to the member of the Garden Silk Mills Limited, on the

Financial Statements for the year ended 31st March, 2013)

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

(b) As explained to us, all the fixed assets have been physically verified by the management at reasonable Intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, the Company has not disposed off a substantial part of its fixed assets during the year, and as such going concern status of the Company is not affected.

2. (a) Theinventory has been physically verified by the management during the year. In our opinion, the freguency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventories. Discrepancies noted on physica verification of inventories were not material, and 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 taken or granted any loans, secured or unsecured, from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. In our opinion, the other Clauses (iii)(b) to (iii)(d) of the Order are not applicable in the case of the Company for the current year.

4. In our opinion and according to the information and explanations given to us, there is an adeguate internal control system commensurate with the size of the Company and the nature of its business for the purchases of inventories and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness in the internal control system of the Company.

5. (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into, have been so entered in the Register maintained under the said Section 301..

(b) In respect of the transaction made in pursuance of such contract or arrangements exceeding the value of Rupees Five Lacs entered into during the financial year, in respect of any party, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. According to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AAof the Act and the rules framed thereunder. Therefore, the provisions of Clause (vi) of paragraph 4 of the Order are not applicable to the Company.

7. In our opinion and on the basis of the internal audit reports broadly reviewed by us, the Company has an internal audit system, commensurate with the size and nature of its business.

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1 )(d) of the Companies Act, 1956. We 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.

9. (a) According to the information and explanations given to us, and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues, including Provident Fund, nvestors Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax/VAT, Wealth Tax, Service Tax, Customs Duty, Excise Duty and other material statutory dues, as applicable, with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investors Education and Protection Fund, Employees'' State nsurance, Income Tax, Sales Tax/VAT, Wealth Tax, Service Tax, Customs Duty, Excise Duty and other material statutory dues were outstanding at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of Central Excise and Sales Tax/VAT on account of disputes, are as follows:

Name of the Nature of Amount under Period to which the amount statute dues* Dispute (Rs. in lacs) relates to/ Order/ Appeal yeai

Central Excise Penalty 35.00 1994-95 Act, 1944

Central Excise Excise Duty/ 11,562.90 2005-09 Act, 1944 Service Tax

Central Excise Excise Duty/ 143.12 2005-06 Act, 1944 Service Tax

Central Excise Excise Duty/ 87.29 2009-11 Act, 1944 Service Tax

Central Excise Excise Duty/ 18,389.18 2012-13 Act, 1944 Service Tax

Central Excise Excise Duty/ 114.72 2012-13 Act, 1944 Service Tax

Central Excise Excise Duty/ 6,038.37 2013-14 Act, 1944 Service Tax

Central Excise Excise Duty/ 3,300.00 2013-14 Act, 1944 Service Tax

Central Excise Excise Duty/ 523.06 2013-14 Act, 1944 Service Tax

Central Excise Excise Duty/ 1,448.98 2012-13 Act, 1944 Service Tax

Central Excise Excise Duty/ 157.78 2012-13 Act, 1944 Service Tax

Central Excise Excise Duty/ 12.88 1994-95 Act, 1944 Service Tax

Central Excise Excise Duty/ 7.04 2010-11 Act, 1944 Service Tax

Gujarat Sales Gujarat 80.51 2004-05 Tax Act, 1969 Sales Tax

Name Forum where dispute is pending Amount deposited against (Rs. in lacs

Central Excise (Mumbai 10.00 High Court.

Central Excise CESTAT, Ahmedabad

Central Excise CESTAT, Ahmedabad

Central Excise CESTAT, Ahmedabad

Central Excise CESTAT, Ahmedabad

Central Excise CESTAT, Ahmedabad

Central Excise CESTAT, Ahmedabad

Central Excise CESTAT, Ahmedabad

Central Excise CESTAT, Ahmedabad

Central Excise CESTAT, Ahmedabad

Central Excise CESTAT, Ahmedabad

Central Excise CESTAT, 6.44 Ahmedabad

Central Excise Commissioner of 7.04 Appeals, Su rat

Central Excise The Joint Commissioner of 10.00 Commercial Tax, Appeal (2), Baroda. Including penalty, wherever applicable.

10. The Company has no accumulated losses as at 31st March, 2013. The Company has incurred cash losses during the financial year covered by the audit as well as in the immediately preceding financial year.

11. Based on our audit procedures and as per the information and explanations given to us, read with Note No 6.1(d) to the financial statements, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution or banks. The Company does not have any borrowing by way of debenture.

12. Based on our examination of the records and 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. Accordingly, paragraph 4(xiii) of the Order is not applicable.

13. In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order, are not applicable to the Company.

14. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. The Company has invested surplus funds in marketable securities and mutual funds. The Company has maintained proper records of the transactions and contracts in respect of dealing or trading in shares, securities, debentures and other investments and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the Company in its own name.

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

16. Based on the information and explanations given to us, term loans availed by the Company during the year were applied for the purpose for which they were obtained, however, amounts remained temporarily invested, pending utilization of the funds for the intended use.

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

18. The Company has made preferential allotment of Share Warrants to the parties covered in the Register maintained under Section 301 of the Companies Act, 1956, based on the valuation of shares by the management, which in our opinion, is prima facie not prejudicial to the interest of the Company.

19. The Company did not have any outstanding debentures during the year.

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

21. During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

For Natvarlal Vepari & Co.

Chartered Accountants

Firm Registration No. 123626W R.N. Vepari

Partner

Surat, 31st May, 2013 Membership No. 6728

---

Mar 31, 2012

1. We have audited the attached Balance Sheet of GARDEN SILK MILLS LIMITED (the "Company") as at 31st March, 2012 and also the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the 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.

3. As required by the Companies (Auditor's Report) Order, 2003 as amended by the Companies (Auditor's Report) (Amendment) Order, 2004 (together the "Order"), 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.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) we have obtained all the information and explanations, which, to the best of our knowledge and belief, were necessary for the 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 dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

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

(f) in our opinion and to the best of our information and according to the explanations given to us, the said 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:

(i) in the case of the balance sheet, of the state of affairs of the Company as at 31st March, 2012;

(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.

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

(b) As explained to us, the fixed assets have been physically verified by the management at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, the Company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

ii. (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

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

(c) The Company is maintaining proper records of inventory. Discrepancies noted on physical verification of inventories were not material, and have been properly dealt with in the books of account.

iii. (a) The Company has granted a secured loan covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding at any time during the year was Rs. 2900.00 Lacs. There was no balance outstanding as at 31st March, 2012.

(b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loan is not prima facie prejudicial to the interest of the Company.

(c) In respect of loans granted, repayment of the principal amount is as stipulated and payment of interest, wherever applicable, has been regular

(d) There is no overdue amount of loans granted to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(e) According to information and explanations given to us, 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. Accordingly the provisions of clause (iii)(e), (iii)(f) and (iii)(g) of paragraph 4 of the Order are not applicable to the Company and hence not commented upon.

iv. 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 purchases of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness in the internal control system of the Company.

v. (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the Register maintained under the said section 301 have been so entered.

(b) In respect of transactions made in pursuance of such contract or arrangement and exceeding the value of Rupees five lacs entered into during the financial year, in respect of any party, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi. According to the information and explanations given to us, the Company has not accepted any deposit from the public within the meaning of Section 58A, 58AA of the Act and the rules framed thereunder. Therefore, the provisions of Clause (vi) of paragraph 4 of the Order are not applicable to the Company.

vii. In our opinion and on the basis of the internal audit reports broadly reviewed by us, 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 accounts and cost records have been made and 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) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company has been generally regular in depositing the undisputed statutory dues including provident fund, investors education and protection fund, employees' state insurance, income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investors education and protection fund, employees' state insurance, income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of central excise and Sales Tax on account of disputes, are as follows:

Name of the Nature of Amount statue dues under Dispute (Rs.)

Central Excise Penalty 35,00,000 Act, 1944

Central Excise Excise Duty 1,15,62,90,427 Act, 1944 including penalty

Central Excise Excise Duty 1,43,12,740 Act, 1944 including penalty

Central Excise Excise Duty 87,29,774 Act, 1944 including penalty

Gujarat Sales Gujarat 80,50,552 Tax Act, 1969 Sales Tax

Name of the Statue Period to Forum Amount which the where deposited amount dispute is against relates pending (Rs.)

Central Excise Act,1944 1994-95 Mumbai 10,00,000 High Court.

Central Excise Act,1944 2005-09 CESTAT, Ahmedabad -

Central Excise Act,1944 2005-06 CESTAT, Ahmedabad -

Central Excise Act,1944 2009-11 The Commissioner (Appeals), Surat -

Central Excise Act,1969 2004-05 The Joint 10,00,000 Commissioner of Commercial Tax, Appeal (2), Baroda.

x. The Company has no accumulated losses as at 31st March, 2012. The Company has incurred cash losses in the financial year ended on that date. The Company has not incurred any cash losses in the immediately preceding financial year.

xi. Based on our audit procedures and as per the information and explanations given to us, read with Note No. 4.1(d) to the financial statements, we are of the opinion that the Company has not defaulted in repayment of dues to financial institution and banks. The Company does not have any borrowing by way of debenture.

xii. Based on our examination of the records and 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, accordingly paragraph 4(xii) of the Order is not applicable.

xiii. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

xiv. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. The Company has invested surplus funds in marketable securities and mutual funds. The Company has maintained proper records of the transactions and contracts in respect of dealing or trading in shares, securities, debentures and other investments and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the Company in its own name.

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

xvi. Based on the information and explanations given to us by the management, term loans availed by the Company during the year were applied for the purpose for which the loans were obtained, however, amounts remained temporarily invested, pending utilisation of the funds for the intended use.

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

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

xix. The Company did not have any outstanding debentures during the year.

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

xxi. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For Natvarlal Vepari & Co.,

Chartered Accountants

Firm Registration Number: 123626W

R. N. Vepari

Partner

Surat, 8th August, 2012 Membership No.6728

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of Garden Silk Mills Limited as at 31st March, 2011, 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 Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the 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.

3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) Order, 2004 (together the "Order"), 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.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 dealt with by this report are in agreement with the books of account;

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

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

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

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

(ii) in the case of the Profit and Loss Account, of the profit 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.

ANNEXURE TO THE AUDITORS' REPORT Statement referred to in paragraph 3 of our report of even date.

1. (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) As explained to us, the fixed assets have been physically verified by the management at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, the Company has not disposed of a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

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

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

(c) The Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to the book records.

3. (a) According to the information and explanations given to us, the Company has granted a loan covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding at any time during the year was Rs. 3262.50 lacs and the year-end balance is Rs. 2900.00 lacs.

In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of the loan given by the Company, is not prima facie prejudicial to the interest of the Company.

(b) As per the information and explanations given to us and the records produced to us for our verification, the Company has, during the year, not taken any loan, secured or unsecured, from Companies, Firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Consequently, the requirement of Clauses (iii)(e), (iii)(f ) and (iii)(g) of paragraph 4 of the Order are not applicable.

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 purchases of inventory and fixed assets and for the sale of goods and services. During the course of our audit we have not observed any major weakness in such internal control system.

5. (a) According to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that needed to be entered in the Register maintained under the said Section have been so entered.

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

6. According to the information and explanations given to us, the Company has not accepted any deposit from the public within the meaning of Sections 58A, 58AA of the Act and the rules framed thereunder. Therefore, the provisions of Clause (vi) of paragraph 4 of the Order are not applicable to the Company.

7. On the basis of the internal audit reports broadly reviewed by us, 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 books of account and records maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company has been generally regular in depositing the undisputed statutory dues including provident fund, investors 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 as applicable with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Income-tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31st March, 2011 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues in respect of central excise and Sales Tax which have not been deposited as on 31st March, 2011 on account of disputes are given below:

Name of the Nature of Amount Period to Forum Statute the Dues under which the where dispute amount dispute (Rs.) is relates pending

Central Penalty 35,00,000 1994-95 Mumbai Excise High Act, 1944 Court.

Central Excise 1,15,62,90,427 2005-09 CESTAT, Excise Duty Ahmedabad Act,1944 including penalty

Gujarat Sales Gujarat 80,50,552 2004-05 The Joint Tax Act,1969 Sales Tax Commissioner of Commercial Tax, Appeal(2), Baroda. Name of the Amount Statute Deposited against (Rs.)

Central Excise Act,1944 10,00,000

Central Excise Act,1944 –

Gujarat Sales Tax Act,1969 10,00,000

10. The Company does not have accumulated losses as at 31st March, 2011 and it has not incurred any cash losses in financial year ended on that date or in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank during the year. The Company has not issued debentures during the year.

12. Based on our examination of the records and 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, accordingly paragraph 4(xii) of the Order is not applicable.

13. In our opinion, the Company is not a chit fund/ nidhi/ mutual benefit fund/ society to which the provisions of special statute relating to chit fund are applicable, accordingly paragraph 4(xiv) of the Order is not applicable.

14. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. The Company has invested surplus funds in marketable securities and mutual funds. The Company has maintained proper records of the transactions and contracts in respect of dealing or trading in shares, securities, debentures and other investments and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the Company in its own name.

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

16. In our opinion and according to the information and explanations given to us, the term loans availed by the Company during the year have been applied for the purposes for which they were obtained, however, amounts remained temporarily invested, pending utilisation of the funds for the intended use.

17. 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 a short-term basis which have been used for long-term investment.

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

19. No debentures have been issued by the Company and hence the question of creating the security or charges in respect thereof does not arise.

20. The Company has not raised any money by public issues during the year.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For Natvarlal Vepari & Co. Firm Registration No. 123626W Chartered Accountants

R. N. Vepari Partner Membership No. 6728

Surat, 27th July, 2011

---

Mar 31, 2010

1. We have audited the attached Balance sheet of GARDEN SILK MILLS LIMITED ("the Company") as at 31st March, 2010, 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 the 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.

3. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together the "Order"), 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 Order.

4. Further to our comments in the Annexure referred to in Paragraph 3 above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief, were necessary for the 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 Profit and Loss Account and Cash Flow Statement dealt with by this report read with notes, are in agreement with the books of account;

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

e) On the basis of written representations received from the Directors as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31 st March, 2010 from being appointed as a director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

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

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

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

(iii) I n the case of the Cash Flow Statement, of the cash-flows for the year ended on that date. ANNEXURE TO THE AUDITORS REPORT (Statement referred to in Paragraph 3 of the Auditor Report of even date to the Members of Garden Silk Mills Limited on the Accounts for the year ended 31 st March, 2010)

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

(b) We are informed that the physical verification of the fixed assets has been carried out by the management at reasonable intervals and no material discrepancies were noticed on such physical verification.

(c) In our opinion and according to the information and explanations given to us, the Company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

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

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

(c) The Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to the book records.

(iii) (a) The Company has granted a secured loan to a company covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding at any time during the year and the balance outstanding as at 31 st March, 2010 was Rs.29 crore.

In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of the loan given by the Company, is not prima facie prejudicial to the interest of the Company.

(b) As per the information and explanations given to us and the records produced to us for our verification, the Company has, during the year, 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. Accordingly, paragraph 4(iii)(e), (f) and (g) of the Order, are not applicable.

(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 with regards to the purchase of inventory and fixed assets and also for the sale of goods and services. During the course of our audit, we have not come across any major weaknesses in the internal control systems of the Company.

(v) (a) According to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that need to be entered in the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees Five Lakhs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant times.

(vi) The Company has not accepted deposits from the public within the meaning of Sections 58A, 58AA of the Companies Act, 1956 and the Rules framed there-under. Therefore, the provisions of Clause 4(vi) of the Order is not applicable.

(vii) On the basis of the internal audit report broadly reviewed by us, we are of the opinion that, the Company has an internal audit system commensurate with the size and nature of its business.

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

(ix) (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-Tax, Sales-Tax, VAT, Wealth-Tax, Service-Tax, Customs Duty, Excise Duty, Cess and other material statutory dues as applicable with the appropriate authorities.

There were no undisputed amount payable in respect of the aforesaid dues outstanding for more than six months as at 31 st March, 2010.

(b) According to the records of the Company and the information and explanations given to us, the particulars of dues in respect of central excise and sales tax as at 31 st March, 2010 which have not been deposited on account of dispute are as follows:

Name of the Nature of Amount Period to Forum Amount

Statute the Dues under which where Deposited

dispute the disputeis against

(Rs) amount pending (Rs.) relates

Central Excise Penalty 35,00,000 1994-95 Mumbai 10,00,000 Act, 1944 High Court.

Central Excise Excise Duty 1,20,63,550 1994-98 CESTAT, 12,00,000

Act, 1944 including Ahmedabad

penalty

Central Excise Excise Duty 1,15,62,90, 427 2005-09 CESTAT, -

Act, 1944 including Ahmedabad

penalty

Gujarat Sales Gujarat 80,50,552 2004-05 The Joint 10,00,000

Tax Act, 1969 Sales Tax Commissioner

of

Commercial

Tax, Appeal (2),

Baroda. (x) The Company does not have any accumulated losses at the end of the financial year 31st March, 2010. Further, the Company has not incurred cash losses during the financial year ended 31st March, 2010 and in the immediately preceding financial year.

(xi) On the basis of the records examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to banks and financial institutions. The Company has not issued debentures during the year.

(xii) 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, accordingly paragraph 4(xii) of the Order is not applicable.

(xiii) In our opinion, the Company is not a chit fund/nidhi/ mutual benefit fund/society to which the provisions of special statute relating to chit fund are applicable, accordingly paragraph 4(xiv) of the Order is not applicable.

(xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. The Company has invested surplus funds in marketable securities and mutual funds.

The Company has maintained proper records of the transactions and contracts in respect of dealing or trading in shares, securities, debentures and other investments and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the Company in its own name.

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

(xvi) In our opinion and according to the information and explanations given to us, the term loans availed by the Company during the year have been applied for the purposes for which they were obtained, however, amounts remained temporarily invested, pending utilisation of the funds for the intended use.

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

(xviii) The Company has not made any preferential allotment of shares to companies/ firms/ parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company has not raised any money by public issues during the year.

(xx) The Company did not have any outstanding debentures during the year.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For Natvarlal Vepari & Co.

Firm Registration No. 123626W Chartered Accountants

R.N. Vepari

Partner Surat, 7th July, 2010 Membership No. 6728