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Auditor Report of Hanung Toys & Textiles Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of HANUNG TOYS AND TEXTILES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.

2) 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.

3) Auditors' Responsibility

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

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 control relevant to the Company's preparation and presentation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and to the operating effectiveness of such control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management/Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

4) Opinion

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

5) Emphasis of Matter

Without qualifying our opinion, we draw attention to note no. 3.1 to the financial statement. We report that the Company has incurred a net loss of Rs. 126,722.84 Lacs during the year ended March 31, 2015 and the accumulated losses of the Company as at March 31, 2015 amount to Rs. 147,888.29 Lacs leading to erosion of its entire net worth. The current liabilities of the Company as at the same date exceed its current assets by Rs. 16,123.94 Lacs . These conditions indicate the existence of a uncertainty and cast significant doubt about the Company's ability to continue as a going concern, which is dependent on the Company being supported by its lenders and achieving a profitable level and state of operation.

6) 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 in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

(a) We have 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 March 31, 2015, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015, from being appointed as a director in terms of Section 164 (2) of the Act.

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

(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- Also refer Note 14.1, 14.2, 30.1 to 30.8 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 under the applicable law or accounting standard.

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

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date on the accounts of Hanung Toys and Textiles Limited ("the Company") for the year ended March 31, 2015

1) In respect of fixed assets:

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

b) As explained to us and according to the practice of the Company, all the fixed assets have been physically verified by the management during the year, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us, discrepancies noticed, if any, on physical verification have been adjusted in the books of accounts.

2) In respect of inventory:

a) As explained to us, the inventory was physically verified during the year by the Management and independent Auditors appointed by bank at reasonable interval during the year.

b) In our opinion and according to the information and explanation provided to us, the procedure and frequency of verification of inventories carried out by the management is reasonable and adequate in relation to the size of the Company and nature of its business.

c) The Company has maintained proper records of inventories. As explained to us, the observation of Stock Auditors and discrepancies noticed on physical verification as compared to book records have been properly dealt with in the books of account for the year ended March 31, 2015.

3) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted/taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013 and accordingly, the provisions of clauses (iii) of paragraph 3 of the Order are not applicable to the Company.

4) In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the Company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods. During the course of our audit, no major instances of continuing failure to correct any weaknesses in the internal controls have been noticed.

5) According to the information & explanation given to us, the Company has not accepted any deposits and accordingly, the provision of clause (v) of paragraph 3 of the Order are not applicable to the Company.

6) 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 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7) According to the information & explanation given to us and on the basis of our examination of the records of the Company, in respect of statutory dues;

a) The Company has not been generally regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues applicable to it with appropriate authorities during the year. Details of the outstanding statutory dues as at March 31, 2015 have been given in the note no. 7.1 of the financial statements. According to the information and explanation given by the Company, there are some undisputed amounts payable in respect of Employee's state insurance, Employee's provident fund, Tax deducted at source, Sales Tax of Rs. 96.81 lacs, Rs. 224.50 lacs, Rs. 24.00 lacs and Rs. 29.75 lacs respectively, which were outstanding, as at March 31, 2015, for a period of more than six months from the date they became payable.

b) According to information and explanation given to us and the records of the Company examined by us, there are no dues of wealth tax, service tax, sales tax, duty of custom and duty of excise which have not been deposited on account of any dispute. The particular of dues of income tax as at March 31, 2015 which has not been deposited on account of any dispute, are as follow-

Name of the Nature of dues Amount Rs. Period to which status in lacs the amount relates

Income Tax Act, 1961 Income tax including 334.17 Assessment Year interest, as applicable 2006-07

Income Tax Act, 1961 Income tax including 440.44 Assessment Year interest, as applicable 2009-10

Income Tax Act, 1961 Income tax including 196.23 Assessment Year interest, as applicable 2010-11

Name of the Statute Forum where the dispute is pending

Income Tax Act,1961 Income-tax Appellate Tribunal

Income Tax Act,1961 Income-tax Appellate Tribunal

Income Tax Act,1961 Appellate Authority -up to Commissioner's level

c) According to information and explanation given to us and the records of the Company examined by us, there are no amount required to be transferred to Investor Education and Protection Fund in accordance with the relevant provision of the Companies Act, 1956 (1 of 1956) and rules made there under.

8) The Company have accumulated losses at the end of the financial year are in excess of 50% of its net worth. The Company has net loss of Rs. 1267.23 Crores and has incurred cash loss of Rs. 1204.87 Crores during the financial year covered by our audit and a net loss of Rs. 495.78 Crores in the immediately preceding financial year.

9) Based on our audit procedures performed and based on the information and explanations given by the management, we are of the opinion that, the Company had defaulted in repayment of dues to financial institution and banks. The Company had approached its lead banker for restructuring of its debt under CDR mechanism. The Restructuring scheme has been approved by the CDR cell in the meeting held on 23rd May, 2014 and the same was informed to the Company on 16th June, 2014. The Master Restructuring Agreement has been prepared and signed by the consortium member banks (except Edelweiss ARC, assignee of SBI) and the other lenders/banks had restructured the accounts as per the approved CDR scheme, which restructuring is continuing as on the Balance Sheet date. Apart from the above, the balance as on March 31, 2015 of Central Bank of India, State Bank of India, Bank of Maharastra, Karur Vysa Bank and Union Bank of India is as per books of account for want of confirmation thereof from these banks. We further report that during the financial year covered by our audit most of the banks have classified the accounts of the Company either Sub-Standard or NPA. The Company had not issued any debenture during the year and hence, there is no default as such to be reported.

10) 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. Accordingly, the provision of clause (x) of paragraph 3 of the Order is not applicable to the Company.

11) Based on our audit procedures and on the information given by the management, we report that the Company has not obtained any term loans during the year. However, term loans obtained in earlier years had been applied for the purpose for which they were obtained.

12) To the best of our knowledge and according to the information and explanations given to us, and considering the size and nature of the Company's operations, no fraud of material significance on the Company or no fraud by the Company has been noticed or reported during the year.

For RAVINDRA SHARMA & ASSOCIATES

Chartered Accountants(CA

(Ravindra Sharma)

Date : May 30, 2015 Partner

Place : Noida Membership No.: 085271


Mar 31, 2014

Report on the Financial Statements

We have audited the accompanying financial statements of HANUNG TOYS & TEXTILES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of the 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 principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and 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 control relevant to the Company''s preparation and presentation 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 the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements. Inventory value of Rs. 27,269.26 Lacs is slow moving item as per the Management representation however the same has not been verified by us. Our Opinion is not qualified in this respect.

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

The Company had approached its lead banker and lender, i.e., Punjab National Bank for restructuring of its debt under CDR mechanism, and accordingly, the lead banker referred the matter to CDR Empowered Group on 31st July, 2013. The CDR scheme was discussed and was approved in the meeting held on 23rd May, 2014. (Refer notes to accounts for details.)

Basis for Qualified Opinion

1. In respect of the Investments made by the company in Hanung (Shangai) Limited, China:- As per the explanatory notes to the financial statements of the Hanung Toys & Textiles Limited ending on 31st March 2014 whereby the Management has represented that the process of winding up of the company has been initiated and investment made in it amounting to Rs. 69.82 lacs is likely to be non-recoverable. However, As per the explanation given to us by the management, it intends to write off the said investment only on completion of the winding up process.

2. The company has recognized deferred tax asset (DTA) of Rs. 10522 lacs for the year ended March 31st, 2014, (Balance for year Ended 31st March 2013 Deferred Tax Liability Rs. 1441 Lacs). The management has recognized the deferred tax asset based on the future projection of taxable income as per TEV study done by Dun & Bradstreet Information Services India Pvt. Ltd. In our opinion virtual certainty test as laid down in AS 22 was not satisfied and the company has not been able to establish any convincing evidence for sufficient taxable income. The Company has filed its Income Tax Return for the Assessment Year 2012-13 on 31st January 2014 (i.e. after the due date) and has carried forward the losses for prior period of Rs. 8216.13 Lacs. The same loss has also resulted in creation to Deferred Tax Asset.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in paragraph 1 to 2 of the basis of Qualified Opinion Paragraph & Subject to the notes to accounts to the financial statements, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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, except for the effect of matters described in paragraph 1 to 2 of the Basis for Qualified Opinion Paragraph and subject to the notes to accounts of the financial statements, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.

(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 disqualified as on 31st March, 2014 from being appointed as a director in terms of Section 274(1)(g) of the 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 Act 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 or payable by the company.

ANNEXURE TO OUR REPORT OF EVEN DATE OF HANUNG TOYS & TEXTILES LIMITED

(Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

On the basis of such checks as we considered appropriate and according to the information and explanations given to us, we report that:

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

(b) As explained to us and according to the practice of the company, all the fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanations given to us, discrepancies noticed, if any, on physical verifi- cation have been adjusted in the books of accounts.

(c) In our opinion and according to the information and explanations given to us, no substantial part of fixed asset has been disposed off by the company during the year and therefore does not affect the going concern assumption.

2) In respect of its inventory:

(a) As explained to us, the whole inventory was physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable in line with size of stock, nature of business and the stock placement at different locations.

(b) In our opinion and according to the information and explanation 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) Book balances have been adopted since certain adjustments have been made in the carrying amount of inventory as disclosed in the Note 1.6 of the financial statements.

3. According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted/taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of clauses 4 (iii) (b), (c), (d), (e) (f) and (g) of the companies (Auditors Report) order, 2003 as amended by the companies (Auditor''s Report) (Amendment) Order, 2004 are not applicable to the Company.

4. In our opinion and according to the information and expla- nations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

6. According to the information & explanation given to us, The Company has not accepted any deposits from the public and consequently, the directives issued by the Reserve Bank of India and the Provision of Section 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed there under are not applicable to the company.

7. The company has its own Internal audit system headed a qualified Chartered Accountant. We have relied on the Internal auditor''s report to make risk assessments while performing procedures for the audit of the financial statements. In our opinion, the internal audit functions carried out during the year by the Management have been commensurate with the size of the Company and the 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 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. (a) According to the information & explanation given to us and on the basis of our examination of the records of the Company, Undisputed statutory dues in respect of service tax, withholding taxes, provident fund, employees'' state insurance, customs, excise duty, cess as applicable, have generally have not been regularly deposited with the appropriate authorities. Details of the outstanding statutory dues as at 31st March 2014 have been given in the note no. 7.1 of the financial statements.

According to the information and explanations given to us, The Company has filed its Income Tax Return for the Assessment Year 2012-13 on 31st January 2014 (i.e. after the due date) and has carried forward the losses for prior period of Rs. 8216.13 Lacs.

According to the information and explanations given to us, The Company had also filed a petition with Hon''ble Income tax Settlement Commission on 19.02.2014 in respect of income for the years ended March 31, 2011 to March 31, 2013, which was admitted vide its order dated 29.04.2014. The case is still pending before the Hon''ble Commission.

(b) According to the information and explanation given by the company there are some undisputed amounts payable in respect of ESI, EPF, TDS of Rs. 39.93, 130,24 and 7.19 Lacs respectively which were outstanding, as at 31st March 2014, for a period of more than six months from the date they became payable.

(c) There is no amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty and excise duty which have not been deposited on account of any disputes. Except those stated in this report.

10. The Company does not have any accumulated loss and but has incurred cash loss during the financial year covered by our audit however the company was profitable in the immediately preceding financial year i.e. Financial Year 2012-13.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that, the Company had defaulted in repayment of dues to a State Bank of India account and subsequently the said account turned into Non Performing Asset as per bank with outstanding balance for Rs.24.86Cr (as per books of accounts as on 31st March 2014). Though the company had applied for restructuring of its dues or other applicable charges through CDR mechanism in the current year and accordingly the said account was restructured.

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

13. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. According to information and explanations given to us, the Company is not dealing in or trading in Shares, Mutual funds & other Investments.

15. According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

16. Based on our audit procedures and on the information given by the management, we report that the company had gone into Corporate Debt Restructuring Scheme as given in the note 4.1 & Note 4.2 of the financial statements and no new loans have been raised during the year.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2014, we report that no funds raised on short-term basis have been used for long-term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that during the year, the Company has not made any preferential allotment of shares to its promoters at a price which is not prejudicial to the interest of the company and its members.

19. The Company has not issued any debenture, consequently the provision of clause (xix) of the companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the company.

20. The Company has not raised any money by public issue during the year,consequently the provision of clause (xx) of the companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the company.

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

For ROHTAS & HANS Chartered Accountants Firm Reg. No. 004372N

(CA Piyush Jain) Place : Delhi Partner Date : 30th May, 2014 Membership No.: 514108


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of HANUNG TOYS AND TEXTILES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of the 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 principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and 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 control relevant to the Company''s preparation and presentation 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 the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the 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 required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Report on Other Legal and Regulatory Requirements

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

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

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.

(e) On the basis of the written representations received from the directors as on 31stMarch, 2013 taken on record by the Board of Directors, none of the directors is disqualified as on 31stMarch, 2013 from being appointed as a director in terms of Section 274(1 )(g) of the Act.

ANNEXURE TO OUR REPORT OF EVEN DATE OF HANUNG TOYS AND TEXTILES LIMITED

(Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

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

(b) As explained to us and according to the practice of the company, all the fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanations given to us, discrepancies noticed, if any, on physical verification have been adjusted in the books of accounts.

(c) In our opinion and according to the information and explanations given to us, no substantial part of fixed asset has been disposed off by the company during the year and therefore does not affect the going concern assumption.

2) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanation 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) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancy noticed on verification between the physical stocks and the book stocks, if any, have been properly dealt with in the books of account;

3. According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted/taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of clauses 4 (iii) (b), (c), (d), (e) (f) and (g) of the companies (Auditors Report) order, 2003 as amended by the companies (Auditor''s Report) (Amendment) Order, 2004 are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, there is generally an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods. During the course of our audit, no major instance of continuing failure to correct any weaknesses in the internal controls has been noticed.

5. In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

6. According to the information & explanation given to us, The Company has not accepted any deposits from the public and consequently, the directives issued by the Reserve Bank of India and the Provision of Section 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed there under are not applicable to the company,

7. The company has its own Internal audit system headed a qualified Chartered Accountant.We have relied on the Internal auditor''s report to make risk assessments while performing procedures for the audit of the financial statements. In our opinion, the internal audit functions carried out during the year by the Management have been commensurate with the size of the Company and the 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 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. (a) According to the information & explanation given to us and on the basis of our examination of the records of the Company in respect of Statutory Dues, the company has been generally regular in depositing the undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cessexcept Income-tax,to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities.

(b) According to the information and explanations given to us there was outstanding income tax liability, in respect of Self Assessment tax for the financial year 2011-12 (Assessment Year 2012-13) of Rs. 1404 Lacs(excluding interest & penalty if any), for a period of more than six months.

(c) According to the information and explanations given to us, there is no amounts payable in respect of income tax, wealth tax, sen/ice tax, sales tax, customs duty and excise duty which have not been deposited on account of any disputes.

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

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

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

13. The Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of this clause of the Companies (Auditor''s Report) Order, 2003 (as amended) is not applicable to the Company.

14. According to information and explanations given to us, the Company is not dealing in or trading in Shares, Mutual funds & other Investments.

15. According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

16. Based on our audit procedures and on the information given by the management, we report that the company has applied the term loans raised during the year for the specific purposes for which they were obtained.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company as at 31st March, 2013, we report that no funds raised on short-term basis have been used for long- term investment by the Company.

18. Based on the audit procedures performed and the information and explanations given to us by the management, we report that during the year, the Company has made a preferential allotment of shares to its promoters at a price which is not prejudicial to the interest of the company and its members.

19. The Company has not issued any debenture, consequently the provision of clause (xix) of the companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the company.

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

21. Based on the audit procedures performed and the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year, nor have we been informed of such case by the management.

For ROHTAS & HANS

Chartered Accountants

(CA Piyush Jain)

Place : Noida Partner

Date : 26th June, 2013 Membership No.: 514108


Mar 31, 2012

1. We have audited the attached Balance Sheet of HANUNG TOYS AND TEXTILES LTD., as at 31st March, 2012 and also the Profit and Loss account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the 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. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis-statement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of 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 above, we report that:

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

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

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

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

(v) On the basis of representations made by the directors as on 31 st March, 2012 and taken on record by the Board of Directors of the Company, 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 on the said date;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with Significant Accounting Policies and Notes on Accounts in Schedule and those appearing elsewhere in the accounts, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2012;

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

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE OF HANUNGTOYS ANDTEXTILES LTD.

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

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

(b) As explained to us and according to the practice of the Company, all the assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanations given to us, discrepancies noticed, if any, on physical verification have been adjusted in the books of account.

(c) During the year, the company has not disposed off a substantial part of its fixed assets so as to affect its going concern.

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

(b) The procedures explained to us, which are followed by the management for physical verification of inventories, are in our opinion reasonable and adequate in relation to the size of the company and the nature of its business.

(c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book stocks, if any, have been properly dealt with in the books of account;

3. According to the information and explanations given to us, the company has neither taken nor granted any loan, secured or unsecured, from/to Companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956;

4. In our opinion and according to the information and explanations given to us, there are generally adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, no major weakness in the internal controls, had come to our notice;

5. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 have been so entered. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the registers maintained under section 301 and exceeding the value of five lacs rupees in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public within the meaning of Section 58 A and 58 AA of the Companies Act, 1956 and the rules framed there under;

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

8. Accounting to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under clause (d) of sub section (1) of Section 209 of the Companies Act, 1956.

9. (a) According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees' State Insurance, Income- Tax, Sales-Tax, Wealth Tax, Custom Duty, Excise- Duty, Cess and other statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income-Tax, Wealth-Tax, Sales Tax, Customs Duty and Excise Duty were outstanding, as at 31st March, 2012 for a year of more than six months from the date they became payable.

(c) According to the records of the company, there are no dues of Sale Tax, Income Tax, Customs Duty, Wealth-Tax, Excise Duty/Cess, which have not been deposited on account of any dispute.

10. The Company has neither accumulated losses at the end of the financial year nor has it incurred cash losses, both, in the financial year under report and the immediately preceding financial year.

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

12. As explained 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.

13. The Company is not a Chit Fund or a Nidhi Mutual benefit Fund/ Society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order 2003 are not applicable to the company.

14. According to the information and explanations given to us, the Company is not dealing or trading in Shares, Securities, Debentures and Other Investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order 2003 is not applicable to the Company.

15. According to the information and explanations given to us, and the representations made by the management, the Company has not given any guarantee for loans taken by others from any bank or financial institution.

16. According to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised.

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 the no funds raised on short- term basis have been used for long-term investment. No long-term funds have been used to finance short-term assets except core (permanent) working capital.

18. Based on our examination of records and the information provided to us by management we report that the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

19. According to the information and explanation given to us, no debentures have been issued by the Company during the year.

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

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

For ROHTAS & HANS

Chartered Accountants

(CA Piyush Jain)

Place : Noida Partner

Date ; August 20, 2012 Membership No.: 514108


Mar 31, 2011

1. We have audited the attached Balance Sheet of HANUNG TOYS AND TEXTILES LTD., as at 31st March, 2011 and also the Profit and Loss account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the 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. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis-statement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of 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 above, we report that :

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

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

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

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

(v) On the basis of representations made by the directors as on 31st March, 2011 and taken on record by the Board of Directors of the Company, 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 on the said date;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with Significant Accounting Policies and Notes on Accounts in Schedule and those appearing elsewhere in the accounts, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE OF HANUNG TOYS AND TEXTILES LTD.

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

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

(b) As explained to us and according to the practice of the Company, all the assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanations given to us, discrepancies noticed, if any, on physical verification have been adjusted in the books of account.

(c) During the year, the company has not disposed off a substantial part of its fixed assets so as to affect its going concern.

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

(b) The procedures explained to us, which are followed by the management for physical verification of inventories, are in our opinion reasonable and adequate in relation to the size of the company and the nature of its business.

(c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book stocks, if any, have been properly dealt with in the books of account;

3. According to the information and explanations given to us, the company has neither taken nor granted any loan, secured or unsecured, from/to Companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act,1956;

4. In our opinion and according to the information and explanations given to us, there are generally adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, no major weakness in the internal controls, had come to our notice;

5. Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 have been so entered. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the registers maintained under section 301 and exceeding the value of five lakh rupees in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public within the meaning of Section 58 A and 58 AA of the Companies Act,1956 and the rules framed thereunder ;

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

8. Accounting to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under clause (d) of sub section (1) of Section 209 of the Companies Act, 1956.

9. (a) According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees' State Insurance, Income-Tax, Sales-Tax, Wealth Tax, Custom Duty, Excise-Duty, Cess and other statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income-Tax, Wealth-Tax, Sales Tax, Customs Duty and Excise Duty were outstanding, as at 31st March, 2011 for a year of more than six months from the date they became payable.

(c) According to the records of the company, there are no dues of Sale Tax, Income Tax, Customs Duty, Wealth-Tax, Excise Duty/Cess, which have not been deposited on account of any dispute.

10. The Company has neither accumulated losses at the end of the financial year nor has it incurred cash losses, both, in the financial year under report and the immediately preceding financial year.

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

12. As explained 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.

13. The Company is not a Chit Fund or a Nidhi Mutual benefit Fund/Society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order 2003 are not applicable to the company.

14. According to the information and explanations given to us, the Company is not dealing or trading in Shares, Securities, Debentures and Other Investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order 2003 is not applicable to the Company.

15. According to the information and explanations given to us, and the representations made by the management, the Company has not given any guarantee for loans taken by others from any bank or financial institution.

16. According to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised.

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 the no funds raised on short- term basis have been used for long-term investment. No long-term funds have been used to finance short-term assets except core (permanent) working capital.

18. Based on our examination of records and the information provided to us by management we report that the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

19. According to the information and explanation given to us, no debentures have been issued by the Company during the year.

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

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

For ROHTAS & HANS

Chartered Accountants

Hans Jain

Place:Noida Partner

Date : August 24, 2011 Membership No.: 82912









 
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