Auditor Report of Jindal Cotex Ltd.

Mar 31, 2016

To

The Members of JINDAL COTEX LTD.

Report on the Financial Statements

We have audited the accompanying financial statements of JINDAL COTEX LTD. ("the Company"), which comprise the Balance Sheet as at March 31, 2016, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Management and board of directors of the company are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (’the act’) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with rule 7 of Companies (Accounts) Rules, 2014. This responsibility 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; design, implementation and maintenance of adequate internal financial controls, that are operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

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 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 an adequate internal financial controls 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 management and Board of 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 audit opinion.

Opinion

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

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

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

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

Emphasis of Matter We draw our attention on the following:

a) Note No. 39 to the financial statements which indicate that the company has accumulated losses of Rs.227.64 Crores as at 31st March 2016 and has eroded its peak level net worth by more than 50% and has become potentially sick company. Reference under the provisions of Section 23 of Sick Industrial Company (Special Provisions) Act, 1985 (SICA) has been generated on 22nd January, 2016. Hence, there are conditions indicating an uncertainty on the going concern. However, the financial statements have been prepared by the management on a going concern basis for the reason stated in the said note.

b) Note no.10 to 12 to the financial statements regarding the company’s Non-current investments, Non-current assets and long term loans/advances including amount recoverable from Jindal International FZE, its foreign subsidiary company, carried in the balance sheet at Rs.157.69 crores. The amount is long outstanding. There is uncertainty regarding realization of this amount. Management should have booked provision against this amount.

c) Manufacturing facilities, at present, all location of the company (Except Wind Mill) have been suspended due to severe financial constraints. Company has leased out one of its unit.

d) There is non-submission of various statutory returns acknowledged by the respective authorities, non provision/deposition of various overdue statutory liabilities like PF/Service Tax/TDS/ Vat & CST/WCT/TCS/ESI & related over dues (Interest and penalty), non-deduction of TDS on provisional expenses and as explained by management exact amount of which could not be ascertained in present scenario.

e) Since all the accounts of the company have been declared sub-standard over a period of time, the banks have started recovery action against the Company under SAR FAESI Act. In the absence of any information on interest on outstanding dues to the bank, the provision of interest has been made on the basis of assumptions which are not certain. Hence balances with banks are subject to confirmation.

f) Note No. 36 to the financial statement on various litigations/suits pending in the court of law at different levels. There is uncertainty regarding the outcome of law suits filed against the company.

g) Actuarial valuation of employee benefits was not conducted during the year.

h) There is diminution in value of investments in current year of Rs. 5.51Crore.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section143 of the Act, we give in the Annexure A statement on the matters Specified in paragraphs 3 and 4 of the Order.

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 appears from our examination of those books

c) The Balance Sheet & Statement of Profit and Loss and cash flow statement dealt with by this Report are in agreement with the books of account.

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

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

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

i. The Company did not have any long-term contracts including derivative contracts; as such the question of commenting on any material foreseeable losses thereon does not arise.

ii. There has not been an occasion in case of the Company during the year under report to transfer any sums to the Investor Education and Protection Fund. The question of delay in transferring such sums does not arise.

iii. The company has disclosed the impact of its pending litigations on its financial position in its financial statements refer note no 36 to financial statements.

ANNEXURE A TO THE INDEPENDENT AUDITORS'' REPORT

Referred to in Paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements."

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

I. 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 the Fixed Assets have been physically verified by the management in a phased manner, designed to cover all the items over a period of regular intervals, which in our opinion, is reasonable having regard to the size of the company and nature of its business.

(c) According to information and explanation given to us, the title deeds of immovable

Property is held in the name of the company.

ii. In respect of Inventories :-

(a) According to information and explanations given to us, the inventories have been physical 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 inventory. Since all the manufacturing activities have been suspended, it does not hold any kind of raw material and finished stock; it is only engaged in trading activity & hold Inventory of stock in trade.

iii. According to 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. Accordingly, the provisions of clause 3 (iii) (a) to (C) 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 adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for the sale of material. Further, on the basis of our examination of the books and records of the Company and according to the information and explanations given to us, no major weakness has not been noticed or reported.

v. In our opinion and according to the information and explanations given to us, the company has not accepted any deposit from the public covered under Section 73 to 76 of the Companies Act, 2013. However, for the repayment of the fixed deposits received in earlier years by the company from the public, the company has taken permission from the Hon’ble Company Law Board, New Delhi, for extension of time for repayment of fixed deposits as the company was unable to repay the same on due dates due to financial crisis.

vi. We have broadly reviewed the records maintained by the company pursuant to the rules prescribed by the central government for maintenance of cost records under sub-section (l) of section 148 of the act and are of the opinion that prima facie, the prescribed accounts have been prepared and maintained. However we have not made the detailed examination of records.

vii. (a) According to the information and explanations given to us and based on the records of the company examined by us, the company is not regular in depositing the undisputed statutory dues, including Provident Fund, Employees’ State Insurance, Income-tax, Sales-tax, Service Tax, Custom Duty, Excise Duty and other material statutory dues, as applicable, with the appropriate authorities in India as follows;

TDS Rs.1960978, TCS Rs.534001, VAT Rs.8325251, CST Rs.466303, PF Payable Rs.5768010 & ESI Payable Rs.3850029.

(b) There has not been an occasion in case of the Company during the year under report to transfer any sums to the Investor Education and Protection Fund. The question of reporting delay in transferring such sums does not arise.

viii The company has accumulated losses at the end of the financial year which has exceeded 50% peak level net worth of the company in the preceding 4 financial years. As such company has become potentially sick. However, the company has not incurred any cash losses during the current financial year covered by our audit as compared to the immediately preceding financial year.

ix. According to the records of the Company examined by us and the information and explanations given to us, the Company has defaulted in repayment of loans or borrowings to banks and financial institution and also has not issued debentures during the year. The Company has also not taken any fresh loans or borrowings from Government.

x. Based on our audit procedures and according to the information and explanations given to us, we are of the opinion the company has defaulted in repayment of dues to financial institutions or banks. During the year 2013-14 CDR cell had approved the debt restructuring of the company and CDR package was implemented with cutoff date as 1st April, 2013.However, during the year end review, the accounts of the company with all the banks have been slipped into the sub standard category due to which the bankers’ of the company have sent mandate to CDR cell for withdrawal of CDR package to the company which was approved by CDR cell in its meeting held on 27 Nov, 2014. Banks have recalled entire outstanding of the company and started recovery proceedings under SARFAESI ACT.

xi. In our opinion, and according to the information and explanations given to us, the Company has not given any guarantee for loan taken by others from a bank or financial institution during the year . However Company has outstanding corporate guarantees of Rs.327.20 crore for loan outstanding by its subsidiaries from banks and financial institutions.

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

xiii. In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

xiv. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

xv. According to the information and explanations given to us and based on our examination of the records of the Company, 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. During the course of our examination of the books and records of the company, carried in accordance with the auditing standards generally accepted in India, we have neither come across any instance of fraud on or by the Company noticed or reported during the course of our audit nor have we been informed of any such instance by the Management.

xvii. Based upon the audit procedures performed and the information and explanations given by the management, all transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

Annexure - B to Independent Auditors’ Report (Referred to in our report of 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 JINDAL COTEX LTD. as of 31st March 2016 in conjunction with our audit of the 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 (’ICAI’).

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.

Auditors’ 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, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, 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 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 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 financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with Authorizations of management and directors of the company; and (3) provide reasonable Assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

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 is not fully in operation so we cannot assure the effectiveness of internal financial controls system over financial reporting and give reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with Authorizations of management and directors of the company.

For Raj Gupta & Co

Chartered Accountants

FRN: 000203N

Place: Ludhiana Raj Kumar Gupta

Date : 30/05/2016 (Partner)

Membership No.: 017039

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Mar 31, 2015

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

Management's Responsibility for the Financial Statements

The Management and board of directors of the company are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ('the act') with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with rule 7 of Companies (Accounts) Rules, 2014. This responsibility 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; design, implementation and maintenance of adequate internal financial controls, that are operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

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 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 an adequate internal financial controls 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 management and Board of 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.

Opinion

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

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

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

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

Emphasis of Matter

Without qualifying our opinion, we draw our attention to the following:

a) Note No. 42 to the financial statements which indicate that the company has accumulated losses of Rs.175.71 crores which has resulted in erosion of 50% of its peak level net worth and as such the company has become potentially sick. Hence, there are conditions indicating an uncertainty on the going concern.

However, the financial statements have been prepared by the management on a going concern basis for the reason stated in the said note.

b) Note No. 10 and 12 to the financial statements regarding the company's Non-current investments and long term loans/advances including amount recoverable from Jindal International FZE, its foreign subsidiary company, carried in the balance sheet at Rs.157.69 crores. The amount is long outstanding.

c) Note No. 39 to the financial statements on various litigations/suits pending in the court of law at different levels. There isuncertainty regarding the outcome of law suits filed against the company.

Other Matters

1. Actuarial valuation of employee benefits was not conducted during the year.

2. Accounts of the company with all the banks have slipped into sub standard category after being restructured, hence banks have recalled the entire outstanding and started recovery action under SARFESI Act.

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.

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 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 aforesaid financial statements comply with the applicable Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules 2014.

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

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

i. The Company has disclosed the impact of its pending litigations on its financial position in its financial statements refer note no 39 to financial statements.

ii. The Company did not have any long-term contracts including derivative contracts; as such the question of commenting on any material foreseeable losses thereon does not arise.

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

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT

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 during the course of our audit, we report that:

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

(b) As explained to us, fixed assets have been physically verified by the management at regular intervals; as informed to us no material discrepancies were noticed on such verification;

(c) The company has not disposed off substantial part of its fixed assets during the year.

ii. In respect of its inventories:-

(a) According to information and explanations given to us, the inventories have been physical verified in a phased manner 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 inventory. As explained to us, the discrepancies noticed on physical verification were not material. However, the discrepancies noticed have been properly dealt with in the books of account.

iii. The company has granted loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Act. And also during the year company has also converted its short term advances to long term advances.

iv. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and for the sale of services. Further, on the basis of our examination of the books and records of the Company and according to the information and explanations given to us, no major weakness has not been noticed or reported.

v. During the year under review, the Company has not accepted any deposits from the public covered under Section 73 to 76 of the Companies Act, 2013. However, for the repayment of the fixed deposits received in earlier years by the company from the public, the company has taken permission from the Hon'ble Company Law Board, New Delhi, for extension of time for repayment of fixed deposits as the company was unable to repay the same on due dates due to financial crisis.

vi. We have broadly reviewed the records maintained by the company pursuant to the rules prescribed by the central government for maintenance of cost records under sub-section (l) of section 148 of the act and are of the opinion that prima facie, the prescribed accounts have been prepared and maintained. However we have not made the detailed examination of records.

vii. (a) According to the information and explanations given to us and based on the records of the company examined by us, the company has been irregular in depositing the undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and other material statutory dues, as applicable, with the appropriate authorities in India ;

(b) According to the information and explanations given to us and based on the records of the company examined by us, there are undisputed dues of Income Tax, Wealth Tax, Service Tax, Sales Tax, Customs Duty and Excise Duty as follows:

TDS Rs.1438456 ; TCS Rs. 379141 ; VAT Rs. 8711210 ; CST Rs. 466303, SERVICE TAX Rs. 608943 ; PF PAYABLE Rs. 5406300 ; ESI Rs. 3850029

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

viii. As at 31st March, 2015, the Company has been registered for more than 5 years; hence, clause 4(x) of the Order is applicable to it.

The company has accumulated losses at the end of the financial year which have exceeded 50% of peak level net worth of the company in the preceding 4 financial years. As such the company has become potentially sick. The company has also incurred cash losses during the current financial year covered by our audit and in the immediately preceding financial year.

ix. According to the records of the company examined by us and as per the information and explanations given to us, the company has not availed any fresh loans from banks, and the company has not issued debentures during the year.

x. Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the company has defaulted in repayment of dues to financial institutions or banks. During the year 2013-14 CDR cell had approved the debt restructuring of the company and CDR package was implemented with cutoff date as 1st April, 2013. However, during the year under review, the Accounts of the company with all the banks have been slipped into substandard category due to which Bankers' of the company have sent mandate to CDR cell for withdrawal of CDR package to the company which was approved by CDR cell in its meeting held on 27th November, 2014. Banks have recalled entire outstanding of the company and started recovery proceedings under SARFESI ACT.

xi. In our opinion, and according to the information and explanations given to us, the Company has not given any guarantee for loan taken by others from a bank or financial institution during the year. However Company has outstanding Corporate guarantees of Rs.291.87 crore for loans outstanding by its subsidiaries from banks and financial institutions.

xii. During the course of our examination of the books and records of the company, carried in accordance with the auditing standards generally accepted in India, we have neither come across any instance of fraud on or by the Company noticed or reported during the course of our audit nor have we been informed of any such instance by the management.

For Raj Gupta & Co Chartered Accountants FRN: 000203N

Place: Ludhiana Raj Kumar Gupta Date : 30/05/2015 (Partner) Membership No.: 017039

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Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

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

Auditors'' Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s Judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of 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 financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

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

c. on the basis of written representations received from directors as on March 31, 2014, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT Referred to in Paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements."

i) a) The Company has maintained proper records

showing full particulars including quantitative details and situation of fixed assets.

b) As explained to us, most of the fixed assets have been physically verified by the management at reasonable intervals. No material discrepancies were noticed on such verification.

c) The Company has not disposed off substantial part of its fixed assets during the year which might call into question the going concern assumption of the company.

ii) a) According to information and explanations given to us, physical verification of inventories has been conducted at reasonable intervals by the management of the company.

b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) The company is maintaining proper records of inventory. As explained to us, the discrepancies noticed on physical verification were not material. However, the discrepancies noticed have been properly dealt with in the books of account.

iii) a) The company has granted unsecured loans

to three companies, firms or other parties listed in the register maintained u/s 301 of the Companies Act, 1956. The amount outstanding at the close of the year is Rs 17892.14 lacs (Prev. yr Rs.17708.34 lacs). The maximum amount outstanding during the year was Rs. 4999.46

b) According to the information and explanation given to us, the rate of interest and other terms and conditions of the loans are prima facie not prejudicial to the interests of the company and the payment of principal amount and interest are also regular.

c) The company has taken unsecured loans from 3 parties covered in the register maintained u/s 301 of the companies Act, 1956. The amount payable at the close of the year is Rs 1183.65 lacs (Prev yr Rs.1182.70) . The maximum amount outstanding during the year was Rs.2025.95 Lacs.

d) According to the information and explanation given to us, the rate of interest and other terms and conditions of the loans are prima facie not prejudicial to the interests of the company and the payment of principal amount and interest are also regular.

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 regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

v) a) According to the information and explanations

given to us , we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section.

b) In our opinion and having regard to our comments in paragraph above, the transactions exceeding the value of Rs. 5 Lacs in respect of any parties during the current year have been made at the prices which are prima facie reasonable having regard to prevailing market prices at the relevant time where such prices are available

vi) The company has accepted deposits pursuant to the provisions of section 58-A of the Companies Act,1956.

The company has received/accepted the deposits from General Public in shape of FDR for different time frames for maturity. Due to financial constraints, the company was not able to repay the deposits within the scheduled time period. The Company applied to the Company Law Board for the deferment of repayments of deposits. The Company Law Board vide its Order No. C.P NO 25/2013-CLB Dt.23/12/2013 has deferred the repayments of deposits by one year. The repayment of Deposits will start from March. 2015.In case of genuine hardship, the company will repay Rs. 5 Lacs on quarterly basis.

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

viii) We have broadly reviewed the books of accounts maintained by the company pursuant to the order made by the Central Government for the maintenance of cost records under section 209(1) (d) of the companies act, 1956 as prescribed by the central government and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However we have not conducted detailed examination to check its accuracy and completeness.

ix) in respect of statutory dues:

a) According to the information and explanations given to us, and as per the records of the company examined by us , we are of the opinion that, except for the cases pointed out in para below, the company has been regular in depositing undisputed statutory dues including Provident Fund, investor Education and Protection Fund, Employees state insurance, income Tax, Sale Tax, Wealth Tax, Custom Duty, Cess, Service Tax, and any other statutory dues as applicable with the appropriate authorities.

b) TDS at Rs 58.64 Lacs, TCS at Rs. 4.91 Lacs, E.S.i at Rs. 32.86 Lacs, Provident Fund at Rs. 130.48 Lacs, Service Tax at Rs 4.36 Lacs, Sales tax at Rs. 61.53 Lacs, Wealth tax at Rs.1.5 Lacs were overdue for deposit as on as on 31.03.2014.

c) Out of the above TDS at Rs.29.40 Lacs, TCS at Rs. 4.23 Lacs, Service Tax at Rs 4.36 Lacs ,Provident Fund at Rs. 107.08 Lacs and E.S.i at Rs. 20.03 Lacs were outstanding as on 31''st March 2014 for a period of more than 6 months from the date they become payable.

d) According to the information & explanations given to us, and as per the records of the company examined by us , the company has no disputed statutory dues.

x) The company has accumulated losses at the end of the year .The accumulated losses of the company are less than fifty percent of its net worth. The company has incurred cash loss during the financial year It did not incur any cash loss in the immediately preceding financial year.

xi) in our opinion and according to the information and explanations given to us and the records of the company examined by us, the company has defaulted in repayment of dues to banks .The amount of default in repayment of term loan is Rs. 1750 Lacs. for a period ranging from three to six months. The Cash Credit accounts were overdue at the end of the year by Rs. 103.85 Lacs. for a period ranging from one to three months. Defaults in payment interest on term loans and the cash credit account is for Rs. 340.68 Lacs. for a period ranging from one to three months.

The Company made request to Corporate Debt Restructuring Cell through Oriental Bank of Commerce (Lead Bank) to restructure the credit facilities. The Empowered Group of CDR-Cell has approved the restructuring package in CDR- Cell meetings held on 24/12/2013 vide order no. 857/2013-14 Dt. 27/12/2013.

xii) As explained 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.

xiii) in our opinion, the company is not a Chit Fund or a nidhi , mutual benefit fund and Society. Therefore, the provisions of clause 4 (xiii) of the said order are not applicable to the company.

xiv) in our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the said order are not applicable to the company.

xv) The Company has given Corporate guarantees of Rs 252.50 cr for loans taken by its subsidiaries from banks and financial institutions. In our opinion, based on the information and explanations given to us, the terms and conditions of the guarantees are not prima-facie prejudicial to the interests of the company.

xvi) in our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised.

xvii) in our opinion and 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 preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

xix) The company has not issued debentures during the year.

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

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

For Raj Gupta & Co.

Chartered Accountants FRN No : 000203N

Raj Kumar Gupta

Place: Ludhiana Partner

Dated: 30.05.2014 M. No. 017039

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Jindal Cotex Limited ("the Company"), which comprise the Balance Sheet as at March 31, 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.

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 Section 211(3C) 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.

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 misstatements.

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid

financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

(b) In the case of the statement of Profit & Loss, of the profit/loss for the year ended on that date: and

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

Report on Other Legal and Regulatory requirements

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

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

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

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

c. The Balance Sheet, the statement of Profit and Loss, and the cash Flow Statement dealt with by this report are in agreement with the books of accounts.

d. In our opinion, the Balance Sheet, the statement of Profit & 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 March 31, 2013 taken on record by the board of directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of section 274(1)(g) of the Act.

(Referred to in paragraph 1 under the heading of "Report on other Legal and Regulatory Requirements" 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 during the course of audit, we state that:- 1. 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 during the year. We are informed that no material discrepancies have been noticed by the management on such verification.

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

2. a) According to the information and explanations given to us the Physical verification of finished goods, stores & spare parts and Raw Material was conducted by the Management where ever practicable at reasonable intervals.

b) In our opinion and according to the information and explanation given to us, the procedure of physical verification of inventories followed by the management is 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. As explained to us, no material discrepancies were noticed on physical verification of inventory as compared to the book records.

3. a) The company has granted unsecured loans to three companies, firms or other parties listed in the register maintained u/s 301 of the Companies Act, 1956. The amount outstanding at the close of the year is Rs. 17708.33 lac.

b) According to the information and explanation given to us, the rate of interest and other terms and conditions of the loans are prima facie not prejudicial to the interest of the company and the payment of principal amount and interest are also regular.

c) The company has taken unsecured loans from 08 person covered in the register maintained u/s 301 of the companies Act, 1956. The amount payable at the close of the year is Rs. 1894.58 lacs.

d) According to the information and explanation given to us, the rate of interest and other terms and conditions of the loans are prima facie not prejudicial to the interests of the company and the payment of principal amount and interest are also regular.

4. In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to the purchase of inventory, fixed assets and sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control procedures.

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 the contracts or arrangements referred to in section 301 needed to be entered into the register, maintained under the said section have been so entered.

b. In our opinion and having regard to our comments in paragraph above, the transactions exceeding the value of Rs. 5.00 Lacs in respect of any parties during the current year have been made at the prices which are prima facie reasonable having regard to prevailing market prices at the relevant time where such prices are available.

6. In our opinion and according to the information and explanation given to us, the company has accepted deposits pursuant to the provisions of section 58-A of the Companies Act, 1956. The company has duly complied with the provisions of section 58-A and 58- AA of the Companies Act,1956 and Companies (Acceptance of Deposits) Rules,1975.

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

8. We have broadly reviewed the books of accounts maintained by the company pursuant to the order made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 as prescribed by the central government and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However we have not conducted detailed examination to check its accuracy and completeness.

9. In respect of statutory dues: a. According to the information and explanations

given to us, and as per the records of the company, we are of the opinion that the company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees state Insurance, Income Tax, Sale Tax, Wealth Tax, Custom Duty, Cess, Service Tax, and any other statutory dues if any applicable with the appropriate authorities, except TDS Rs 39.25 Lacs, TCS Payable Rs. 6.99 Lacs and Provident Fund Rs. 99.62 Lacs which was pending for deposit as on 31.03.2013. TDS Rs.10.78 Lacs,TCS Payable Rs. 4.32 Lacs. Provident Fund Rs. 46.69 Lacs payable in respect of the aforesaid dues were outstanding as at 31''st March 2013 for a period of more than 6 months from the date they become payable.

b. According to the information & explanations given to us, and as per the records of the company, the company has no disputed statutory dues .

10. The company has no accumulated losses and cash loss during the current financial year but has incurred cash loss in the immediately preceding financial year under audit.

11. In our opinion and according to the information and explanations given to us, the company has defaulted in repayment of dues to bank, financial institutions, or debenture holders. Amt. of default in repayment of loan is Rs. 408.42 Lacs. for a period of one month in term loan and C/C account were overdue by Rs. 222.59 Lacs., defaults in payment of Interest is for Rs. 308.09 Lacs. for a period of 1-3 months.

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

13. The company is a manufacturing company and 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 has not dealt or traded in shares, securities, debentures and other investments. Therefore, the provisions of Clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

15. According to the information and explanations given to us, the Company has given Corporate guarantees of Rs 242.50 cr for loans taken by its subsidiaries from banks and financial institutions and the terms and conditions whereof in our opinion are not prima- facie prejudicial to the interest of the company.

16. In our opinion and according to the information and explanations given to us, the Term Loans have been applied for the purpose for which they were raised.

17. In our opinion and 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.

18. According to the information and explanations given to us, the company has not made any preferential allotment of shares during the current year to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. As per information and explanation given to us no debentures have been issued by the company.

20. We have verified that the end use of the money raised by way of public issue is as disclosed in the notes to the Financial statements.

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period covered by our audit.

FOR AGGARWAL GARG & CO.

Chartered Accountants

(P. K. Garg)

Partner

Dated: 30.05.2013 M. No. 083139

Place: Ludhiana FRN : 004745N

---

Mar 31, 2012

1. We have audited the attached Balance Sheet of Jindal Cotex Ltd. as at 31st March 2012 and also the Profit & Loss Account and the cash flow statement of the company 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 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 from 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 the 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 (Auditors' Report) (Amendment) Order,2004} issued by the Central Government of India in terms of sub section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such checks as are considered appropriate and according to information and explanation given to us, we give in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent to which it is applicable to the Company.

4. Further to our comments in the Annexure referred to in paragraph 3, we report as follows :- a) We have obtained all the information and explanations which to the best of our knowledge and belief, were necessary for the purpose of our audit;

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

c) The Balance sheet and the Profit & Loss Account dealt with by this report are in agreement with the Books of Account.

d) In our opinion, the Balance Sheet and the Profit & Loss Account dealt with by this report are in compliance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable.

e) On the basis of written representations received from the directors as on 31.03.2012 and taken on record by the Board of Directors, we report that none of the directors of the company is disqualified as on 31.03.2012 from being appointed as a Director of the company in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

5 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 schedules and Notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true & fair view in conformity with the accounting principles generally accepted in India :

I) In case of the Balance Sheet, of the state of Affairs of the Company as at 31st March, 2012 and :

II) In case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date :

III) In case of the Cash Flow Statement, of the cash flow of the Company for the year ended on that date :

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph (3) of our Report of even date on the Accounts of Jindal Cotex Ltd. for the Year ended as on 31st March, 2012)

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:- 1. 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 during the year. We are informed that no material discrepancies have been noticed by the management on such verification.

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

2. a) According to the information and explanations given to us the Physical verification of finished goods, stores & spares parts and Raw Materials was conducted by the Management where ever practicable at reasonable intervals.

b) In our opinion and according to the information and explanation given to us, the procedure of physical verification of inventories followed by the management is 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. As explained to us, no material discrepancies were noticed on physical verification of inventory as compared to the book records.

3. a) The company has granted unsecured loans to five companies, firms or other parties listed in the register maintained u/s 301 of the Companies Act, 1956. The amount outstanding at the close of the year is Rs 17219.72 lac.

b) According to the information and explanation given to us, the terms and conditions of loan are prima facie not prejudicial to the interests of the company and it has been granted interest free as per the objects of the issue and the payment of principal amount is also regular.

c) The company has taken unsecured loans from 05 persons covered in the register maintained u/s 301 of the companies Act, 1956. The amount involved in the transaction is Rs 749.40 Lacs. The amount payable at the close of the year is Rs 379.16 lacs.

d) According to the information and explanation given to us, the rate of interest and other terms and conditions of the loans are prima facie not prejudicial to the interests of the company and the payment of principal amount and interest are also regular.

4. In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to the purchase of inventory, fixed assets and sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control procedures.

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 the contracts or arrangements referred to in section 301 needed to be entered into the register, maintained under the said section have been so entered.

b. In our opinion and having regard to our comments in paragraph above, the transactions exceeding the value of Rs. 5.00 Lacs in respect of any parties during the current year have been made at the prices which are prima facie reasonable having regard to prevailing market prices at the relevant time where such prices are available.

6. In our opinion and according to the information and explanation given to us, the company has accepted deposits pursuant to the provisions of section 58-A of the Companies Act, 1956. The company has duly complied with the provisions of section 58-A and 58-AA of the Companies Act, 1956 and Companies (Acceptance of Deposits) Rules 1975.

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

8. We have broadly reviewed the books of accounts maintained by the company pursuant to the order made by the Central Government for the maintenance of cost records under section 209(1) (d) of the companies act, 1956 as prescribed by the central government and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However we have not conducted detailed examination to check its accuracy and completeness.

9. In respect of statutory dues:

a. According to the information and explanations given to us, and as per the records of the company, we are of the opinion that the company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees state Insurance, Income Tax, Sale Tax, Wealth Tax, Custom Duty, Cess, Service Tax, and any other statutory dues if any applicable with the appropriate authorities.

b. According to the information & explanations given to us, and as per the records of the company, the company has not deposited disputed statutory dues on account of matters pending before the appellate authorities in respect of sales tax demand of Rs 134.14 lacs (previous year 134.14 lacs) raised by Sales Tax Authorities under Punjab Vat Act 2005 and VAT exemption of Rs 1245.52 lacs (utilized Rs 417.29 lac up to 31.03.12) on the basis of eligibility certificate issued by District Industries centre, which is disputed by concerned Sales tax Authority under Punjab general Sales tax 1948 & Punjab Vat act 2005.

10. The company has no accumulated losses but has incurred cash loss during the current financial year under audit. However, there was no cash loss in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the company has defaulted in repayment of dues to bank, financial institutions, or debenture holders. Amt. of default in repayment of Loan – 224.36 lacs, default in payment of Interest-98.55 lacs. Period of default in repayment of Loan - 1 month and in payment of Interest-1-3 months.

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

13. The company is a manufacturing company and 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 has not dealt or traded in shares, securities, debentures and other investments. Therefore, the provisions of Clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

15. According to the information and explanations given to us, the Company has given Corporate guarantees of Rs 234.75 cr for loans taken by its subsidiaries from banks and financial institutions and the terms and conditions whereof in our opinion are not prima-facie prejudicial to the interest of the company.

16. In our opinion and according to the information and explanations given to us, the Term Loans have been applied for the purpose for which they were raised.

17. In our opinion and 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.

18. According to the information and explanations given to us, the company has not made any preferential allotment of shares during the current year to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. As per information and explanation given to us no debentures have been issued by the company.

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

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period covered by our audit.

FOR AGGARWAL GARG & CO.

Chartered Accountants

Firm Regn. No. : 004745N

(Pawan Kumar Garg)

Dated: 30.05.2012 Partner

Place: Ludhiana M. No. 083139

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of Jindal Cotex Ltd. as at 31st March 2011 and also the profit & Loss Account and the cash fl ow statement of the company 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 auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from 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 the 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 (Auditors' Report) (Amendment) Order,2004} issued by the Central Government of India in terms of sub section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such checks as are considered appropriate and according to information and explanation given to us, we give in the annexure a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order, to the extent to which it is applicable to the Company.

4. Further to our comments in the Annexure referred to in paragraph 3, we report as follows :- a) We have obtained all the information and

explanations which to the best of our knowledge and belief, were necessary for the purpose of our audit;

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

c) The Balance sheet and the profit & Loss Account dealt with by this report are in agreement with the Books of Account.

d) In our opinion, the Balance Sheet and the profit & Loss Account dealt with by this report are in compliance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable.

e) On the basis of written representations received from the directors as on 31.03.2011 and taken on record by the Board of Directors, we report that none of the directors of the company is disqualifi ed as on 31.03.2011 from being appointed as a Director of the company in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

5 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 schedules and Notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true & fair view in conformity with the accounting principles generally accepted in India :

I) In case of the Balance Sheet, of the state of Affairs of the Company as at 31st March, 2011 and :

II) In case of the profit and Loss Account, of the profit of the Company for the year ended on that date :

III) In case of the cash fl ow statement, of the cash flow of the Company for the year ended on that date :

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph (3) of our Report of even date on the Accounts of Jindal Cotex Ltd. for the Year ended as on 31st March, 2011)

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:- 1.

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 verifi ed by the management at reasonable intervals during the year. We are informed that no material discrepancies have been noticed by the management on such verifi cation.

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

2. a) According to the information and explanations given to us the Physical verifi cation of fi nished goods, stores & spares parts and Raw Materials was conducted by the Management where ever practicable at reasonable intervals.

b) In our opinion and according to the information and explanation given to us, the procedure of physical verifi cation of inventories followed by the management is 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. As explained to us, no material discrepancies were noticed on physical verifi cation of inventory as compared to the book records.

3. a) The company has granted unsecured loans to two companies, fi rms or other parties listed in the register maintained u/s 301 of the Companies Act, 1956. The amount outstanding at the close of the year is Rs 1454.21 lac.

b) According to the information and explanation given to us, the terms and conditions of loan are prima facie not prejudicial to the interests of the company and it has been granted interest free as per the objects of the issue and the payment of principal amount is also regular.

c) The company has taken unsecured loans from 06 person covered in the register maintained u/s 301 of the companies Act, 1956. The amount involved in the transaction is Rs 1314.92 Lacs. The amount payable at the close of the year is Rs 1376.06 lacs.

d) According to the information and explanation given to us, the rate of interest and other terms and conditions of the loans are prima facie not prejudicial to the interests of the company and the payment of principal amount and interest are also regular.

4. In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to the purchase of inventory, fixed assets and sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control procedures.

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 the contracts or arrangements referred to in section 301 needed to be entered into the register, maintained under the said section have been so entered.

b. In our opinion and having regard to our comments in paragraph above, the transactions exceeding the value of Rs. 5.00 Lacs in respect of any parties during the current year have been made at the prices which are prima facie reasonable having regard to prevailing market prices at the relevant time where such prices are available.

6. In our opinion and according to the information and explanation given to us, the company has not accepted any deposit pursuant to the provisions of section 58-A of the Companies Act, 1956.

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

8. We have broadly reviewed the books of accounts maintained by the company pursuant to the order made by the Central Government for the maintenance of cost records under section 209(1) (d) of the companies act, 1956 as prescribed by the central government and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However we have not conducted detailed examination to check its accuracy and completeness.

9. In respect of statutory dues:

a. According to the information and explanations given to us, and as per the records of the company, we are of the opinion that the company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees state Insurance, Income Tax, Sale Tax, Wealth Tax, Custom Duty, Cess, Service Tax, and any other statutory dues if any applicable with the appropriate authorities.

b. According to the information & explanations given to us, and as per the records of the company, the company has not deposited disputed statutory dues on account of matters pending before the appellate authorities in respect of sales tax demand of Rs 134.14 lacs (previous year 104.36 lacs) raised by Sales Tax Authorities under Punjab Vat Act 2005 and VAT exemption of Rs 1245.52 lacs (utilized Rs 417.29 lac up to 31.03.11) on the basis of eligibility certificate issued by District Industries centre, which is disputed by concerned Sales tax Authority under Punjab general Sales tax 1948 & Punjab Vat act 2005.

10. The company has no accumulated losses and has not incurred any cash loss during the current financial year under audit and 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 bank, financial institutions, or debenture holders.

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

13. The company is a manufacturing company and 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 has not dealt or traded in shares, securities, debentures and other investments. Therefore, the provisions of Clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

15. According to the information and explanations given to us, the Company has given Corporate guarantees of Rs 138.00 cr for loans taken by its subsidiaries from banks and financial institutions and the terms and conditions where of in our opinion are not prima-facie prejudicial to the interest of the company.

16. In our opinion and according to the information and explanations given to us, the Term Loans have been applied for the purpose for which they were raised.

17. In our opinion and 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.

18. According to the information and explanations given to us, the company has not made any preferential allotment of shares during the current year to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. As per information and explanation given to us no debentures have been issued by the company.

20. We have verified that the end use of the money raised by way of public issue is as disclosed in the notes to the Financial statements.

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period covered by our audit.

FOR AGGARWAL GARG & CO.

CHARTERED ACCOUNTANTS

Firm Regn. No. : 004745N

(PAWAN KUMAR GARG) Date : 28.07.2011 PARTNER

Place : Ludhiana Membership No. 083139

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of Jindal Cotex Ltd. as at 31st March 2010 and also the Profit & Loss Account and the cash flow statement of the company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from 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 the 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} issued by the Central Government of India in terms of sub section (4A) of Section 227 of the Companies Act, 1956 and on the basis of such checks as are considered appropriate and according to information and explanation given to us, we give in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent to which it is applicable to the Company.

4. Further to our comments in the Annexure referred to in paragraph 3, we report as follows :- a) We have obtained all the information and

explanations which to the best of our knowledge and belief, were necessary for the purpose of our audit;

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

c) The Balance sheet and the Profit & Loss Account dealt with by this report are in agreement with the Books of Account.

d) In our opinion, the Balance Sheet and the Profit & Loss Account dealt with by this report are in compliance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable.

e) On the basis of written representations received from the directors as on 31.03.2010 and taken on record by the Board of Directors, we report that none of the directors of the company is disqualified as on 31.03.2010 from being appointed as a Director of the company in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

5 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 schedules and Notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true & fair view in conformity with the accounting principles generally accepted in India :

I) In case of the Balance Sheet, of the state of Affairs of the Company as at 31st March, 2010 and :

II) In case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date :

III) In case of the cash flow statement, of the cash flow of the Company for the year ended on that date : ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph (3) of our Report of even date on the Accounts of Jindal Cotex Ltd. for the Year ended as on 31st March, 2010)

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:-

1. 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 during the year. We are informed that no material discrepancies have been noticed by the management on such verification.

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

2. a) According to the information and explanations given to us the Physical verification of finished goods, stores & spares parts and Raw Materials was conducted by the Management where ever practicable at reasonable intervals.

b) In our opinion and according to the information and explanation given to us, the procedure of physical verification of inventories followed by the management is 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. As explained to us, no material discrepancies were noticed on physical verification of inventory as compared to the book records.

3. a) The company has granted unsecured loans to two companies, firms or other parties listed in the register maintained u/s 301 of the Companies Act, 1956. The amount outstanding at the close of the year is Rs 223.03 lac.

b) According to the information and explanation given to us, the terms and conditions of loan are prima facie not prejudicial to the interests of the company and it has been granted interest free as per the objects of the issue and the payment of principal amount is also regular.

c) The company has taken unsecured loans from 06 person covered in the register maintained u/s 301 of the companies Act, 1956. The amount involved in the transaction is Rs 322.64 Lacs. The amount payable at the close of the year is Rs 62.43 lacs.

d) According to the information and explanation given to us, the rate of interest and other terms and conditions of the loans are prima facie not prejudicial to the interests of the company and the payment of principal amount and interest are also regular.

4. In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to the purchase of inventory, fixed assets and sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control procedures.

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 the contracts or arrangements referred to in section 301 needed to be entered into the register, maintained under the said section have been so entered.

b. In our opinion and having regard to our comments in paragraph above, the transactions exceeding the value of Rs. 5.00 Lacs in respect of any parties during the current year have been made at the prices which are prima facie reasonable having regard to prevailing market prices at the relevant time where such prices are available.

6. In our opinion and according to the information and explanation given to us, the company has not accepted any deposit pursuant to the provisions of section 58-A of the Companies Act, 1956.

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

8. We have broadly reviewed the books of accounts maintained by the company pursuant to the order made by the Central Government for the maintenance of cost records under section 209(1) (d) of the companies act, 1956 as prescribed by the central government and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However we have not conducted detailed examination to check its accuracy and completeness.

9. In respect of statutory dues:

a. According to the information and explanations given to us, and as per the records of the company, we are of the opinion that the company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees state Insurance, Income Tax, Sale Tax, Wealth Tax, Custom Duty, Cess, Service Tax, and any other statutory dues if any applicable with the appropriate authorities.

b. According to the information & explanations given to us, and as per the records of the company, the company has not deposited disputed statutory dues on account of matters pending before the appellate authorities in respect of sales tax demand of Rs 104.36 lacs raised by Sales Tax Authorities under Punjab Vat Act 2005 and VAT exemption of Rs 1245.52 lacs (utilized Rs 417.29 lac up to 31.03.10) on the basis of eligibility certificate issued by District Industries centre, which is disputed by concerned Sales tax Authority under Punjab general Sales tax 1948 & Punjab Vat act 2005.

10. The company has no accumulated losses and has not incurred any cash loss during the current financial year under audit and 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 bank, financial institutions, or debenture holders.

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

13. The company is a manufacturing company and therefore, the provisions of Clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

14. According to the information and explanations given to us, the Company has not dealt or traded in shares, securities, debentures and other investments. Therefore, the provisions of Clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

15. According to the information and explanations given to us, the Company has given Corporate guarantees of Rs 138.00 cr for loans taken by its subsidiaries from banks and financial institutions and the terms and conditions whereof in our opinion are not prima-facie prejudicial to the interest of the company.

16. In our opinion and according to the information and explanations given to us, the Term Loans have been applied for the purpose for which they were raised.

17. In our opinion and 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.

18. According to the information and explanations given to us, the company has not made any preferential allotment of shares during the current year to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. As per information and explanation given to us no debentures have been issued by the company.

20. We have verified that the end use of the money raised by way of public issue is as disclosed in the notes to the Financial statements.

21. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period covered by our audit.

FOR AGGARWAL GARG & CO.

CHARTERED ACCOUNTANTS

Firm Regn. No. : 004745N

(PAWAN KUMAR GARG) Date : 28.05.2010 PARTNER Place : Ludhiana Membership No. 083139