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Auditor Report of Kansal Fibres Ltd.

Mar 31, 2014

1. We have audited the attached Balance Sheet of KANSAL FIBRES LIMITED as at 31st March, 2014, the Profit and Loss Account of the company and also the Cash Flow Statement for the year ended on that date, both 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. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement .An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

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

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

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

d. In our opinion, the balance sheet, the Profit and Loss Account and the cash flow statement dealt with by this report comply with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956 ;

e. We draw attention to note 2 in the financial statements. The company incurred a net loss of Rs. 62,288,730/- during the year ended 31st March, 2014, and on that date. The accumulated loss of the company exceeds its paid-up capital. These factors along with other matters as set forth in Notes raise substantial doubt about the ability of the company to continue as a going concern in future.

f. Except as stated in (e) above, In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the significant accounting policies and other notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India. ;

i) In case of Balance Sheet, of the state of Company''s affairs as at 31st March, 2014;

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

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

(REFERRED TO IN PARAGRAPH (3) OF OUR REPORT OF EVEN DATE)

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

(b) As explained to us, most of the fixed assets have been physically verified by the management during the year in a phased manner, which in our opinion is reasonable having regard to the size of the company. No material discrepancies were noticed on such verification.

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

(ii) According to information and explanations given to us, the company held no inventories during the year. As such clause (ii)-a, b and c are not applicable.

(iii) (a) According to the information and explanations given to us, the company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Hence clause (iii)-(b), (c) and (d) are not applicable.

(b) The company has taken an unsecured loan from a party listed in the register maintained u/s 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs. 44,29,597/-. Based on the information and explanations given to us, there are no stipulations regarding repayment of the principal amount and the payment of interest on the loan. Other terms and conditions of the loan, in our opinion, are not prima facie prejudicial to the interests of the company.

(iv) In our opinion, based on our observations and the information and explanations given to us, the company has in place adequate internal control systems commensurate with its size and the nature of its business, with regard to rendering of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system. There were no transactions relating to purchase of inventory, fixed assets and the sale of goods during the year.

(v) (a) Based on 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 Companies act, 1956 have been entered into the register maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public.

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

(viii) The requirements relating to the maintenance of the cost records in terms of Section 209 (I) (d) of the Companies Act, 1956 are not applicable to the company.

(ix) Based on our examination of the records of the company and information and explanations given to us, there were no arrears of undisputed statutory dues outstanding as on 31st March, 2014 for more than six months from the date they become payable.

(x) The Company has accumulated losses of Rs. 62,288,730/- at the end of the financial year. The accumulate losses are more than 50% of the company''s net worth. The company has incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to a financial institution or banks or debenture holders.

(xii) As explained to us, the Company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause (xii) of the order are not applicable to the company.

(xiii) The company is not a Chit Fund or a Nidhi, mutual benefit fund/society. Therefore, the provisions of Clause 4 (xiii) of the order are not applicable to the company.

(xiv) Based on the information and explanations given to us and the records of the company examined by us, the company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause (xiv) of the order are not applicable to the company.

(xv) Based on our examination of records of the company and information and explanation given to us, the company has not given a guarantee in respect of loans taken by others from banks and financial institutions.

(xvi) In the absence of any term loans availed by the company, the provision of clause 4 (xvi) of the order are not applicable.

(xvii) In the absence of short-term funds raised by the company, the provisions of clause 4(xvii) of the order are not applicable.

(xviii) According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies act, 1956.

(xix) According to the information and explanations given to us, the company has not issued debentures during the year. Accordingly, the provisions of clause 4(xix) of the order are not applicable to the company.

(xx) According to the information and explanations given to us, the company has not raised any money by way of public issue during the year. Accordingly the provisions of clause 4(xx) of the order are not applicable to the company.

(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. 000203N

Place: Ludhiana Dated: 30/05/2014 Sd/- (CA R.K.Gupta) Partner M. No. 017039


Mar 31, 2013

1. We have audited the attached Balance Sheet of KANSAL FIBRES LIMITED as at 31st March, 2013, the Profit and Loss Account of the company and also the Cash Flow Statement for the year ended on that date, both 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. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement .An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

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

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

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

d. In our opinion, the balance sheet, the Profit and Loss Account and the cash flow statement dealt with by this report comply with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956 ;

e. We draw attention to note 1 in the financial statements. The company incurred a net loss of Rs. 17,95,282/- during the year ended 31st March, 2013, and on that date. The accumulated losses of the company exceed its paid-up capital. These factors along with

other matters as set forth in Notes raise substantial doubt about the ability of the company to continue as a going concern in future.

f. Except as stated in (f) above, In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the significant accounting policies and other notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India. ;

i) In case of Balance Sheet, of the state of Company''s affairs as at 31st March, 2013;

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

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

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

(b) As explained to us, most of the fixed assets have been physically verified by the management during the year in a phased manner, which in our opinion is reasonable having regard to the size of the company. No material discrepancies were noticed on such verification.

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

(ii) According to information and explanations given to us, the company held no inventories during the year. As such clause (ii)-a, b and c are not applicable.

(iii) (a) According to the information and explanations given to us, the company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1056. Hence clause (iii)-(b), (c) and (d) are not applicable.

(b) The company has taken an unsecured loan from a party listed in the register maintained u/s 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs. 15,88,699/-. Based on the information and explanations given to us, there are no stipulations regarding repayment of the principal amount and the payment of interest on the loan. Other terms and conditions of the loan, in our opinion, are not prima facie prejudicial to the interests of the company.

(iv) In our opinion, based on our observations and the information and explanations given to us, the company has in place an adequate internal control systems commensurate with its size and the nature of its business, with regard to rendering of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system. There were no transactions relating to purchase of inventory, fixed assets and the sale of goods during the year.

(v) (a) Based on 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 Companies act, 1956 have been entered into the register maintained under that section.

(b)In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public.

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

(viii) The requirements relating to the maintenance of the cost records in terms of Section 209 (I) (d) of the Companies Act, 1956 are not applicable to the company.

(ix) Based on our examination of the records of the company and information and explanations given to us, there were no arrears of undisputed statutory dues outstanding as on 31st March, 2013 for more than six months from the date they become payable.

(x) The Company has accumulated losses of Rs. 62,291,113/- at the end of the financial year. The accumulate losses are more than 50% of the company''s net worth. The company has incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to a financial institution or banks or debenture holders.

(xii) As explained to us, the Company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause (xii) of the order are not applicable to the company.

(xiii) The company is not a Chit Fund or a Nidhi, mutual benefit fund/society. Therefore, the provisions of Clause 4 (xiii) of the order are not applicable to the company.

(xiv) Based on the information and explanations given to us and the records of the company examined by us, the company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause (xiv) of the order are not applicable to the company.

(xv) Based on our examination of records of the company and information and explanation given to us, the company has not given a guarantee in respect of loans taken by others from banks and financial institutions.

(xvi) In the absence of any term loans availed by the company, the provision of clause 4

(xvi) of the order are not applicable.

(xvii) In the absence of short-term funds raised by the company, the provisions of clause 4(xvii) of the order are not applicable.

(xviii) According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies act, 1956.

(xix) According to the information and explanations given to us, the company has not issued debentures during the year. Accordingly, the provisions of clause 4(xix) of the order are not applicable to the company.

(xx) According to the information and explanations given to us, the company has not raised any money by way of public issue during the year. Accordingly the provisions of clause 4(xx) of the order are not applicable to the company.

(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. 000203N

Place: Ludhiana

Date: 21/05/2013 Sd/-

(CA R.K.Gupta)

PARTNER

M. No. 017039


Mar 31, 2012

1. We have audited the attached Balance Sheet of KANSAL FIBRES LIMITED as at 31st March, 2012, the Profit and Loss Account of the company and also the Cash Flow Statement for the year ended on that date, both 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. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement .An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

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

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

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

d. In our opinion, the balance sheet, the Profit and Loss Account and the cash flow statement dealt with by this report comply with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956 ;

e. We draw attention to note 1 in the financial statements. The company incurred a net loss of Rs. 2,53,608/- during the year ended 31st March, 2012, and on that date. The accumulated losses of the company exceed its paid-up capital. These factors along with other matters as set forth in Note 1 raise substantial doubt about the ability of the company to continue as a going concern in future.

f. Except as stated in (f) above, In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the significant accounting policies and other notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India. ;

i) In case of Balance Sheet, of the state of Company's affairs as at 31st March, 2012;

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

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

ANNEXURE TO AUDITORS' REPORT RE: KANSAL FIBRES LIMITED (REFERRED TO IN PARAGRAPH (3) OF OUR REPORT OF EVEN DATE)

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

(b) As explained to us, most of the fixed assets have been physically verified by the management during the year in a phased manner, which in our opinion is reasonable having regard to the size of the company. No material discrepancies were noticed on such verification.

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

(ii) According to information and explanations given to us, the company held no inventories during the year. As such clause (ii)-a, b and c are not applicable.

(iii) (a) According to the information and explanations given to us, the company has not granted any loan, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1056. Hence clause (iii)-(b), (c) and (d) are not applicable.

(b) The company has taken an unsecured loan from a party listed in the register maintained u/s 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs. 12,26,899/-. Based on the information and explanations given to us, there are no stipulations regarding repayment of the principal amount and the payment of interest on the loan. Other terms and conditions of the loan, in our opinion, are not prima facie prejudicial to the interests of the company.

(iv) In our opinion, based on our observations and the information and explanations given to us, the company has in place an adequate internal control systems commensurate with its size and the nature of its business, with regard to rendering of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system. There were no transactions relating to purchase of inventory, fixed assets and the sale of goods during the year.

(v) (a) Based on 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 Companies act, 1956 have been entered into the register maintained under that section.

(b)In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public.

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

(viii) The requirements relating to the maintenance of the cost records in terms of Section 209 (I) (d) of the Companies Act, 1956 are not applicable to the company.

(ix) Based on our examination of the records of the company and information and explanations given to us, there were no arrears of undisputed statutory dues outstanding as on 31st March, 2012 for more than six months from the date they become payable.

(x) The Company has accumulated losses of Rs. 6,04,95,831/- at the end of the financial year. The accumulate losses are more than 50% of the company's net worth. The company has incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to a financial institution or banks or debenture holders.

(xii) As explained to us, the Company has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause (xii) of the order are not applicable to the company.

(xiii) The company is not a Chit Fund or a Nidhi, mutual benefit fund/society. Therefore, the provisions of Clause 4 (xiii) of the order are not applicable to the company.

(xiv) Based on the information and explanations given to us and the records of the company examined by us, the company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause (xiv) of the order are not applicable to the company.

(xv) Based on our examination of records of the company and information and explanation given to us, the company has not given a guarantee in respect of loans taken by others from banks and financial institutions.

(xvi) In the absence of any term loans availed by the company, the provision of clause 4

(xvi) of the order are not applicable.

(xvii) In the absence of short-term funds raised by the company, the provisions of clause 4(xvii) of the order are not applicable.

(xviii) According to the information and explanations given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies act, 1956.

(xix) According to the information and explanations given to us, the company has not issued debentures during the year. Accordingly, the provisions of clause 4(xix) of the order are not applicable to the company.

(xx) According to the information and explanations given to us, the company has not raised any money by way of public issue during the year. Accordingly the provisions of clause 4(xx) of the order are not applicable to the company.

(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. 000203N

Place: Ludhiana Dated: 29/08/2012

Sd/- (CA R.K.Gupta) PARTNER M. No. 017039


Mar 31, 2011

We have audited the attached Balance Sheet of KANSAL FIBRES LIMITED as at 31st March, 2011, the Profit and Loss Account of the company and the Cash Flow Statement for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

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

2. Further to our comments in the annexure referred to above, we report that:

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

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

c. The Balance Sheet and Profit and Loss Account and Cash Flow Statement deall with by this report are in agreement with the books of account,

d. In our opinion, the balance sheet, the Profit and Loss Account and the cash flow statement dealt with by this report comply with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956 ;

e. The annual accounts and annual returns of the company not having been filed for continuous three financial years, both the directors of the company stand disqualified in terms of Section 274 (1) (g) of the Companies Act.

f. We draw attention to note 1 in the financial statements. The company incurred a net loss of Rs. 2,26,838/- during the year ended 31st March, 2011, and on that date. The accumulated losses of the company exceed its paid-up capital. These factors along with other matters as set forth in Note 1 raise substantial doubt about the ability of the company to continue as a going concern in future.

g. Except as stated in (f) above, in our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the significant accounting policies and other accounts give the information required by the Companies Act, 1956 in the manner required and give a true and fair view in conformity with the accounting principles generally accepted in India.;

i) In case of Balance Sheet, of the state of Company's affairs as at 31st March, 2011 and

ii) In case of Profit and Loss Account, of the loss of the company for the year ended on that date.

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

ANNEXURE TO AUDITORS' REPORT RE: KANSAL FIBRES LIMITED (REFERRED TO IN PARAGRAPH (3) OF OUR REPORT OF EVEN DATE)

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

(b) As explained to us, most of the fixed assets have been physically verified by the management during the year in a phased manner, which in our opinion is reasonable having regard to the size of the company. No material discrepancies were noticed on such verification.

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

(ii) According to information and explanations given to us, the company held no inventories during the year. As such clause (ii)-a, b and c are not applicable.

(iii) (a) According to the information and explanations given to us. The company has not granted any loans, secured or unsecured, to any companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1056. Hence clause (b), (c) and (d) are not applicable to the said company.

(b) The company has taken an unsecured loan from a party listed in the register maintained u/s 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs.976899/-. Based on the information and explanations given to us, there are no stipulations regarding repayment of the principal amount and the payment of interest on loan. Other terms and conditions of the loan, in our opinion, are not prima facie prejudicial to the interest of the company.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with its size and the nature of its business, with regard to rendering of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system. There were no transactions relating to purchase of inventory, fixed assets and the sale of goods during the year.

(v) (a) Based on the information and explanations given to us, we are of the opinion that the particulars of contract or arrangements referred to in section 301 of the companies act, 1956 have been entered into the register maintained under that section.

(b)In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public.

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

(viii) The requirements relating to the maintenance of the cost records in terms of under section 209 (I) (d) of the Companies Act, 1956 is not applicable to the company.

(ix) Based on our examination of the records of the company and information and explanations given to us, there were no arrears of undisputed statutory dues outstanding as on 31st March, 2011 for more than 6 months from the date they become payable.

(x) The Company have accumulated losses at the end of financial year amounting to Rs. 60235935/-. The accumulate losses are more than 50% of the company's net worth. The company has incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanation given to us, the company has not defaulted in repayment of dues to a financial institution or banks or debentures holders.

(xii) As explained to us, the Company has not given any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause (xii) of the order are not applicable to the company.

(xiii) The company is not a Chit Fund or a Nidhi, mutual benefit fund/society. Therefore, the provisions of Clause 4 (xiii) of the order are not applicable of the company.

(xiv) Based on the information and explanation given to us and the records of the company examined by us. The company is not dealing in or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause (xiv) of the order are not applicable to the company.

(xv) Based on our examination of records of the company and information and explanation given to us, the company has not given a guarantee in respect of loans taken by others from banks and financial institutions.

(xvi) In the absence of any term loans availed by the company, the provision of clause 4 (xvi) of the order are not applicable.

(xvii) In the absence of short-terms funds raised by the company, the provisions of clause 4(xvii) of the order are not applicable.

(xviii) According to the information and explanation given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the companies act, 1956.

(xix) According to the information and explanations given to us, the company has not issued debentures during the year. Accordingly, the provisions of clause 4(xix) of the order are not applicable to the company.

(xx) According to the information and explanations given to us, the company has not raised any money by way of public issue during the year. Accordingly the provision of clause 4(xx) of the order are not applicable the company.

(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. 000203N

Place: Ludhiana

Dated: 22.07.2011

Sd/-

(CA R.K.Gupta)

PARTNER


Mar 31, 2010

We have audited the attached Balance Sheet of KANSAL FIBRES LIMITED as at 31st March, 2010, the Profit and Loss Account of the company and the Cash Flow Statement for the year ended on that date, which we have signed under reference to this report. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

1. As required by the Companies (Auditor's Report) (Amendment Order 2004) issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent to which it is applicable to the company.

2. Further to our comments in the annexure referred to in paragraph (1) above, state that:

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

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

c. The Balance Sheet and Profit and Loss Account as referred to in this report are in agreement with the books of account;

d. In our opinion, the Profit and Loss Account and the Balance Sheet of the company comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e. During the year ended 31.03.2010 the company has undertaken no activity except hiring out its solve vehicle, the proceeds of which are insufficient to meet the Expenses of the Company. The company has incurred cash loss amounting to Rs. 240110/- during the year. The accumulated losses of the company have eroded more than 100% of its capital.

The net worth of the company is negative Rs. (2133502/-). In our opinion and according to the information and explanation given to us, the prevailing situation of the company vitiates the basic accounting assumption of going concern and there is substantial doubt regarding continuation of companies' activity for unforeseeable future.

f. Subject to Point E in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner required and give a true and fair view ;

i) In case of Balance Sheet, of the state of Company's affairs as at 31st March, 2010 and

ii) In case of Profit and Loss Account, of the loss of the company for the year ended on that date.

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

g. On the basis of confirmations received from the directors, none of the director is disqualified from being appointed as a director under clause (g) of sub-section (1) of Section 274 of the Companies act, 1956.

ANNEXURE TO AUDITORS' REPORT RE : KANSAL FIBRES LIMITED (REFERRED TO IN PARAGRAPH (1) OF OUR REPORT OF EVEN DATE)

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

(b) The Company has physically verified all the assets during the year. According to the information and explanations given to us no material discrepancies were noticed on such verification.

(ii) In respect of its inventories.

(a) As explained to us, and according to the information and explanations given to us the company owned no inventories during the year.

(iii) (a) The company has not granted any loans, secured or unsecured, to any companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1056. According to the information and explanations given to us. So, provisions of clause (b), (c) and (d) is not applicable to the said company.

(b) The company has not taken any loans, secured or unsecured, from any companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. According to the information and explanations given to us.

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

(v) In our opinion and according to the information and explanations given to us all the particulars of contracts or arrangements required to be made in the register maintained in pursuance of Section 301 of the Companies Act, 1956 has been made.

(vi) The company has not accepted any deposits within the year.

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

(viii) The order made by the Central Government for the maintenance of cost records under section 209 (I) (d) of the Companies Act, 1956 is not applicable to the company.

(ix) According to the information and explanations given to us, in respect of statutory and other dues.

(a) The company has been regular in depositing undisputed statutory dues, Including Provident fund, Investor Education and protection fund, Employees State Insurance, Income Tax, Sales tax, Custom Duty, Excise Duty, cess and any other statuary dues with the appropriate authorities during the year except the following : -

Name of the Party Nature of Payment Amount

Ludhiana Stock Exchange Listing Fees 168000/-

Ahmedabad Stock Exchange Listing Fees 60000/-

Delhi Stock Exchange Listing Fees 60000/-

Bombay Stock Exchange Listing Fees 11330/-

(b) No disputed amount is pending.

(x) The Company have accumulated losses at the end of the year amounting to Rs. 60001502/- (Previous Year Rs. 59753794/-) and has incurred cash losses during the current year amounting to Rs. 240110/- (Previous Years Cash Loss Rs. 223199/-).

(xi) Based on our procedures on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to any financial institutions or banks.

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

(xiii) In our opinion and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks and financial Institutions.

(xiv) To the best of our knowledge and according to the information and explanations given to us, No term loans has been availed by the Company.

(xv) According to the cash flow statement and other records examined by us and the information and explanations given to us, on an overall basis, funds raised on short term basis have, prima facie, not been used during the year for the purposes for which the loans were obtained and vise-versa other than temporary deployment pending application.

(xvi) The company has not made any preferential allotment during the year.

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

(xviii) To the best of knowledge and belief and according to the information and explanations given to us, no fraud or by the company has been noticed or reported during the course of our audit.

FOR RAJ GUPTA & CO.,

CHARTERED ACCOUNTANTS Place: Ludhiana

Dated: 10.05.2010

Sd/-

(CA R.K.Gupta)

PARTNER

 
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