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Auditor Report of Katare Spinning Mills Ltd.

Mar 31, 2015

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

Management's Responsibility for the Financial Statements

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

Auditor's Responsibility

My responsibility is to express an opinion on these financial statements based on my audit.

I 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.

I conducted my audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that I 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 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 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 Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

Attention is drawn to the following:

a. As stated in Note No. 15 to the accounts, the company has included in other non- current assets a sum of Rs. 428.00 lacs as deferred interest expenditure. In the past the company had availed a term loan ICICI Bank Ltd (which was under OTS with them) which was subsequently assigned by ICICI to Kotak Mahindra Bank Ltd. Consequent upon assignment The Kotak Mahindra Bank Ltd had filed suit against the company in DRAT for recovery. The company has settled the said loan with Kotak Mahindra Bank Ltd for an agreed amount of Rs. 750 lacs of which Rs. 325 lacs was deposited before DRAT and Rs. 425 lacs is paid on or before 31/05/2013 and accordingly no balance is now outstanding.

b. The company had a transferred balance in Capital Reserve of Rs. 150 lacs when the loan was settled with ICICI Bank Ltd. The said balance is now reversed from Capital Reserve and balance Rs. 600 lacs represent the amount of interest from the year 2002 to the date of settlement. The company has deferred this interest amount of Rs. 600 lacs to be written off over a period of 7 years and have accordingly charged Rs. 86 lacs each year in the last two years but has not charged Rs. 86.00 lacs to the statement of profit and loss for the year under audit and balance Rs. 428.00 lacs is carried as deferred revenue expenditure.

c. Had the items reported in para 4 (b) and (c) above been charged to the statement of profit and loss, the profit for the year of Rs. 18.53 lacs would have been resulted into loss of Rs. 502.22 lacs. To that extent it has resulted into overstatement of year end net Current Assets and Reserves and Surplus by Rs. 502.22 lacs.

d. No provision is made for payment for gratuity on actuarial basis as on 31st March 2015 hence its impact on the net profit could not be ascertained as referred to Note. No. 27(b) in the notes on accounts.

In my opinion and to the best of my information and according to the explanations given to me, except as reported in para 4(a) to (e) above, the financial statements give the information required by the Act in the manner so required and except as reported in para 4(a) to (e) above, give a true and fair view in conformity with the accounting principles generally accepted in India:

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 section 143 of the Act, I give in the Annexure a statement on the matters Specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

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

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

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

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

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

f) In my opinion and to the best of my information and according to the explanations given to me, I 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:

g) In my opinion, the company has adequate internal financial control systems in place and the same are effective and commensurate with the nature of business of the company and the scale of its operations.

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

i. The Company does not have any pending litigations which would impact its financial position.

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

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

Annexure to the Auditors' Report

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

(i) In respect of its fixed assets:

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

b) Fixed assets have been physically verified by the management during the year in accordance with the phased programme of verification adopted by the management which, in my opinion, provides for physical verification of all the fixed assets at reasonable intervals. No material discrepancies were noticed on such verification.

(ii) In respect of its inventory:

a) The inventories of finished goods, semi-finished goods, stores, spare parts and raw materials were physically verified at regular intervals by the Management.

b) The procedures of physical verification of inventories followed by the Management

c) were reasonable and adequate in relation to the size of the Company and the nature of its business.

d) The Company has maintained proper records of its inventories. According to information and explanation given to me, the discrepancies noticed on physical verification of stocks as compared to book records were not material and have been properly dealt with in the books of account.

(iii) The Company has not granted any loans to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013 and therefore paragraph 3(iii) of the Order is not applicable.

(iv) In my opinion, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and services. During the course of my Audit, I have not observed any continuing failure to correct major weaknesses in internal control.

(v) The company has not accepted any deposits from the public during the year except the unsecured advances received from the directors and their relatives/associates.

(vi) I have broadly reviewed the cost records maintained by the Company pursuant to the the Rules made by the Central Government under Section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie the prescribed cost records have been made and maintained. I have, however, not made a detailed examination of these records with a view to determining whether they are accurate or complete.

(vii) In respect of statutory dues:

a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it, with the appropriate authorities.

b) There were no undisputed amounts payable in respect of Income-tax, Wealth Tax, Custom Duty, Excise Duty, Sales Tax, VAT, Cess and other material statutory dues in arrears/were outstanding as at 31 March, 2015 for a period of more than six months from the date they became payable.

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

(viii) The company does not have the accumulated losses at the end of financial year. The company has not incurred any cash losses during the financial covered by my Audit and the immediately preceding financial year.

In arriving at the accumulated losses and net worth as above, I have considered the quantifications which are quantifiable in the audit reports of the years to which these losses pertain.

(ix) The Company has not defaulted in the repayment of dues to financial institutions and banks except the Special Capital Incentive in the form of loan of Rs. 3,16,139 which remained unpaid as at the date of the Balance Sheet.

(x) The company has not given any guarantee for loans taken by others from banks or financial institutions during the year.

(xi) The Term loans taken by the company have been applied for the purpose for which they were raised.

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

Place : Solapur G.M.PAWLE Chartered Accountant Date : 31st August 2015 Membership No. : 032561


Mar 31, 2014

I have audited the accompanying finartcia statements of Katare Spin ring Mills Limited ("the Company11), which eg in prise the Ea lance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Fbw Statement for the year than ended, and a summary of sign meant accounting policies and other explanatory information.

2. Management's responsibility for thefinanciaI 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 Standardsnefa'red to in suo-section (3C) of section 211 of the Companies Art, 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 trueanc fair view and are free from material misstatement, whether due Lufraud or error,

3. Auditor's Responsibility

My responsibility is to express on opinion on these financial statements based on my audit. I conducted my audit in accordance with the Standards on Auditing issued by the Institute of Chartered Aecoustancs cf India. Those Standards require that I comply with ethical requirements and plan and perorm the audit to obtain rcascnablc assurance a bout whether tie financial statements free from material statement.

An audit involves perorming pnocedtires to obtan audit evidence about the amounts and disclosures in the financial statements. The procedures selectee depend or the auditor's judgment, including the assessment of the risks of material misstatement cf the financial statements, whether due to fraud or error. In making those risk assessments, tie auditor considers Internal comrol relevant to the Company's preparation and fair presentation of tie financial statements in order tc design audrt procedures that are appropriate n tie circumstances. Ar audit also includes evaluatng the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating theoveraii presentation of the fmanc al statement.

I believe that the audit evidence I have obtained Is sufficient and appropriate to provide a basis for my audit opinion.

4. Opinion

Attention is drawn to the following:

a. The company had a transferred balance in Capital Reserve pf Rs. 150 lacs when ttie loan was settd with ICICI Bank Ltc. ThesEid balance is now reversed from Capita! Reserve and balance Rs. 600 lacs represent the amount of interest from the year 2002 to tie d a te of settl enn ent The coin pa iy ha 5 def ei red tli i5 in tei est e mo un t cf Ra, 00 0 iacs to oe written of over a period of 7 years and have accordingly charged Rs. 86 acsto the statement of profit and loss for the year under audit and balance Rs. 428.00 lacs is carried asdeferrec revenue expenciture.

b. Mad the items reparted rn para 4 (b) and (c) above been charged ta the statement of profit and loss, lire loss fur fire year of Rs. 17,47 lacs would have been resulted into Jess nt Rs 538.5ft lacs. Tn that entent it has resulted into overstatement of year end ret Current Assets and Reserves and Surplus by Rs.538.58 lacs.

c. No provision is made far payment for gratuity on actuarial basis as on 31" March 2014 hence its mpact on the net profit could not be ascertained as referred to Note. No. 27(b) In the notes on accounts.

In my opiniuon and to the best of my information and acoreding to the explanation given to me. except " as reporterd in para 4(a) to (ri ahnvp, the financial stalrmnnh; give the information required by the Ac: in the manner so required and except as reported in para 4(a) to(c) above, give a true ard fair view n conformity with tie accounting principles gen erg: |y accepted in tndla:

a] in the Ldse uf Lhe Balance SEitel, uf tl rs sidle uf dtfdiii uf Hie Cvuiydriv dS dt March 31,7014;

b in the ca se of: he sea tern fin t of Prolt a nd Loss, of the p rnf i t fa r Lhe y ea r en bed on that date; and

c) in the case of the Cash Flow Statement of the cash nows for the yea-ended on that date.

Reporton Other legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2U03 "theOrder") issued ay the Cent re I Goverr m ent of 1 nd la m temnsof su b- sect ion (4 A) of sectia n 22 7 cf th e Act, 1 give m the Annexure a statement on tha matters specified in paragraphs 4 aid 5 of tie O'der.

2. As nequ i red by section 2 2 7 i 3) of the Act, I nepon that;

a) I have obtained all the information and explanations which to the best of ny k now ledg e a nd be I erire neoessa ry for the pu rpase of my a ud it;

b' Ir rny opinion proper Uouks of dccuLiriL as requires. by law hove been kept jy the Company so far as appears from my examination of those books-

c) Thp Ralanre Sheet, Smtemenr nf Profit and I nss, and Cash Finw Rtatpmpnt dealt with by this Report are in agreement with the books of account.

d Ir my opinion, exce ptas reported in pa ra 4(a} to (c) a bove the Ba la ice 5h eet, Statement of Profit and _055, srd Cash Flow Statement comply with tie Accounting Standards referred to in subsection (30 of section 211 of toe Companies Act, 1556;

e On the basis or written re presentat on s received from the directors a son March 31, 2014, and taken on record by the Board of Directors, none of the directors is disbud Pitied db on March 31, 2014, fruoi beiiey appointed db d Uiiectur in terms nf clause (g) of snh-serrinr (1 ) of sectinn 774 nf the ["nm fames Art, 1956.

Since the Central Government ias not issued ary notification as to the rate at wh ch tie cess is to be paid under section 441A o" the Companies Act, 1956 nor has it ssued any Roles under the said section, prescribing the manner in which such cess is to De paid, io ce £5 i e d u e a nd paya ble by the Com pa ny.

The An next, re referred to in paragraph 1 of the My Report of even date to the members Of KATARE SPINNIRG MILLS LIMITED on the accounts of the campanyfor the year ended 31st March, 2014.

On rhe basis of such checks as 1 considered appropriate and according to the infOrmatFCin and explanation given to me during the course of my audit; I report that:

1, (aj The company has maintained proper records showing full particulars including q uanti ta ti ve deta i I s a nd si tuation o f its f i xed a ssets,

(t) As explained to me, fixec assets have been physically verified by the management at reasonable Intervals; no materia discrepancies are noticed on such verification.

(c) In cry -opinion and on the basis of my examination of die reco-ds, the Company has been d i sposed off PI ant an d Macb i n erv of Ps. 44fi. 59 lacs during the yea r.

2, (a) As explained to me, inventories have been physically verified during the year by tie management at reasonable intervals,

(b) In my opinion and according to the information and explanations given to me, tie 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) In my opinion and cn the basis of my examination of the records, the Company is yener-dlly inalriljainiry prujjtiF records of its inventoritrs. Nu nidLerid dicrepdncy wus nnrirpd nn phycirpl vprifiraNon of storks by dip rrnnagprrpnt as normarprl to hook records

3, (a) According to the information and explanations given to me and on the basis of ny examination otthe books of account, the Com pa ny has net granted any loans, secured or unsecured, to companies, fi'ms or other parties listed in the reg st-er maintained under Section 301 of the Companies Act, 1956- Consequently, the provisions of clauses iii (b), iii(c) and iii (d) oFthe order are net applicable to the Company.

(e) According to the information and explanations given to me and on the basis of ny examination of the books of account, the Company has mat taken loans from cam panics, firms or otier parties listed in the register maintained under Section 301 of the Companies Act, 1956, Thus sub clauses (f) & ;g) are not applicable to tie company.

4, In my opinion and according to the information and explanations given to me, there ts generally an adequate nternai control aroceduro commensurate with the size of toe ro m ps ny and r hp n nhi i rp nf i ts h i isi nps
E. a) Gascd on the audit procedures applied by me and according jo the information and explanations provided by the management, the particulars of contacts or arrangements refcrrec to n section 301 of the Act have been entered In the register requirec to oe maintained under that section.

DJ as per information fc explanations given to me and in my opinion, the transaction entered into by the company with parties severed u/s 301 of the Ad does not exceeds five lacs rupees in a financial year therefore requirement of reasonableness of transactions does net arises,

6. The Company has not accepted any deposits from the public covered under section 53A emdSQAA of the Complies Act, 1956.

7. As oer information & explanations given by the management, the Company has an intcrnalaud tsystem commensurate with its size and the nature of its business.

8. As per information & explanation given by the management, m a in:enanceof cost records has been prescribes by the Central government under clause (c) of sub-section (1) of section 209 of the Act aid [ ere of the toinion that prirr.fi facie the pnesc-ibed Accounts and records have been made anc ma ntaincd

9. (a) According to the records of the company, undisputec statutory dues including Provident Fund, Investor Ecuca:ion and Protection Func, Employees' State insurance, Income-tax, Sales-tax, /veath Tax, Service Tax, Custom Duly, Excise Duty, cess to toe extent appliahlFi and any other statutory dues have gr of rally hf=en regularly rieposi tort with the appropriate authorises. According to the information and expianations given to me there are no outstanding statutory dues as on 31st of March, 2014 for a pe-iod of m ore tha n s * mo mhs f nm t h e da te they bee*me peyable

(b) According to the information a-nd explanations given tc me, there S no amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty and exc se duty which have not been deposited or account of any disputes,

10. During theifremda I veatsoMemd by my audit thffcorr pamy has iricunred cash tossbut has not incurred cesn loss in ;hc immediately preceding financial year.

11. Based on rry audit procedures and on the n formation and explanations given by tie management, I am of the opinion that, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

li According to the information and explanation; given to me, the Company has not granted

loans and advances on the basis of security by way of pledge of shares, debentures and other securbies.

13. The Company is not a chit fund or a rndni /mutuai benefit fund/scciety. Therefore, toe provision of this clause of the Companies (Auditor's Report) Order. 2003 (as amended) is not applicable tc the Company.

14. In my opinion, the Comoany is not dealing cr trading in shares, securities debentures or other investment erd, hence the requirements of pera 4 (xiv) are not ar-pIicable to tie company.

15. According to the information and explanations given to mo, the Company has not given an y g u aran tees ro r to a n taken by others from a bank or fm an cia I i nsbtudon.

16. Based on my audit procedures and on ttyeinformation given by the management, [report that the company has raised term loans of Rs. -900-03 lacs d-yrine; the year frcm Cankyf Ind-a for estab I i sh merit of Solar power plnt.

17. Based on the information and explanations g ven to me and on an overall examination of the Balance Sheet of the Company as at 31st March, 201, 1 have to report that no funds raised on short-term basis have been used tor long-ce-m invest merit by the company.

18. flexed on ths audit procedures performed and the information and explanations given to me by the management, I have to report that the Compary has not mace any preferential allotment of shares curing the yean

19. The Company has no outstanding debentures during the period under audit.

20. TheCompanyhasnotrasedanymoneybypublicissuedui-ingtheyear. Based on the audit procedures pedormed and the information and explanations given to mo, no fraud on or ay tie Company has been noticed or reported during the year, nor have I been informed of such case by the management.

place ; Solapur G.M.PAWALE chartered account Date 31st August 2014 Membership No.03256


Mar 31, 2013

1. Report on the Financial Statements

I have audited the accompanying financial statements of Katare Spinning Mills Limited Company Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, 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.

2. Management''s responsibility for the financial statements

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

3. Auditor''s Responsibility

My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that I 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 frayed 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.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

4. Opinion

Attention is drawn to the following:

a. As stated in Note No. 15 to the accounts, the company has included in other non-current assets a sum of Rs. 514.00 lacs as deferred interest expenditure. In the past the company had availed a term loan ICICI Bank Ltd (which was under OTS with them) which was subsequently assigned by ICICI to Kotak Mahindra Bank Ltd. Consequent upon assignment The KotakMahindra Bank Ltd. had filed suit against the company in DRAT for recovery. The company has settled the said loan with Kotak Mahindra Bank Ltd for an agreed amount of Rs. 750 lacs of which Rs. 325 lacs was deposited before DRAT and Rs. 425 lacs is paid on or before 31/05/2013 and accordingly no balance is now outstanding.

b. The company had a transferred balance in Capital Reserve of Rs. 150 lacs when the loan was settled with ICICI Bank Ltd. The said balance is row reversed from Capital Reserve and balance Rs. 600 lacs represent the amount of interest from the year 2002 to the date of settlement. The company has deferred this interest amount of Rs. 600 lacs to be written off over a period of 7 years and have accordingly charged Rs. 86 lacs to the statement of profit and loss for the year under audit and balance Rs. 514 lacs is carried as deferred revenue expenditure.

c. Trade Receivables to the extent of Rs. 19.51 lacs and other current assets/advances of Rs. 87.12 lacs aggregating to Rs. 106.63 lacs are bad for which no provision is made in the accounts as referred to in Note No. 17 and Note No.20 in the notes on accounts.

d. Had the items reported in para 4 (b) and (c) above been charged to the statement of profit and loss, the profit for the year of Rs. 19.97 lacs would have been resulted into loss of Rs. 602.66 lacs.

To that extent it has resulted into overstatement of year end net Current Assets and Reserves and Surplus by Rs. 602.66 lacs.

e. No provision is made for payment for gratuity on actuarial basis as on 31 st March 2013 hence its impact on the net profit could not be ascertained as referred to Note. No. 27(b) in the notes on accounts.

In my opinion and to the best of my information and according to the explanations given to me, except as reported in para 4(a) to (e) above, the financial statements give the information required by the Act in the manner so required and except as reported in para 4(a) to (e) above, give a true and Fairview 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 and Loss, of the profit for the year ended on that date and

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("theOrder") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, I 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, I reportthat:

a. I have obtained all the information and explanations which to the best of my knowledge and belief were necessary forthe purpose of my audit.

b. in my opinion proper books of account as required by law have been kept by the Company so far as appears from my 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 my opinion, except as reported in para 4(a) to (e) above 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. .

e. On the basis of written representations received from the directors as on March 31, 2013, and 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 clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

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

On the basis of such checks as I considered appropriate and according to the information and explanation given to me during the course of my audit, I report that:

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

(b) As explained to me, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies Ire noticed on such verification.

(c) In my opinion and according to the information and explanations given to me, no fixed asset has been disposed during the year and therefore does not affect the going concern assumption.

2. (a) As explained to me, inventories have been physically verified during the year by the management at reasonable intervals.

(b) In my opinion and according to the information and explanations given to me, 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) In my opinion and on the basis of my examination of the records, the Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. (a) According to the information and explanations given to me and on the basis of my examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of clauses iii (b), iii(c) and iii (d) of the order are not applicable to the Company.

(e) According to the information and explanations given to me and on the basis of my examination of the books of account, the Company has not taken loans from companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1 956. Thus sub clauses (f) & (g) are not applicable to the company.

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

5. a) Based on the audit procedures applied by me and according to the information and explanations provided by the management, 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) As per information & explanations given to me and in my opinion, the transaction entered into by the company with parties covered u/s 301 of the Act does not exceeds five lacs rupees in a financial year therefore requirement of reasonableness of transactions does notarises.

6. The Company has not accepted any deposits from the public covered under section 58A and 58AA of the Companies Act, 1956.

7. As per information & explanations given by the management, the Company has an internal audit system commensurate with its size and the nature of its business.

8. As per information & explanation given by the management, maintenance of cost records has been prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act and I are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

9. (a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, wealth Tax, Service Tax, Custom Duty, Excise Duty, cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities. According to the information and explanations given to me there are no outstanding statutory dues as on 31 st of March, 2013 for a period of more than six months from the date they became payable.

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

10. During the financial year covered by my audit the company has incurred cash loss but has not incurred cash loss in the immediately preceding financial year.

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

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

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

14. In my opinion, the Company is not dealing or trading in shares, securities debentures or other investment and, hence the requirements of para 4 (xiv) are not applicable to the company.

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

16. Based on my audit procedures and on the information given by the management, I report that the company has not raised any term loans during the year.

1 7. Based on the information and explanations given to me and on an overall examination of the Balance Sheet of the Company as at 31st March, 2013,1 have to report that no funds raised on short-term basis have been used for long-term investment by the Company.

1 8. Based on the audit procedures performed and the information and explanations given to me by the management, I have to report that the Company has not made any preferential allotment of shares during the year.

19. The Company has no outstanding debentures during the period under audit.

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

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

Place : Solapur G.M.PAWALE

Chartered Accountant

Place : 31 st May 2013 Membership No. : 032561


Mar 31, 2012

1 I have audited the attached Balance Sheet of Katare Spinning Mills Limited, Solapur as at 31st March 2012, the statement of Profit and Loss and Cash Flow statement of tbo Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the company's management. My responsibility is to express an opinion on these financial statements based on my audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub section (4A) of section 227 of the Companies Act, 1956,1 enclose in the Annexure a statement on the n, i iters specified in paragraphs 4 and 5 of the said Order.

4 Further to my comments in the Annexure referred to above, 1 report that:

(i) I have obtained all the information and explanations, which to the best of my knowledge and belief were necessary for the purposes of my audit;

(ii) In my opinion proper books of accounts as required by law have been kept by the company so far as appears from my examination of those books;

(iii) The balance sheet, statement of profit and loss and cash flow statement dealt with by this report are in agreement with the books of accounts; (iv) On the basis cf written representations received from the directors, as on 31st March 2012 and taken on record by the Board of Directors, I report that none of the directors is disqualified as on 31 st March 2012 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 2 74 of the Companies Act, 1956; (v) In my opinion, the balance sheet and statement of profit and loss and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 19 56 to the extent applicable, subject to

a) The Nil balance of loan from ICICI Bank which was assigned by it to Kotak Mahindra Bank Ltd., as referred to, in Note No. 27(c) & (d) in notes on Accounts, at the year end is subject to confirmation in respect of final dues including interest and therefore, the impact of reconciliation and adjustment in respect of the loan, the profit for the year and net assets position as at year end and also it's impact on concept of ongoing concern due to losses, is presently not ascertainable.

b) Receivables to the extent of Rs. 106,71,00 (Trade Receivables Rs. 19,58,790 & other current assets Rs.87,12,21 7) are bad for which no provision was made in the accounts in the year ended 31st March, 2012 as referred to, in Note No.l 7 & 20 in the notes on accounts and as such has resulted in overstatement of year end net Current Assets and Reserves & Surplus by Rs. 1,06,71,007 each.

c) All the balances of Receivables and Payables are subject to confirmation and reconciliation and adjustments, if any, required on reconciliation. The consequential effect of such possible adjustments and the extent thereof on the profit of the year, the year end Net Current Assets and Reserve & Surplus cannot be ascertained at this stage.

d) No provision for gratuity payment on actuarial basis as on 31st March, 2012 was made hence it's effect on profit could not be ascertained as referred to in note no. 27(b) in the notes on accounts.

(vi) Subject to my comments under paras

(v) (a) to (d) above, in my opinion and to the best of my information and according to the explanations given to me, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

(b) in the case of the statement of profit and loss account, of the Loss for the year ended on that date.

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

ANNEXURE TO THE AUDITOR'S REPORT

(Referred to in paragraph 3 of my report of even date)

To,

The Members,

Katare Spinning Mills limited,

Solapur

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

(b) During the year, the company has not carried out physical verification of assets. In my opinion, the frequency of verification is not reasonable, having regard to the size and nature of its business.

(c) The company has not disposed off any substantial part of the fixed assets of the fixed assets during the year and the going concern status of the company is not affected.

(ii) (a) As informed the physical verification of inventories was conducted by the management at reasonable intervals. In my opinion, the frequency of verification is reasonable.

(b) In my opinion, 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) I find from the records that no material discrepancies were noticed on physical verification of stocks referred above as compared to the book records and the same have been properly dealt with in the books of accounts.

a) The company h 4s not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly sub- clause (b) (c) and (d) are not applicable.

b) The company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly sub- clause (f) and (g) are not applicable.

(iv) In my opinion, and according to the information and explanations given to me, there is an adequate internal control procedure commensurate with the size of the company and the nature of its business for the purchase of inventory and assets for the sale of goods. During the course of my audit, I have not observed any continuing failure to correct major weakness in internal control.

(v) (a) According to the information and explanations given to me, I am of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In respect of the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding Rs. 50,000/- in respect of each party during the year I am unable to express my opinion whether the said transactions have been m; le at prices which are reasonable or not, having regard to the prevailing market price at the relevant time since there are no similar transactions entered into with the other parties and no such information about the relevant market price is available with the Company.

(vi) The Company has not accepted any deposits from the public, hence provisions of sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 are notapplicable to the Company.

(vii) The company has a procedure for an internal audit system, which is commensurate with the size and the nature of its business.

(vlii) I have broadly reviewed the records maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209 (1 )(d) of the Companies Act, 1956 and I am of the opinion that prima facie, the prescribed records have been made and maintained. I, however, have not made a detailed examination of the records with a view to detenriining whether they are accurate or complete.

(ix) The company is regular in depositing statutory dues including Provident Fund, Income Tax, Wealth Tax, Customs Duty and Value Added Tax.

(x) a) As on 31 st March, 2012 there were no accumulated losses.

b) During the financial year covered by my audit the company has incurred cash loss but has not incurred cash loss in the immediately preceding f financial year.

(xi) The company has defaulted in repayment of dues of loan from ICICI Bank Ltd. which was subsequently assigned by ICICI to Kotak Mahindra Bank Ltd. the details of which are covered in note no. 2 7(c), (d) & (e) of notes on accounts.

(xii) The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In my opinion, the company is not a chit fund or a nidhi/murual fund society. Therefore the provisions of the clause no. 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

(xiv) In my opinion, the Company is not dealing or trading in shares, securities, debentures or other investments and, hence, the requirements of para 4(xiv) are not applicable to the company.

(xv) The company has not given any guarantee for the loans taken by others from banks or financial institutions.

(xvi) The company has not taken any term loan during the year. (xvii) On the basis of my overall examination of Balance Sheet, I report that the funds raised on short-term basis have not been used for long-term investments. The company has not raised long-term funds during the year and, hence, the question of use of such funds for short-term investments does not arise.

(xviii) The company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

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

(xx) The company has not raised any monies by puolic issue during the year.

(xxi) On the basis of my examination and according to the information and explanations given to me, no fraud, on or by the company, has been noticed or reported during the course of my audit.

Solapur G.M.PAWLE

31 st August, 2012 Chartered Accountant

M. No. 32561


Mar 31, 2010

1. I have audited the attached Balance Sheet of Katare Spinning Mills Limited, Solapur as at 31 st March 2010, the Profit and Loss Account and 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. My responsibility is to express an opinion on these financial statements based on my audit.

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

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, I enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to my comments in the Annexure referred to above, I report that:

(i) I have obtained all the information and explanations, which to the best of my knowledge and belief were necessary for the purposes of my audit;

(ii) In my opinion proper books of accounts as required by law have been kept by the company so far as appears from my examination of those books;

(iii) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of accounts;

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

(v). In my opinion, the balance sheet and profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 to the extent applicable, subject to

a) The Nil balance of loan from ICICI Bank, as referred to, in Note No. 5(a) and 5(b) in notes on Accounts, at the year end is subject to confirmation in respect of final dues including interest and therefore, the impact of reconciliation and adjustment in respect of the loan, the profit for the year and net assets position as at year end and also its impact on concept of ongoing concern due to huge losses, is presently not ascertainable.

b) Receivables to the extent of Rs. 1,08,80,964/- are bad for which no provision wasmade in the accounts in the year ended 31st March, 2010 as referred to, in Note No. 7 in the notes on accounts and as such has resulted in overstatement of year end net Current Assets and Reserves & Surplus by Rs. 1,08,80,964/- each.

c) All the balances of Receivables and Payables are subject to confirmation and reconciliation and adjustments, if any, required on reconciliation. The consequential effect of such possible adjustments and the extent thereof on the profit of the year, the year end Net Current Assets and Reserve & Surplus cannot be ascertained at this stage.

d) No provision for gratuity payment on actuarial basis as on 31st March, 2010 was made hence its effect on profit could not be ascertained as referred to in note no. 1 (f) in the notes on accounts.

(vi) Subject to my comments under paras (v) (a) to (d) above, in my opinion and to the best of my information and according to the explanations given to me, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the balance sheet, of the state of affairs of the company as at 31 st March, 2010

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

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

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

To,

The Members,

Kntare Spinning Mills Limited,

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

(b) During the year, the company has not carried out physical verification of assets. In my opinion, the frequency of verification is not reasonable, having regard to the size and nature of its business.

(c) The fixed assets disposed off during the year, in my opinion, do not constitute a substantial part of the fixed assets of the company and such disposal has, in my opinion, not affected the going concern status of the company.

(ii) (a) I am informed that the physical verification of inventories, except inventories lying with the third parties, was conducted by the management at reasonable intervals. In my opinion, the frequency of verification is reasonable.

(b) In my opinion, 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) I find from the records that no material discrepancies were noticed on physical verification of stocks referred above as compared to the book records and the same have been properly dealt with in the books of accounts.

(iii) The company has not taken unsecured loans from Firms or other parties listed in the Register maintained under section 301 of the Companies Act, 1956. The rate of interest and the terms and conditions of these loans are prima facie not prejudicial to the interests of the company. No loans were taken from the Companies under the same management within the meaning of Section 370(1 B) of the Companies Act, 1956. The company has not given any loans to any companies, firms or otter parties listed in the register maintained under section 301 of the Companies Act, 1956.

(iv) In my opinion, and according to the information and explanations given to me, there is adequate internal control procedure commensurate with the size of the company and the nature of its business for the purchase of inventory and assets for the sale of goods. During the course of my audit, I have not observed any continuing failure to correct major weakness in internal control.

(v) (a) According to the information and explanations given to me, I am of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In respect of the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding Rs. 50,000/- in respect of each party during the year i am unable to express my opinion whether the said transactions have been made at prices which are reasonable or not, having regard to the prevailing market price at the relevant time since there are no similar transactions entered into with the other parties and no such information about the relevant market price is available with the Company.

(vi) The Company has not accepted any deposits from the public, hence provisions of sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 are not applicable to the Company.

(vii) The company has a procedure for an internal audit system, which is commensurate with the size and the nature of its business.

(viii) I have broadly reviewed the records maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209 (1 )(d) of the Companies Act, 1956 and I am of the opinion that prima facie, the prescribed records have been made and maintained. I, however, have not made a detailed examination of the records with a view to determining whether they are accurate or complete.

(ix) The company is regular in depositing statutory dues including Provident Fund, Income Tax, Wealth Tax, Customs Duty and Value Added Tax.

(x) a) As on 31st March, 2010 there were no accumulated losses.

b) The company has not incurred cash loss during the financial year covered by my audit and in the immediately preceding financial year.

(xi) The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xii) In my opinion, the company is not a chit fund or a nidhi/mutual fund society, therefore, the provisions of the clause No. 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

(xiii) In my opinion, the Company is not dealing or trading in shares, securities, debentures or other investments and, hence, the requirements of para 4(xiv) are not applicable to the company.

(xiv) The company has. not given any guarantee for the loans taken by others from banks or financial institutions.

(xv) The company has not taken any term loan during the year.

(xvi) On the basis of my overall examination of Balance Sheet, I report that the funds raised on short-term basis have not been used for long-term investments. The company has not raised long-term funds during the year and, hence, the question of use of such funds for short-term investments does not arise.

(xvii) The company has not made any preferential allotment of shares to partfes and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

(xviii) The company has not issued debentures during the year.

(xix) The company has not raised any monies by public issue during the year.

(xx) On the basis of my examination and according to the information and explanations given to me, no fraud, on or by the company, has been noticed or reported during the course of my audit.

G. M. Pawle Solapur Chartered Accountant

August 31, 2010 M. No. 32561

 
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