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Auditor Report of Kitex Garments Ltd.

Mar 31, 2015

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

Management''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

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

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

Opinion

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

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

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements- Refer Note 30 to the financial statements;

ii. The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses - Refer Note 40 to the financial statements;

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

For KOLATH & CO

Chartered Accountants Firm''s Registration No.008926S

Sd/-

CA Liju V Rajan Kolath

Kizhakkambalam Partner

04.04.2015 Membership No.209309


Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (the "Act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

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

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

Opinion

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

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

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 and sub-section (11) of Section 143 of the Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

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

d. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013;

e. on the basis of written representations received from the directors as on March 31, 2014 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 and sub-section (2) of Section 164 of the Companies Act, 2013.

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.

Annexure to Auditors'' Report

Referred to in Paragraph 1 of Report on Other Legal and Regulatory Requirements 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, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such physical verification.

(c) During the year, the Company has not disposed off a substantial part of its fixed assets, which affect the going concern status of the Company.

(ii)

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

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

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from Companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956 and Section 189 of the Companies Act, 2013.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and also with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(v)

(a) In our opinion and according to the information and explanations given to us, we are of the opinion that the transactions made in pursuance of contracts or arrangements, that need to be entered in the Register maintained under Section 301 of the Companies Act, 1956 and Section 189 of the Companies Act, 2013, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and Section 189 of the Companies Act, 2013, and exceeding the value of Rs. 5 Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public during the year. Therefore, the provisions of clause 4 (vi) of the Companies (Auditor''s Report) Order, 2003, are not applicable to the Company.

(vii) Internal Audit functions are carried out by the Internal Audit Department of the Company and the same is reviewed by the Audit Committee. In our opinion, the same can be considered as adequate.

(viii) According to the information and explanations given to us, the Central Government has prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 and Section 128 read with Section 2(13) of the Companies Act, 2013, in respect of manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, carried out a detailed examination of the same.

(ix)

(a) The Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and any other material statutory dues applicable to the Company.

According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were in arrears, as at 31.03.2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the following dues demanded by the relevant authority have not been deposited on account of pending disputes:

Name of Statute Nature of Dues Amount (Rs.) Period to Forum where which it Dispute is Relates Pending

Customs Act Customs Duty Rs.2,20,61,171 with simple interest of FY 1997-98 Honorable Supreme 10% on Rs. 99,31,229 as per Settlement Court of India Commission Order (out of which Rs. 2,20,61,171/- has been paid)

Income Tax Act Income tax Rs.6,29,406/- AY 2003-04 Honorable High & 2004-05 Court of Kerala

Income Tax Act Income tax Rs.21,29,567/- AY 2005-06 Commissioner of Income Tax (Appeals)

Income Tax Act Income tax Rs.8,68,593/- AY 2006-07 Commissioner of Income Tax (Appeals)

Income Tax Act Fringe Benefit Rs.9,07,553/- AY 2006-07 Commissioner of tax Income Tax (Appeals)

Income Tax Act Income tax Rs.58,87,640/- AY 2009-10 Commissioner of Income Tax (Appeals)

Income Tax Act Income tax Rs.48,72,980/- AY 2011-12 Commissioner of Income Tax (Appeals)

Provident Fund Provident Fund Rs.1,31,86, 588/- (Out of which FY 2001-02 Honorable High Act Rs.52,74,636/- has been deposited) to 2005-06 Court of Kerala

Provident Fund Provident Fund Rs.20,44,752/- For the Regional Provident Act Period Fund Commissioner, April 2012 to Kochi August 2012

Employees State Employee State Rs.2,03,687/- (Out of which FY 1996-1997 The Director ESI Insurance Act Insurance Rs.1,25,000/- has been deposited) and 1997-98 Regional Office, Ernakulam

Employees State Employee State Rs.5,61,692/- (Out of which FY 1998 -99 Honorable High Insurance Act Insurance Rs.2,15,791/- has been deposited) to 2001-02 Court of Kerala

Employees State Employee State Rs.26,01,275/- (Out of which the FY 2008-09 Honorable ESI Court, Insurance Act Insurance company has Deposited Rs.3,00,000/-) Alapuzha

Employees State Employee State Rs.2,79,558/- and related Interest of FY 2008-09 Honorable ESI Court, Insurance Act Insurance Rs.9,466/- (Out of which the company Alapuzha has Deposited Rs.50,000/-)

Employees State Employee State Rs.8,63,348/ (Out of which the FY 2008-09 Honorable ESI Court, Insurance Act Insurance company has Deposited Rs.1,00,000/-) Alapuzha

Kerala One Time Rs.3,08,945/- 1997 Honorable High Municipa lity Act, Building Tax Court of Kerala 1994 read with Kerala Building Rules, 1999

(x) In our opinion, the Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

(xi) Based on our audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. There were no debenture holders at any time during the year.

(xii) Based on our examination of documents and records and according to the information and explanations given by the Management, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003, are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. The investment made in equity shares is held in its own name.

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

(xvi) In our opinion, the term loans have been applied for the purposes for which they were raised.

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

(xviii) According to the information and explanations given to us, 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 and Section 189 of the Companies Act, 2013.

(xix) The Company has not issued any debenture during the year. Accordingly, the provisions of clause 4(xix) of the Companies (Auditor''s Report) Order, 2003, are not applicable to the Company.

(xx) The Company has not raised money by public issues during the year and hence the question of disclosure and verification of the end use of such money does not arise.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company during the year was noticed or reported, nor have we been informed of such case by the management.

For KOLATH & CO

Chartered Accountants

Firm''s Registration Number 008926S

Sd/-

CA .Liju.V.Rajan Kolath

Ernakulam Partner

03.04.2014 Membership No.209309


Mar 31, 2013

We have audited the accompanying financial statements of Kitex Garments 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.

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.

Auditor''s Responsibility

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

An audit involves performing procedure 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 as- sessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

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

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

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

d. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub--section (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 ap- pointed 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, pre- scribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

Referred to in Paragraph 1 of Report on Other Legal and Regulatory Requirements 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, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such physical verification.

(c) During the year, the Company has not disposed off a substantial part of its fixed assets, which affect the going concern status of the Company.

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

(b) The procedures of physical verification of inventories followed by the management are reasonable and ad- equate in relation to the size of the Company and the nature of its business.

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

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from Companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and also with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(v) (a) In our opinion and according to the information and explanations given to us, we are of the opinion that the transactions made in pursuance of contracts or arrangements, that need to be entered in the Register maintained under Section 301 of the Companies Act, 1956, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956, and exceeding the value of Rs. 5 Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accept- ed any deposits from the public during the year. Therefore, the provisions of clause 4 (vi) of the Companies (Auditor''s Report) Order, 2003, are not applicable to the Company.

(vii) The internal audit functions are carried out by the Internal Audit Department of the Company and the same is reviewed by the Audit Committee. In our opinion, the same can be considered as adequate.

(viii) According to the information and explanations given to us, the Central Government has prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 in respect of manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, carried out a detailed examination of the same.

(ix) (a) The Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and any other material statutory dues ap- plicable to the Company.

According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were in arrears, as at 31.03.2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the following dues demanded by the relevant authority have not been deposited on account of pending disputes:

Name of Statute Nature of Amount (Rs.) Period to Forum where Dispute is Dues which it Pending Relates

Customs Act Customs 3,25,20,531/- (out of which FY 1997-98 Honorable Supreme Duty Rs.1,21,29,9 42/- has been paid) Court of India

Income Tax Act Income Tax 6,29,406/- AY 2003-04 Honorable High court & 2004-05 of Kerala

Income Tax Act Income Tax 21,29,567/- AY 2005-06 Commissioner of Income Tax (Appeals)

Income Tax Act Income Tax 38,32,909/- (Out of which AY 2006-07 Commissioner of In Rs.31,50,000/- has been deposited) come Tax (Appeals)

Income Tax Act Fringe Ben- 9,07,553/- AY 2006-07 Commissioner of In- efit Tax come Tax (Appeals)

Income Tax Act Income Tax 3,16,22,680/- (Out of which AY 2008-09 Income Tax Appellate Rs.1,17,57,862 has been deposited) Tribunal, Kochi

Income Tax Act Income Tax 58,87,640/- AY 2009-10 Commissioner of Income Tax (Appeals)

Provident Fund Provident 1,31,86,588/- (Out of which FY 2001-02 Honorable High Court Act Fund Rs.52,74,636/- has been deposited) to 2005-06 of Kerala

Employees Employee 3,66,333/- with interest of 2,69,330 FY 1996-1997 The Director ESI Region- State Insurance State Insur- up to 30.11.2003 (Out of which and 1997-98 al Office, Ernakulam Act ance Rs.75,000/- has been deposited)

Employees Employee 5,61,692/- (Out of which FY 1998 -99 Honorable High Court State Insurance State Insur- Rs.2,15,791/- has been deposited) to 2001-02 of Kerala Act ance

Employees Employee 57,72,341/- (Out of which 2003 to 2009 Honorable ESI Court State Insurance State Insur- Rs.15,00,000/- has been deposited) Act ance

Kerala Mu- One Time 3,08,945/- 1997 Honorable High Court nicipality Act, Building Tax of Kerala 1994 read with Kerala Building Rules, 1999

(x) In our opinion, the Company does not have accumulated losses at the end of the financial year. The Com- pany has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

(xi) Based on our audit procedures and according to the information and explanations given to us, the Com- pany has not defaulted in repayment of dues to a financial institution, bank or debenture holders. There were no debenture holders at any time during the year.

(xii) Based on our examination of documents and records and according to the information and explanations given by the Management, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003, are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. The investment made in equity shares is held in its own name.

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

(xvi) In our opinion, the term loans have been applied for the purposes for which they were raised.

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

(xviii) According to the information and explanations given to us, 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.

(xix) The Company has not issued any debenture during the year. Accordingly, the provisions of clause 4(xix) of the Companies (Auditor''s Report) Order, 2003, are not applicable to the Company.

(xx) The Company has not raised money by public issues during the year and hence the question of disclosure and verification of the end use of such money does not arise.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company during the year was noticed or reported, nor have we been informed of such case by the management.

For KOLATH & CO

Chartered Accountants

Firm''s Registration Number 008926S

Sd/-

CA. Liju V.Rajan Kolath

Partner

Membership Number 209309

Ernakulam

04.04.2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of KITEX GARMENTS LIMITED, as at 31st March, 2012, the Profit and Loss Account and also the Cash Flow Statement of the Company 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 statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

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

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

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

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

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

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said ac- counts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Annexure to Auditors' Report

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, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such physical verification.

(c) During the year, the Company has not disposed off a substantial part of its fixed assets, which affect the going concern status of the Company.

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

(b) The procedures of physical verification of inventories followed by the management are reasonable and ad- equate in relation to the size of the Company and the nature of its business.

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

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from Companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and also with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(v) (a) In our opinion and according to the information and explanations given to us, we are of the opinion that the transactions made in pursuance of contracts or arrangements, that need to be entered in the Register maintained under Section 301 of the Companies Act, 1956, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956, and exceeding the value of Rs. 5 Lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public during the year. Therefore, the provisions of clause 4 (vi) of the Companies (Auditor's Report) Order, 2003, are not applicable to the Company.

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

(viii) According to the information and explanations given to us, the Central Government has prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, carried out a detailed examination of the same.

(ix) (a) The Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and any other material statutory dues applicable to the Company.

According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were in arrears, as at 31.03.2012 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the following dues demanded by the relevant authority have not been deposited on account of pending disputes:

Name of Statute Nature of Dues Amount (Rs.) period to which it Forum where Dis- Relates pute is Pending

Customs Act Customs Duty 3,25,20,531/- 1997-98 Honourable High (out of which Court of Kerala Rs.1,21,29,942/- has been paid)

Income Tax Act Income Tax 6,29,406/- AY 2003-04 & 2004- Honourable High 05 court of Kerala Income Tax Act Income Tax 38,32,909/- AY 2006-07 Commissioner of (Out of which Income Tax (Ap- Rs.31,50,000/- has peals) been deposited)

Income Tax Act Income Tax 23,93,497/- AY 2007-08 Deputy Commissioner of Income Tax

Income Tax Act Income Tax 3,16,22,680/- (Out of AY 2008-09 Commissioner of which Rs.1,56,06,500 Income Tax (Ap- has been deposited) peals)

Provident Fund Act Provident Fund 1,31,86,588/- 2001-02 to 2005-06 Honourable High (Out of which Court of Kerala Rs.52,74,636/- has been deposited)

Employees State In- Employee State 3.66 Lakhs (Out of 1996 - 1997 and ESI Inspector surance Act Insurance which Rs.75,000/- 1997-98 has been deposited)

Employees State In- Employee State 5.62 Lakhs (Out of 1998 -99 to 2001-02. Honourable High surance Act Insurance which Rs.50,000/- Court of Kerala has been deposited)

Employees State In- Employee State 57,72,341/- 2003 to 2009 Honourable ESI surance Act Insurance (Out of which Court Rs.15,00,000/- has been deposited)

(x) In our opinion, the Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

(xi) Based on our audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. There were no debenture holders at any time during the year.

(xii) Based on our examination of documents and records and according to the information and explanations given by the Management, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003, are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. The investment made in equity shares is held in its own name.

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

(xvi) In our opinion, the term loans have been applied for the purposes for which they were raised.

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

(xviii) According to the information and explanations given to us, 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.

(xix) The Company has not issued any debenture during the year. Accordingly, the provisions of clause 4(xix) of the Companies (Auditor's Report) Order, 2003, are not applicable to the Company.

(xx) The Company has not raised money by public issues during the year and hence the question of disclosure and verification of the end use of such money does not arise.

(xxi) To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company during the year was noticed or reported, nor have we been informed of such case by the management.

For KOLATH & CO

Chartered Accountants

Firm Regn. No. 008926S

Sd/-

CA. Liju V.Rajan Kolath

Partner

Membership No. 209309

Ernakulam

20.04.2012


Mar 31, 2010

1. We have audited the attached Balance Sheet of M/s. KITEX GARMENTS LIMITED, as at 31st March, 2010, the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto, in which are incorporated the returns from Taipei Branch audited by a member of Taipei Certified Public Accountants as Branch auditor, appointed by the Company. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

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

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

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

(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books and proper returns adequate for the purpose of our audit have been received from Taipei branch. The Branch Auditors Report on the accounts of Taipei branch has been forwarded to us and have been suitably dealt with by us in preparing this report;

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account and with the audited returns from the branch;

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

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

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes and schedules attached thereto 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, 2010;

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

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

Annexure referred to in paragraph 3 of the Auditors Report of even date to the members of the KITEX GARMENTS LIMITED on the Accounts for the year ended on 31st March,2010.

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

(i) Fixed Assets:

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

b) Fixed Assets have been physically verified by the management during the year and no material discrepancies have been noticed on such verification.

c) In our opinion, substantial part of the fixed assets of the Company have not been disposed off during the year. (ii) Inventories:

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

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

c) In our opinion, the company is maintaining proper records of inventories and no material discrepancies have been noticed on physical verification.

(iii) Loans taken/granted:

The Company has neither granted nor taken any loans secured or unsecured to / from Companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(iv) Internal Control

In our opinion, there are adequate internal control systems commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and sale of goods and services. During the course of our audit, we have not noticed any major weakness in the internal control system.

(v) Section 301

a) In our, opinion and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered in the register maintained under section 301 have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the registers maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) Deposit from Public

In our opinion, since the Company has not accepted any deposits from the public during the year, clause 4(vi) of the order is not applicable to the Company.

(vii) Internal Audit

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

(viii) Cost Records

We are informed that the Central Government has prescribed maintenance of cost records by the company under section 209 (1) (d) of the Act. In our opinion and according to the information provided to us we are of the view that the prescribed accounts and records have been made and maintained. However, we have not made detailed examination of the records with a view to determine whether they are accurate and complete.

(ix) Payment of Statutory dues

(a) In our opinion and according to the information and explanation given to us, the company was generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income tax, Sales tax, Service Tax, Customs duty, Cess and other material statutory dues as applicable with appropriate authorities during the year. We are informed that the excise duty is not applicable for companys product.

In our opinion, no undisputed arrears of statutory dues are outstanding as on 31st March, 2010 for a period of more than six months from the date they become payable.

(b) According to the information and explanation given and as per the records produced to us, as at the year end following dues demanded by the relevant authority have not been deposited on account of pending disputes.

Name of Nature of the Amount (Rs) Statute dues

Customs Act Customs Duty 3,25,20,531/- (out of which Rs. 1,21,29,942/- has been paid

Customs Act Customs Duty 27,52,846/- (out of which Rs.5,00,000/ has been deposited)

Income Tax Income Tax 12,23,097/-(out of Act, 1961 which Rs. 1,00,000/ has been deposited)

Income tax Act Income Tax 6,29,406

Income tax Act Income Tax 38,32,909/- (Out of which Rs.24,50,000/ has been deposited

Income tax Act Income Tax 23,93,497

Provident Provident Fund 1,31,86,588 (Out of Fund Act which Rs.52,74,636/- has been deposited)

Employees Employee State 6.11 Lacs (Out of State Insurance Act Insurance which Rs.50,000/- has been deposited)

Name of Statue Period to Forum where disputed which it relates

Customs Act FY 1997-98 Honorable High Court of Kerala

Customs Act AY 2004-05 Honorable High Court of Kerala

Income Tax Act, 1961 AY 1999-00, Income Tax Appellate 00-01 & 02-03. Tribunal

Income tax Act AY 2003-04 Hon. High Court of & 2004-05.Kerela

Income tax Act AY 2006-07. Commissioner of Income Tax (Appeals)

Income tax Act AY 2007-08 Dy.Commissioner of Income Tax

Provident Fund Act FY 1999-00 to Provident Fund 2005-06 Appellate Tribunal.

Employees State Insurance Act FY 1999-00 to Honorable ESI Court. 2001-02.

(x) Accumulated Losses/ Cash losses

The company has no accumulated losses as at 31st March 2010 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

(xi) Default in repayment of Dues

In our opinion and according to the records produced to us, the company has not defaulted in repayment of dues to any financial institution or bank as at the balance sheet date.

(xii) Grant of Secured Loans & Advances

In our opinion the company has not granted any loan and advance on the basis of security by way of pledge of shares, debentures and such other securities during the year.

(xiii) Special Statute Chit Fund companies, Nidhis/Mutual benefit fund/societies

In our opinion, the provisions of special statue applicable to a chit fund or nidhi/mutual benefit fund/ society are not applicable to the Company for the year under review.

(xiv) Company dealing or Trading in shares, securities etc.

In our opinion the company has not dealt in or traded in shares, securities, debentures and other investments during the year under review. The investment made in equity share is held in its own name.

(xv) Provision of Guarantee

In our opinion and according to the explanations given, the Company has not given any guarantees for loans taken by others from banks or financial institutions.

(xvi) Term Loans

In our opinion and according to the explanations given, on an overall basis the term loans were applied for the purpose for which they were raised.

(xvii) Usage of Funds

On the basis of an overall examination of the balance sheet of the company, in our opinion, funds raised on Short Term basis have not been used for Long Term investment.

(xviii) Preferential Allotments

The Company has not made any preferential allotment of shares to parties and companies listed in the register maintained under section 301 of the Companies Act, 1956 during the year under review.

(xix) Creation of security for Debenture Issue

The company has not issued any Debentures.

(xx) Disclosure of End-use of Funds

During the year under review the Company has not raised any money through public issue.

(xxi) Frauds

On the basis of information and explanation given during the course of our audit, we report that we have neither come across nor have been informed of any material fraud on or by the company noticed or reported during the year under review.

For and on behalf of VENKIT AND HARI

Chartered Accountants

FRN.004662S

Sd/-

Kochi T.A.VENKITACHALAM

27th November, 2010. Parmer - M.No.21585



 
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