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Auditor Report of M K Exim (India) Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of M.K. EXIM (INDIA) LIMITED (''the Company"), which comprise the Balance Sheet as at 31st March, 2015, 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 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 ofthe Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with provisions of the Act for safeguarding of the assets of the company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements 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 ofthe financial statements that give a true and fair view and are free from material misstatements, whether due to fraud and error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.

We have taken into account the provisions ofthe Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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 judgement, including the assessment of the risks of material misstatements of 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the company's directors, as well as evaluating the overall presentation ofthe financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following matters in the Notes to the financial statements:

AS-15, far Employees Benefits (Revised 2005), in respect of Provision for Gratuity. The Provision for Gratuity provided by the company is inadequate and its effect on liabilities and profit of the Company is unascertainable. Further, requisite disclosures are not made in respect of retirement benefits.

Our opinion is not modified in respect of this matter.

As required by Companies (Auditors' Report) Order, 2015 issued by the Central Government of India in terms of Section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 of the said order.

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

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

d. ln our opinion, the aforesaid Standalone Financial Statements comply with the Accounting Standards referred to in Section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014.

e. On the basis of written representations received from the Directors, as on 31st March, 2015 and taken on record by the Board of Directors, we report that 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 matter 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 litigation 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 REFERRED TO IN OUR REPORT OF EVEN DATE ON THE ACCOUNTS OF M.K. EXIM (INDIA) LIMITED FOR THE YEAR ENDED ON 31 ST MARCH, 2015

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

(b)AII the assets have been physically verified by the management at the end of the year, which, in our opinion is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

2. (a)The inventory has been physically verified during the year at reasonable intervals by the management.

(b) The procedure of physical verification of inventories followed by the management is adequate in relation to the size of the company and the nature of its business.

(c) The company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification.

3. 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.

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

5. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits.

6. We have been explained that the maintenance of cost records has not been prescribed by the Central Government under sub section (1) of Section 148 of the Companies Act.

7. (a) The company is generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income tax, Sales tax .Wealth tax, Service tax, Duty of Customs, Duty of Excise, Value Added tax, Cess and any other statutory dues with the appropriate authorities and there were no arrears of outstanding statutory dues as at the last day of the financial year for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, dues of Income tax amounting to Rs 190380/- have not been deposited and the matter is pending before CIT (Appeals)-I, Jaipur (c)According to the information and explanations given to us and records of company, no amount is required to be transferred to Investor Education and Protection Fund.

8. The company does not have accumulated losses as at the end of the year. The company has not incurred any cash losses during the current financial year and during the immediately preceding financial year.

9. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions, banks and debenture holders.

10.In our opinion and according to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks or financial institutions.

11. The company has applied the term loan ,the purpose for which the loan was obtained.

12. According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year.

For VIMAL AGRAWAL & ASSOCIATES Chartered Accountants (FRN: 004187C)

Sd /- (V. K. Agrawal) Partner Place : Jaipur M. No. 071627 Date : 30.05.2015


Mar 31, 2014

We have audited the accompanying financial statements of M.K. EXIM (INDIA) LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March 2014, 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 Financial Statements

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

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing 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 of 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 judgement, including the assessment of the risks of material misstatements of financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

(a) in the case of the Balance Sheet, of the State of Affairs of the Company as at 31st March, 2014;

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

(c) in the case of the Cash Flow Statement, of the Cash Flows 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 Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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

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

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

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

I. AS-28, for "Impairment of Assets", in respect of impairment loss of Garment manufacturing unit, impairment loss, remains unascertained.

II. AS-15, for Employees Benefits (Revised 2005), in respect of Provision for Gratuity. The Provision for Gratuity provided by the Company is inadequate and its effect on liabilities and profit of the Company is unascertainable. Further, requisite disclosures are not made in respect of retirement benefits.

(e) On the basis of written representations received from the Directors, as on 31st March 2014 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2014 from being appointed as a director in terms of clause (g) of subsection (1) of section 274 of the Companies Act, 1956.

ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE ON THE ACCOUNT OF M.K. EXIM (INDIA) LIMITED FOR THE YEAR ENDED ON 31st MARCH, 2014

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

(b) All the assets have been physically verified by the management at the end of the year, which, in our opinion is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) In our opinion, Company has not disposed off substantial part of Fixed Assets during the year and the going concern status of the Company is not affected.

2. (a) The inventory has been physically verified during the year by the management.

(b) The procedure of physical verification of inventories followed by the management is adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory.

3. (a) The Company has granted interest free unsecured loan to three parties listed in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 88,50,000/- and the year end balance of loan given to such parties was 88,50,000/.

(b) No terms and conditions have been stipulated for loans granted to the party listed in the register maintained under section 301 of the Companies Act, 1956.

(c) According to the information and explanations given to us, no stipulation has been made for the repayment of principal amount in respect of loans given to the parties listed in the register maintained under section 301 of the Companies Act, 1956.

(d) The Company has taken interest free unsecured loans from five parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 81692/- and the year-end balance of loans taken from such parties was Rs. Nil.

(e) In our opinion, other terms and conditions on which loans have been taken from the parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

(1) According to the information and explanations given to us, no stipulation has been made for the repayment of principal amount in respect of loans taken from the parties listed in the register maintained under section 301 of the Companies Act, 1956.

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

5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of all contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act 1956, have been so entered.

(b) 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. Five lakhs in respect of each party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of the provisions of section 58A and 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975.

7. In our opinion and according to the information and explanations given to us the internal audit system needs augmentation.

8. We have been explained that the maintenance of cost records has not been prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956 for the period under review for the products of the Company.

9. (a) The Company is generally regular in depositing with the appropriate authorities undisputed statutory dues.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Value Added Tax, Service Tax, Customs Duty and Excise Duty were in arrears as at the end of the financial year for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us and records of Company, there are no disputed statutory dues.

10. The Company does not have accumulated losses as at the end of the year. The Company has not incurred any cash losses during the current financial year. The Company has not incurred cash losses during the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks and financial institutions.

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

13. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others.

14. Clause (xiii) is not applicable as this clause is applicable to nidhi/mutual benefit fund/ societies.

15. Clause (xiv) is not applicable as this clause is applicable to Company dealing/trading in shares, securities and other investments.

16. The company has not raised any term loan during the year.

17. According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, we report that the no funds raised on short term basis have been used for long term investment.

18. According to the information and explanation 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 during the year.

19. According to the information and explanation given to us, the Company has not issued debentures; hence this clause is not applicable.

20. According to the information and explanation given to us, the Company has not raised any money by public issue during the year; hence this clause is not applicable.

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

For VIMAL AGRAWAL & ASSOCIATES Chartered Accountants (FRN: 004187C)

(V. K. Agrawal) Partner M. No. 71627

Place : Jaipur Dated: 21st June, 2014


Mar 31, 2012

1. We have audited the attached Balance Sheet of M.K. EXIM (INDIA) LIMITED as at 31st March 2012, Statement of Profit and Loss and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. 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 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 above, we report that:

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

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

(c) The Balance Sheet, 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 dealt with by this report comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 except, AS-28, for "Impairment of Assets", in respect of impairment loss of Garment manufacturing unit, impairment loss, remains unascertained.

II. AS-15, for Employees Benefits (Revised 2005), in respect of Provision for Gratuity. The Provision for Gratuity provided by the Company is inadequate and its effect on liabilities and profit of the Company is unascertainable. Further, requisite disclosures are not made in respect of retirement benefits.

(e) On the basis of written representations received from the Directors, as on 31" 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 subsection (1) of section 274 of the Companies Act, 1956.

(i) Subject to above, 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 thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the State of Affairs of the Company as at 31st March, 2012; and

(ii) in the case of Statement of Profit and Loss, of the Profit of the Company for the year ended on that date.

(iii) in the case of the Cash Flow Statement, of the Cash Flows of the Company for the year ended on that date.

ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE ON THE ACCOUNT OF M.K. EXIM (INDIA) LIMITED FOR THE YEAR ENDED ON 318T MARCH, 2012

1. (a) The Company has maintained proper records showing full particulars including

quantitative details and situation of fixed assets.

(b) All the assets have been physically verified by the management at the end of the year, which, in our opinion is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) In our opinion, Company has not disposed off substantial part of Fixed Assets during the year and the going concern status of the Company is not affected.

2. (a) The inventory has been physically verified during the year by the management.

(b) The procedure of physical verification of inventories followed by the management is adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory.

3. (a) The Company has granted interest free unsecured loan to two parties listed in the

register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 32,63,2607- and the year end balance of loan given to such party was NIL.

(b) No terms and conditions have been stipulated for loans granted to the party listed in the register maintained under section 301 of the Companies Act, 1956.

(c) According to the information and explanations given to us, no stipulation has been

made for the repayment of principal amount in respect of loans given to the parties listed in the register maintained under section 301 of the Companies Act, 1956.

(d) The Company has taken interest free unsecured loans from two parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 27,40,000/- and the year-end balance of loans taken from such parties was Rs. 81,692/-

(e) In our opinion, other terms and conditions on which loans have been taken from the parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

(f) According to the information and explanations given to us, no stipulation has been made for the repayment of principal amount in respect of loans taken from the parties listed in the register maintained under section 301 of the Companies Act, 1956.

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

5. (a) According to the information and explanations given to us, we are of the opinion that

the particulars of all contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act 1956, have been so entered.

(b) 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. 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.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of the provisions of section 58A and 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975.

7. In our opinion and according to the information and explanations given to us the internal audit system needs augmentation.

8. We have been explained that the maintenance of cost records has not been prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956 for the period under review for the products of the Company.

9. (a) The Company is irregular in depositing with the appropriate authorities undisputed

statutory dues in respect of Income Tax Deducted at source and there have been significant delays in a number of cases.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Value Added Tax, Service Tax, Customs Duty and Excise Duty were in arrears as at the end of the financial year for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us and records of Company, following are disputed Income tax due which have not been deposited with appropriate authorities.

S. Nature of Dues Amount (Rs.) Period Forum where No. dispute is pending

1. Income Tax Demand 299973/- AY 2005-06 CIT(Appeals)

2. Income Tax Demand 720985/- AY 2006-07 CIT(Appeals)

10. The Company does not have accumulated losses as at the end of the year. The Company has not incurred any cash losses during the current financial year. The Company has not incurred cash losses during the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks and financial institutions.

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

13. In our opinion and according to the information and explanations given to us, the Company has given guarantee for loans taken by Symphony Jewels (P) Ltd. from Bank of Baroda amounting to Rs. 516.66 Lacs.

14. Clause (xiii) is not applicable as this clause is applicable to nidhi/mutual benefit fund/ societies.

15. Clause (xiv) is not applicable as this clause is applicable to Company dealing/trading in shares, securities and other investments.

16. The company has not raised any term loan during the year.

17. According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, we report that the no funds raised on short term basis have been used for long term investment.

18. According to the information and explanation 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 during the year.

19. According to the information and explanation given to us, the Company has not issued debentures; hence this clause is not applicable.

20. According to the information and explanation given to us, the Company has not raised any money by public issue during the year; hence this clause is not applicable.

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

For VIMAL AGRAWAL & ASSOCIATES

Chartered Accountants (FRN:004187C)

Sd/- (V. K. Agrawal)

Partner M. No. 71627

Place : Jaipur

Dated: 16th July, 2012


Mar 31, 2010

1. We have audited the attached Balance Sheet of M.K. Exim (INDIA) LIMITED as at 31st March 2010 the Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed there to. 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 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 above, we report that

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

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

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

(d) In our opinion, the Balance Sheet, 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 except.

I AS-28, for "Impairment of Assets", in respect of impairment loss of Garment manufacturing unit, impairment loss, remains unascertained.

II. AS-15, for Employees Benefits (Revised 2005), in respect of Provision for Gratuity. The Provision for Gratuity provided by the Company is inadequate and its effect on liabilities and profit of the Company is unascertainable. Further, requisite disclosures are not made in respect of retirement benefits.

(e) 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 clause (g) of subsection (1) of section 274 of the Companies Act, 1956.

(i) Subject to above, 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 thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the State of Affairs of the Company as at 31st March, 2010; and

(ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date.

(iii) In the case of the Cash Flow Statement, of the Cash Flows of the Company for the year ended on that date.

ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE ON THE ACCOUNT OF M.K. EXIM (INDIA) LIMITED FOR THE YEAR ENDED ON 31st MARCH, 2010

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

(b) All the assets have been physically verified by the management at the end of the year, which, in our opinion is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) During the year, the Company has not disposed off substantial part of the plant and machinery. According to the information and explanation given to us, we are of the opinion that the sale of said part of plant and machinery has not affected the going concern status of the Company.

2. (a) The inventory has been physically verified during the year by the management.

(b) The procedure of physical verification of inventories followed by the management is adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory.

3. (a) The Company has granted interest free unsecured loan to one party listed in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 66,800/- and the year end balance of loan given to such party was Rs. 66,800/-.

(b) No terms and conditions have been stipulated for loans granted to the party listed in the register maintained under section 301 of the Companies Act, 1956.

(c) According to the information and explanations given to us, no stipulation has been made for the repayment of principal amount in respect of loans given to the parties listed in the register maintained under section 301 of the Companies Act, 1956.

(d) The Company has taken interest free unsecured loans from three parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 4, 63,10,410/- and the year-end balance of loans taken from such parties was Rs. 2,77,54,332/-

(e) In our opinion, other terms and conditions on which loans have been taken from the parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

(f) According to the information and explanations given to us, no stipulation has been made for the repayment of principal amount in respect of loans taken from the parties listed in the register maintained under section 301 of the Companies Act, 1956.

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

5. (a) According to the information and explanations given to us, we are of the opinion that the particulars of all contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act 1956, have been so entered.

(b) 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. 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.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of the provisions of section 58A and 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975.

7. In our opinion and according to the information and explanations given to us the internal audit system needs augmentation.

8. We have been explained that the maintenance of cost records has not been prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956 for the period under review for the products of the Company.

9. (a) The Company is irregular in depositing with the appropriate authorities undisputed statutory dues including Investor Education Protection Fund, Provident Fund Dues, Employees State Insurance dues, Income Tax Deducted at source, Income Tax Sales Tax, Value Added Tax, Service Tax, Custom Duty, Excise Duty, cess and other material statutory dues applicable to it and there have been significant delays in a large number of cases.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Value Added Tax, Service Tax, Customs Duty and Excise Duty were in arrears as at the end of the financial year for a period of more than six months from the date they became payable.

(C) According to the information and explanations given to us and records of Company, the following are the disputed statutory dues on account of income tax, which have not been deposited with appropriate authorities:

S. No. Nature of Dues Amount(Rs.) Period Forum where dispute is pending

1 Income Tax Demand 1,33,938/- A.Y.2002-03 Income tax Appellate Tribunal

10. The,Company does not have accumulated losses as at the end of the year. The Company has not-incurred any cash losses during the current financial year. The Company has not incurred cash loses during the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks and financial institutions.

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

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

14. Clause (xiii) is not applicable as this clause is applicable to nidhi/mutual benefit fund/societies.

15. Clause (xiv) is not applicable as this clause is applicable to Company dealing/trading in shares, securities and other investments.

16. In our opinion, the term loans have been applied for the purpose for which they were raised.

17. According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, we report that the no funds raised on short term basis have been used for long term investment.

18. According to the information and explanation given to us, the Company has not made any preferential allotment of share; hence this clause is not applicable.

19. According to the information and explanation given to us, the Company has not issued debentures; hence this clause is not applicable.

20. According to the information and explanation given to us, the Company has not raised any money by public issue during the year; hence this clause is not applicable

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



For VIMAL AGRAWAL & ASSOCIATES Chartered Accountants (FRN: 004187C)

sd/- (V. K. Agrawal) Partner M. No. 71627

Place : Jaipur Date : 30th May, 2010

 
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